Making sure the mall is in fashion

The all-encompassing Internet has rained heavy blows on many traditional industries, including newspapers, but hasn’t laid a glove on a business it was once widely expected to kill: the shopping mall.

Americans still flock to malls in vast numbers, and the business of building and operating them continues to grow. Billions of dollars worth of goods may be sold online every year, but most people aren’t about to give up the tactile experience of shopping, said Art Coppola, chief executive of Santa Monica-based Macerich Co.

Lucky for him, considering that Macerich is one of the biggest shopping center builders and owners in the country.

Publicly held Macerich, which Coppola joined in 1975, owns 73 large shopping centers in 18 states, with more on the way. Among them are the Westside Pavilion in West Los Angeles, the Oaks in Thousand Oaks and Santa Monica Place.

Coppola’s grasp of what appeals to average shoppers was formed in Des Moines, where he grew up and attended Dowling High School. He still donates to the Catholic school.

“Some people get attached to their college,� he said. “I got attached to where I feel like I learned the most, and that was in high school.�

When it came time to prepare for a career, Coppola’s father, a real estate developer, suggested Art get a grounding in numbers and the law.

“My dad told me, ‘I can’t do anything without talking to my lawyer or my accountant.’ �

So Coppola became a lawyer and an accountant, joining the state bar and earning the top score in the 1973 test for admittance to the Iowa Society of Certified Public Accountants. (For the record, Coppola said, “Getting your CPA is a helluva lot tougher than passing the bar exam, I can tell you that.�)

Even with those impressive credentials, Coppola had a hard time finding a job.

“I sent my resume out to the top 50 shopping center developers in 1975,� Coppola said. “I didn’t get one response.�

One of his father’s business partners, Mace Siegal, purchased Lakewood Center in Los Angeles County that year and was moving his company west. He persuaded Coppola to join him. Siegal, who founded Macerich Co. with the late Richard Cohen in 1964, remains chairman of the board.

So began Coppola’s education about shopping centers, which he considers a uniquely American institution.

“They’re a product of the department stores that were created in the early 1900s,� he said, and evolved into something grander through the suburban sprawl that followed World War II. Open plots of land became available for building huge indoor malls that could be easily reached by cars on new freeways.

Such now-traditional malls are the core of Macerich’s empire, and one of Coppola’s biggest challenges is to keep them appealing for modern shoppers. Tastes change and, like theme parks, malls need new attractions every few years to keep customers coming back.

A case in point is Santa Monica Place, which is essentially an old-school suburban mall plunked smack in the middle of a prosperous urban streetscape. With the public turning its back on the 1980s-era box in favor of the Third Street Promenade, an adjacent boutique-lined walkway, Macerich announced plans in 2004 for a radical makeover of Santa Monica Place.

The proposal was a major miscalculation on Macerich’s part. It called for replacing the mall with an outdoor shopping promenade and adding high-rise residential towers, offices for rent and a public park. Locals revolted.

Macerich was “not plugged in to the ethos of our city,� said Nina Fresco, chairwoman of Santa Monica’s Landmarks Commission. “We’re all about the beach.�

Chastened by the reaction, Macerich is back with a scaled-down plan that would lift the roof off the mall and extend the Third Street Promenade south across Broadway and into the mall’s center court. The new design has preliminary city approvals, and Coppola hopes to break ground by March.

In an unusual turn for a shopping center makeover, Coppola said, the entire mall except Macy’s will be closed during renovations.

When it reopens, perhaps as soon as fall 2009, the food court will be on the third floor instead of at the Broadway entrance and the tenant roster will be very different.

“There is clearly a need for upscale and luxury retail in this market, and we will be delivering retailers that can serve that demand,� he said.

The region should be ready for a fancier mall because, according to Los Angeles real estate tycoon Richard Ziman, Coppola has excellent timing.

“Timing is the first rule of real estate,� said Ziman, who sold Arden Realty for $3.2 billion during the market peak last year. “Art perceives opportunity and perceives timing.�

Ziman was behind a City of Hope event this month that honored Coppola and Siegal and raised $3.5 million for the charity. One of the biggest donors was Coppola.

Industry trends are pushing malls to offer more than shopping and entertainment, Coppola said. Macerich plans to include luxury condo towers, offices and perhaps medical facilities at some of its developments.

At older enclosed malls, Macerich and other owners are introducing outdoor additions to help them compete with new outdoor “lifestyle centers� such as the Grove in L.A. The ability to contribute to local economies and transform landscapes on such a scale has been one of the biggest lures of the business for Coppola.

“In most of our cities, we are the largest contributor to the economy,� Coppola said, through sales taxes and real estate taxes.

“What keeps me really inspired is our ability to have a generational impact on communities,� Coppola said. “Our perfect retail center is one people think of as their downtown or town center. Then we have really done our job.�

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(BEGIN TEXT OF INFOBOX)

Mr. Mall

Who: Arthur M. Coppola

Age: 55

Occupation: Chief executive and president of Macerich Co.

Education: Bachelor’s degree, Dartmouth College; law degree, Drake University

Personal: Married; four children; lives in Marina del Rey.

Affiliations: Chairman of the board of governors of the National Assn. of Real Estate Investment Trusts; member, Real Estate Roundtable board of directors