Business

CambridgeSide has found a formula for success

CambridgeSide draws more than 7 million visitors a year.
Lane Turner/Globe Staff
CambridgeSide draws more than 7 million visitors a year.

On a recent Tuesday, two 17-year-olds from Medford did something that might be considered extraordinary by today’s retail standards: They wandered a mall, shopping bags in hand.

They weren’t alone. Throughout the afternoon, the corridors of the CambridgeSide shopping complex in East Cambridge saw a steady stream of customers come through its doors.

The American mall has been put on deathwatch as the rise of e-commerce has upended the US retail industry, forcing thousands of stores to close. And while that’s fair to a point — a recent report from Credit Suisse predicted that between 20 and 25 percent of the 1,200 US malls will close in the next five years — the reality is that in many regions of the country, malls that are adapting to shoppers’ wants and needs are thriving.

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“The death of brick-and-mortar is highly exaggerated,” said Leon Nicholas, the chief insights officer at Kantar Retail, a Boston-based industry research firm. Malls that have the right demographics, location, and mix of stores are still drawing shoppers. And CambridgeSide — which is dropping Galleria from its name as part of a $30 million reinvention — is one of them.

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“There is no question that it is one of the better mall properties in terms of its performance around the country,” Nicholas said. The reason? “You have an urban-accessible mall that is surrounded by young, relatively affluent people who are drawn not to the anchors but the specialty retail in between.”

For 27 years, CambridgeSide has occupied a particular place in Boston’s retail landscape. When New England Development opened the complex in 1990, analysts wondered whether the $100 million complex, which included a shopping center, hotel, and office space, would make it in a faltering economy. But its developer, Stephen Karp, made the gamble that CambridgeSide would draw middle-class consumers who found Copley Place and Faneuil Hall expensive and unpractical, Downtown Crossing unsafe, and suburban malls just plain boring.

Over time, CambridgeSide settled into its role as an alternative to the well-appointed shopping centers on the other side of the river — a transit-accessible destination for the middle class (with cheap parking to boot). And its developers say that now, as an influx of new residential buildings and high-tech offices are popping up around Kendall Square, it is even better poised to serve a cross-section of the city.

Much of its success stems from the “right retail alchemy” of its tenants, said Nicholas. Despite having two anchor stores in Macy’s and Sears, which have struggled to stay relevant in an e-commerce era, the mall still pulls in shoppers to its more middlebrow, off-price stores like TJ Maxx and fast fashion brands like H&M and Forever 21. And that’s not going away, as a Wells Fargo survey of millennial shoppers found they preferred physical stores to online shopping, and typically seek out off-price stores, department stores, and big box stores.

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CambridgeSide also is still a haven for teens.

“It has more stores appealing to our age group,” said Melissa Tullio, a 17-year-old from Medford who had taken the train to Lechmere to go shopping. She and her friend, Emeline Antunes, were working the circuit, stopping at Charlotte Russe, Express, and H&M before checking out the sales at Pink, the Victoria’s Secret sister store that targets younger women.

New escalators brought patrons to the J. Crew store on the third level of the mall.
Lane Turner/Globe Staff
New escalators brought patrons to the J. Crew store on the third level.

“There’s not much in the Prudential price-range wise” for teens, Antunes said.

That accessibility is a large part of the mall’s appeal. CambridgeSide draws more than 7 million visitors a year to its mix of mid-market storefronts, said New England Development’s senior vice president, Issie Shait, and has consistently had occupancy rates in the mid- to high-90 percent range. According to Green Street Advisors, a real estate research firm, the country’s top-performing “A++” malls like Copley Place or the Glendale Galleria in Los Angeles typically earn more than $1,000 per square foot. In comparison, CambridgeSide ranks A-, with an average of $485 in sales per square foot.

But an A- is just fine with Shait. “This is not going to be, nor should it be, Copley Place,” he said.

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At CambridgeSide, the average shopper spends $144.83 per visit, approximately 45 percent higher than the US average. Similar class A malls account for about 70 percent of all US mall sales. It’s the far more isolated, anchor-dependent suburban malls that get the C and D grades and are struggling to survive.

Tourists may like to ogle the luxury brands downtown, but Shait said he regularly sees international shoppers buy a piece of luggage at TJ Maxx, and then wander from store to store. “They’ll walk around the mall just filling it up. It’s hysterical to watch,” he said.

And because its rents are lower than luxury malls, CambridgeSide is also one of the few places where brands can break into the Northeast if they’re looking to expand, said Jeff Donnelly, a retail analyst at Wells Fargo. “I think everyone aspires to luxury,” he said, “but the vast majority of people in the US shop right in the middle, which kinds of positions them as unique.”

So for a store that’s looking for steady sales, an A- mall might be a safe bet. But Shait admits that to stay relevant in its increasingly innovation-centric neighborhood, CambridgeSide needed to make some changes. In addition to its name change, the mall is undergoing a $30 million makeover that has left much of the building in a state of chaos.

With construction well underway, confused shoppers are being met with a series of cheeky signs: “Our escalator is in time out.” “Life’s too short not to change.” “Space reimagined for an innovation neighborhood.”

The updates were inevitable, said Shait. The escalators were breaking down and it was impossible to find replacement parts. The beige walls and ceilings screamed 1990s.

“There are a lot of very good fashionable tenants out there, they would walk in and the mall was all brass,” he said, sighing as he dodged construction one recent afternoon. The renovations, which will include new floor tiles, escalators, and energy-efficient lighting, are to be completed by the end of the year. A newly updated Apple Store, which has been under construction since last August, is also scheduled to open soon, and will be double the size.

“It was certainly time to catch up with everything else that’s going on around us,” Shait said.

In an age when the traditional shopping mall seems to be dying, the CambridgeSide mall is thriving.
Lane Turner/Globe Staff
In an age when the traditional shopping mall seems to be dying, CambridgeSide is thriving.

Cause and effect

By 2030, online purchases will account for 37% of clothing sales, up from 17% today.

By 2022, as many as 275 of the 1,100-plus malls nationwide — about 25% — will likely close.

SOURCE: Credit Suisse

Janelle Nanos can be reached at janelle.nanos@globe.com. Follow her on Twitter @janellenanos.