Before the Trail Blazers, before light rail, before the glitz of the Pearl District or the trendy shops of Northeast neighborhoods, Portland had the Lloyd Center.
Built in an era of freeways and department stores, Portland's oldest mall survived more than half a century as the city transformed around it. Now, if it hopes to thrive in an age of online shopping and boutique retail, the Lloyd Center must change, too.
Amid a $50 million remodel, the mall is working to overcome the loss of an anchor tenant and the competitive threats that come with its close-in urban location. Parking garages, an essential feature in another era, now are architectural obstacles as the mall tries to adapt to a new age.
Yet retail observers say some of those challenges can work for the mall, instead of against it, if the center can remake itself to win over new types of shoppers. And area redevelopment, bringing hundreds of new residents, could be a boon to the center if it's able to tap into the wallets of its new neighbors.
New look, new tenants
Based on interviews with the mall manager and industry experts, it appears the aim of the remodel is to reposition the Lloyd Center to appeal to shoppers' changing expectations, taking cues from lifestyle centers like Bridgeport Village. Lifestyle centers place less emphasis on anchor tenants and offer amenities you might see in a neighborhood, like restaurants and bars.
When the Lloyd Center opened on August 1, 1960, it was promoted as the largest mall in the world. Its 1.2 million square feet housed space for 100 tenants, and its parking lots had room for 8,000 cars. In an editorial the day before it opened, The Oregonian praised the development for aiding in Portland's modernization, and thousands of shoppers flocked to the giant new shopping center as it opened its doors.
Over the years, other area malls popped up, including downtown's Pioneer Place in 1990. Meanwhile, the Lloyd District earned bad press for shootings, drug deals and a steady homeless population. In the last 10 years, online sales have grown steadily, competing with traditional brick-and-mortar destinations for shoppers' attention.
The Lloyd Center was sold in 2013 and Cypress Equities, a Dallas real estate developer, began managing the mall. Bob Dye, who helped open Tigard's Bridgeport Village in 2005, was brought in to oversee the Lloyd Center in summer 2015.
Cypress did not return multiple interview requests for this story, so the official company aim for the remodel is unclear.
"If it was my vision, I would do what I could - particularly with food - to try to bring in more local fare whenever possible," Dye said in a phone interview.
In an interview and walk-through with The Oregonian/OregonLive in early June, Dye said the interior renovations should be complete by mid-November (just in time for Black Friday), with the exterior work finished by spring 2017. That puts the project about a year behind schedule.
The renovation plans include updates to the mall's interior (new lighting, exposed terrazzo columns, new flooring), a refurbished, slightly smaller ice rink and a new entryway with a spiral staircase next to Macy's.
Dye said the remodel - namely the ice rink's new home directly under the skylights - will be "breathtaking." The renovation will also allow more natural light into the mall, he said.
The makeover marks the largest remodel to the mall since it was enclosed in 1991. But some components - the spiral staircase, the terrazzo columns - recall features of the open-air shopping center that debuted in 1960.
Though the remodel will change the mall's physical appearance, new tenants will play a huge part in reshaping its future.
The mall's real estate brokers, New & Neville, say they're working to bring in restaurants, boutiques, brewpubs and a grocery store.
The brokers' largest space to fill is the former Nordstrom store at the Lloyd Center's west end, which has sat empty since the store closed in January 2015.
A mall with an empty anchor tenant is losing out on potential sales, but this large vacant space gives the mall an opportunity to update its tenant mix, said Ryan McCullough, senior economist for CoStar, a commercial real estate analytics company.
"You'd be hard-pressed to find a more productive anchor than Nordstrom, but it's not impossible," he said.
This opportunity for the Lloyd Center to reposition itself comes as development adds additional housing and retail to the area.
Steve Neville, co-owner of New & Neville, said he's looking for tenants that will appeal to the district's longtime residents as well as the new residents. Many of these new residents will likely be Millennials, he said.
Neville said he's working to bring in a 25,000 square-foot grocery store to the Nordstrom building's ground floor, along with a restaurant and brewpub. He's targeting more traditional retailers for the second and third floors, he said.
It's unlikely the grocery store will be open by the time indoor renovations are complete in November, Neville said, but he hopes to have the lease signed by then. Neville declined to provide additional information about the possible tenants, citing ongoing lease negotiations.
The current state of malls
National mall vacancy rates (including anchor tenants) were at 5.1 percent as of March 31, McCullough said. They're at 6 percent in the Portland area, he said.
According to Dye, the Lloyd Center is currently 11 percent vacant. It's unclear whether this number includes the vacant Nordstrom space or the Sears space. According to city records, Sears owns its anchor space. Nordstrom also owned its space before it vacated. The Lloyd Center bought the space in February 2015 for $7.5 million, city records show.
For a mall in the midst of a renovation, a nearly 90 percent occupancy rate is pretty good, said mall expert Mark Hunter. Hunter worked as an executive for mall ownership firm General Growth Properties before taking a job with commercial real estate services company CBRE. (Dye worked for CBRE for six years before coming to the Lloyd Center, but his tenure didn't overlap with Hunter's, which started in January.)
