Friday, April 9, 2021

This Day in Business History (James Rouse, Mall Pioneer and Urban Advocate, Dies)

Apr. 8, 1996—James W. Rouse, a developer who experimented with food uses, emerging tenants and community-based design to transform how Americans shopped and lived, died at age 81 of Lou Gehrig’s disease in Columbia, MD, a city he had helped bring into being.

Starting the company he would lead for four decades as a small mortgage banking concern in 1939, Rouse returned from WWII service to broaden his operations to include single-family dwellings, then apartment complexes and open-air (originally called “strip”) shopping centers, and finally, with Harundale Mall, enclosed, climate-controlled regional centers.

Part of that first postwar generation of mall developers, he differentiated himself from most because of his intense civic activism, particularly in evangelizing against suburban sprawl and for urban spaces born of a centralized operating vision.

Among other honors, Rouse made the cover of Time in 1981 and was awarded the Presidential Medal of Freedom. How many others who influenced urban planning could make a similar claim?

Film fans might recognize Rouse for a piece of trivia: as the grandfather of actor Edward Norton. But his impact on modern life was significant. Particularly in a commercial real estate industry centered on the present, it is worthwhile to recall how his methods might help shopping centers deal with their current substantial challenges.

Lessons to be drawn from these methods are simple:

*Try something out first on a small scale, locally;

*Figure out why this experiment worked or didn’t;

*See how that experiment might be adapted to other unique settings; and

*The private sector can  produce projects for the public good.

Rouse thought long and hard not just about how to lure people to malls but also how to bring them together in small groups once they got there. A great example was Paramus Park, not far from where I live in Bergen County, NJ.

It’s hard to convey to later generations who grew up with malls the impact of this project when it opened in 1974. Start with its food court, which allowed families weary from shopping to pause, recharge over a meal, and extend their stay, perhaps visiting more stores where they might spend more money.

That innovation was the product of trial and error at another Rouse mall, Plymouth Meeting Mall in Pennsylvania. According to an Edmund Mander article in the May 2004 issue of Shopping Centers Today, that attempt at open food areas failed because it was “deemed too small and insufficiently varied.”

Those mistakes were fixed in the New Jersey project. And locating the food upstairs meant that shoppers would have to notice a whole new set of stores on this second level.

Moreover, these shoppers also gazed raptly at what appeared on either side of the escalator—live trees and terraced gardens—and the sound of the piece de resistance, a waterfall that provided a natural acoustic backdrop to what was actually an artificial indoor setting.

The features of Paramus Park were widely incorporated in malls from coast to coast. Food courts particularly became a teen hangout, reaching a cultural apotheosis of sorts in the 1982 film Fast Times at Ridgemont Hall, whose characters worked and congregated there, in effect treating it as an adult-free zone.

As with Paramus Park, Faneuil Hall Marketplace in Boston resulted from improvisation. When it opened in August 1976, only half its tenants had been signed and an even smaller number—one-quarter—of its stalls were occupied.

What could have been a ruinous first impression for shoppers was obscured by numerous carts featuring unusual merchandise. The merchants behind these carts might have been reluctant to sign long-term leases but were more willing to try short-term rental agreements.

These pushcarts—incubators of the small businesses Rouse desired in his project—formed the foundation of temporary tenant (or, as they were later called, specialty leasing) programs at malls.

The distinction of Faneuil Hall didn’t stop there. It is regarded as the first of the “festival marketplaces” that would soon be built around the country—European-style retail emporiums built in urban areas (often near waterways) and catering to tourists. Rouse would import the concept to Baltimore (Harborplace), New York City (South Street Seaport), Norfolk (Waterside), and Miami (Bayside Marketplace).

Like Victor Gruen, the architect of Southdale, America’s first enclosed, climate-controlled mall, Rouse quickly became concerned by what he saw as the problems emanating from the new commercial behemoths following in its wake, noting:

"Our cities grow by sheer chance--by accident….A farm is sold and begins raising houses instead of potatoes--then another farm. Forests are cut; valleys are filled; streams are buried in storm sewers....Thus, bits and pieces of a city are splattered across the landscape. By this irrational process, non-communities are born--formless places without order, beauty or reason, places with no visible respect for people or the land. Thousands of small, separate decisions made with little or no relationship to one another, nor to their composite impact, produce a major decision about the future of our cities and our civilization--a decision we have come to label 'suburban sprawl.' What nonsense this is! What reckless, irresponsible dissipation of nature's endowment and of man's hope for dignity, beauty, growth!”

Though blunt about this increasing reality, Rouse was also ultimately optimistic about what could be done to counteract it, as seen in the title of the October 1967 speech in San Juan, Puerto Rico, from which this quote is taken: “Cities That Work for Man–Victory Ahead.

Just as the specialty leasing program at Faneuil Hall served as a kind of laboratory for new retail concepts, Columbia, MD became a petri dish for Rouse’s ideas on urban revitalization. Opened the summer before his San Juan address, it represented his attempt, as noted in Jimmy Stamp’s 2014 Smithsonian Magazine article on Rouse, to create “a culturally diverse, integrated city where kids walked to school and the office was just a quick bus ride away.”

By the early 1990s, many developers recognized that malls were becoming increasingly homogeneous. Much of that had to do with how quickly the industry adopted Rouse’s innovations.

But Rouse was so restlessly intelligent—so able to improvise a solution to a problem—that I suspect that, had he continued to stay active in retail real estate instead of stepping down as CEO of The Rouse Company in 1984, he would have come up with more ideas that would have broken the increasingly cookie-cutter mold into which malls had settled.

Since the 1950s, The Rouse Company had been publicly traded, and for that reason its founder often told employees, “We're for sale every day."

But two years after his death, when the company formed a real estate investment trust (REIT), it opened itself up to the competitive pressures that hastened consolidation of ownership among the nation’s regional and superregional malls around the millennium. It ended up being sold in 2004 to Chicago-based General Growth Properties (which itself would be acquired by Brookfield Property Partners 14 years later).

No matter how malls emerge from the crisis hastened by the current pandemic and recession, they will undoubtedly move away from the commodity-centric markets of the postwar development boom to James Rouse’s vision of thriving civic anchors filled with enticing food fare, entertaining, experiential spaces and community institutions such as libraries, post offices, fountains, and churches. They will embody his simple, consistent message: avoid sterility and promote vitality.

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