Older shopping centers target of redevelopment.

Big-box centers with flashy superstores and huge value retailers have for years been siphoning both customers and tenants away from smaller community shopping centers. Meanwhile, many marginal mall properties struggled with high vacancies, financial instability and physical decay - their owners unwilling or unable to address the effects of structural changes in retailing.

But increasingly, capital is again seeking out strong returns in select smaller retail properties - which means more and more underperforming mall properties are now able to undergo the radical change that will preserve their value in the community, as well as in the real estate marketplace.

Witness the example of University Hills Mall in Denver, an enclosed community shopping mall that limped along nearly empty for seven years while a succession of owners, the City of Denver and the Denver Urban Renewal Authority struggled to remedy its accelerating decay. Relief recently came when a partnership of Greystone Realty Corporation and Goldberg Property Associates purchased the mall for $12 million.

The enclosed mall was demolished in August and will be redeveloped into a 250,000 square-foot community shopping center, anchored by a 66,000 square-foot King Soopers grocery store, a 52,000 square-foot Home Place and a 30,000 square-foot Office Max. The grand opening is set for July 1, 1997.

Conover notes many former stalwarts of community malls, like CVS and Foot Locker, are increasingly shifting to stand-alone big-boxes. Other traditional tenants are getting murdered by category-killers. Color Tile, a well-known home decorating store, recently joined a growing list of community mall mainstays that have closed down or scaled back operations, including Jamesway, Caldor, Clover Department Stores, Rickels Home Centers, Pergament Home Centers, Herman's Sporting Goods, Fayva Shoes, El Bee Shoes, Petrie Stores, Fashion Bug and Clothestime.

For some properties, the best answer for the community is redevelopment or radical repositioning. At other properties, a capital infusion used to improve physical appearance, amenities and tenant mix will revive a mall's competitive position, Conover says.

The fortunes of Broadway Mall, an older community mall in Hicksville, NY, were declining until a multi-million dollar make-over brought shoppers flocking back. The updated mall, complete with a multiplex theater, now offers convenience, atmosphere and the popular big-box Swedish furniture superstore, IKEA.

"Retailing must appeal to a full spectrum of shoppers' tastes," Conover says. "When all is said and done, there'll be as many different types of retail centers - small and exclusive, mass-oriented with strong entertainment components, value and discount approaches - as there are types of retailers."