If the Lloyd Center wants to stay healthy after the remodel, Hunter and other experts agree that it must become more than a place to shop: it must offer more experiences, too. In malls, these can take the form of restaurants, bars, theaters, bowling alleys and more.
So far, since the work on the mall began, the mall has managed to finalize at least one such lease, according to Dye, the mall manager: Frack Burger, an Oregon-based restaurant chain that will occupy the former Billy Heartbeats space.
The Lloyd Center's anchor tenants are Macy's, Sears, Marshalls, Ross and Barnes & Noble, and the third floor is largely occupied by medical and professional offices, as well as the food court. A for-profit college and a cosmetology school also have homes in the mall. Meanwhile, the former movie theater space inside the mall will soon be occupied by Providence Health & Services administrative offices, Dye said.
Schools and offices bring in students and clients on weekdays, when mall traffic might otherwise be slow, Hunter said. Overall, he said, the Lloyd Center's tenant mix is strong.
Location, location, location
One of the most crucial variables in a mall's success -- household density -- is outside its control. This is especially true for the Lloyd Center, which has seen Portland grow around it.
"It's the malls that are in the denser locations today that are thriving," McCullough said. "And the ones that are in rural areas are not."
In this sense, the Lloyd Center is well-positioned, he said.
In addition to the household density that comes with being close to downtown, the Lloyd District is adding more apartments. The
added more than 600 apartments, and the same developer is looking to
across the street.
These changes have made the area feel more like a neighborhood and less like just a place people go to work, said Gerard Mildner, who directs PSU's Center for Real Estate.
"It's less of a lonely walk," he said. "There's more evening traffic, more dining out, more opportunities for neighborhood retail."
The area has a chance to reinvent itself, Mildner said.
"If the Lloyd District becomes a more residential place, it has an opportunity to feel more safe and secure, rather than windswept and desolate," he said.
And with rent rates like the ones Hassalo on Eighth is charging (studio apartments start around $1,000 per month), the area will soon be full of young professionals with money to spend, Mildner said.
"As a result, the Lloyd District should see more sales and a shift in the mix of sales towards higher end products," Mildner wrote in an email.
According to Dye, the Lloyd Center wants a piece of that mid-level luxury market, targeting retailers like Coach, and said the renovation could help pull in those retailers.
"I would say that we're not going to be something we're not," he said over the phone. "We're going to provide the best and broadest selection, everything from discount to mid-level luxury."
Parking vs. visibility
Craig Sweitzer, founder of Portland retail brokerage firm Urban Works Real Estate, isn't convinced that Lloyd Center can draw shoppers away from other retail districts.
"The hard thing with the Lloyd Center is they're competing with the neighborhoods, like the Pearl and downtown," he said. "If you don't have a Nordstrom, if you don't have a Nordstrom Rack, there's really no reason to go there (to the Lloyd Center)."
One advantage the Lloyd Center has over nearby competitors like Pioneer Place and neighborhood shopping districts is its 5,000-plus free parking spaces. But the parking structures that surround the mall could stunt its growth, Sweitzer said.
The mall's biggest weakness, he said, is its lack of outward-facing shops.
"You need visibility," he said. "People today are used to convenience and access. Driving by, unless I'm looking at one of the signs, it's hard for me to know what's in there."
In the last 15-20 years, malls like Washington Square have essentially turned themselves "inside out," adding outside entrances for smaller stores, as well as those for anchor tenants, Sweitzer said. This way, shoppers can see the storefronts from the road.
But the Lloyd Center, largely surrounded by parking garages, doesn't have this option - at least not as part of its $50 million remodel.
Lisa Sedlar, founder of Green Zebra Grocery, said she supports anything that will improve the neighborhood and add more amenities. She just opened her second market about a block away from the mall, as part of the Hassalo on Eighth complex.
She says her shoppers tell her they want to see the mall more open and interactive, like the open-air mall it was in the '60s.
"I almost wish they would knock the whole thing down and start over," she said. "When you think about what makes a good shopping experience, that old-style mall with four walls just isn't it anymore."
Forging ahead
Dye brushed off critics of the Lloyd Center's remodel.
"We're excited, and I refuse to let anybody change my mood," he said over the phone.
Later, in an email, he expounded: "We believe in what we are doing, are working very hard, spending a lot of money, and creating hundreds of new jobs to deliver a much improved Lloyd Center to the community."
It's unlikely that the Lloyd Center remodel will drum up as much fanfare as its opening did in 1960s, when 700 homing pigeons were released as Portland Mayor Terry Schrunk cut the inaugural ribbon. But the next few years will be key in determining whether the mall - with its updated look and new mix of tenants - can capture the imagination of another generation of Portland shoppers.
-- Anna Marum
amarum@oregonian.com
503-294-5911
@annamarum