The list of malls in the Washington area that are either being torn down or remade into something completely different is steadily growing.
Landover Mall has been demolished (only a Sears remains). Springfield Mall has also been demolished and is being turned into a more modern shopping plaza with a focus on restaurants. The owners of White Flint Mall have begun making changes and would like to make more if not for a lawsuit from Lord & Taylor, which doesn’t much like the plans. Landmark Mall is primed to be remade into a town center.
As many of the above examples demonstrate, turning a mall into something else isn’t easy. Which suits Tysons Galleria — home to Cartier, Emporio Armani, Gucci, Hugo Boss and Louis Vuitton — just fine.
While other malls are dying on the vine, Tysons Galleria is having its best year ever. Its average sales per square foot for the first half of the year is $973, according to the ratings agency Morningstar, more than double the industry average for last year of around $450.
Not only is the mall on pace to crush its average sales from last year ($868) but its sales from 2007, before the economy collapsed ($848). It is also beating what Morningstar estimates are the average sales per square foot at the Fashion Center at Pentagon City ($950), Tysons Corner Center ($835), Fair Oaks Mall ($615) and Westfield-Montgomery Mall ($600).
Last week, the mall’s owner, General Growth Properties, took out a new mortgage of $325 million, according to Morningstar. General Growth’s representatives did not respond to requests for comment.
How is Tysons Galleria improving in an age when people are shunning malls? Even though some prognosticators are fond of saying the enclosed shopping mall is dead, it’s mostly doing things the old fashioned way.
For one thing, the mall is perfectly placed among wealthy people; the average household income within five miles of the mall is $177,000. It has cornered the luxury market in the midst of some of the country’s richest counties.
But Tysons Galleria also perfects a strategy malls have been long practicing: charging tenants exactly as much as they are willing to pay, regardless of what their neighbors are paying. Consider the chart above of the 10 largest stores and restaurants (not counting the mall’s anchors, which own their own space). J. Crew is paying nearly $77 per foot, while Piazza Di Giorgio pays just $27.49.
For more info on the mall, check out Morningstar’s report here.