| Subject: Melvin Simon, Who Sold America on Malls, Dies at 82 |
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Date Posted: 09/17/09 12:56:09pm
Melvin Simon, who helped create the shape of suburbia by developing shopping malls, eventually owning more of them than anybody else in the world, died Wednesday in Carmel, Ind., a suburb of Indianapolis. He was 82.
Les Morris, a spokesman for the Simon Property Group, announced the death but gave no cause.
Mr. Simon, who grew up in a $30-a-month walk-up apartment in the Bronx, and never lost his raspy New York accent, started his real estate empire by building small strip malls in Indianapolis. He expanded ever outward, first in the Midwest, where he later helped develop the giant Mall of America, and then around the world. In many years, he would open a half dozen shopping centers, compared with one or two for most major competitors.
Simon Property — which is publicly held but controlled by Mr. Simon and his brother, Herbert — owns 386 properties in North America, Europe and Asia, comprising 244 million square feet. It is the largest mall operator in the United States, with 2.8 billion shopper visits each year and sales in excess of $60 billion.
It is the nation’s largest retail real estate investment trust as measured by market capitalization.
John Bucksbaum, chairman of General Growth Properties, the second-largest mall operator, said in an interview on Wednesday that an “aura of excitement” surrounded Mr. Simon, who he said was “always willing to experiment.”
In an e-mail message, Robert S. Taubman, chairman, president and chief executive of Taubman Centers Inc., another major mall operator, called Mr. Simon “one of the key pioneers in an industry that became one of the most important in America.”
Clearly, Mr. Simon was in the right place at the right time, as postwar Americans were eager to drive their cars somewhere in the new suburbs to spend money. But he did more than buy cornfields on the cheap. He helped develop the business model for modern mall operators:
Attract big anchor tenants like department stores by charging them less rent. Sign up a prestigious anchor even before a shovel is turned, so that banks will finance much or all of the development. Then charge smaller adjacent stores proportionately more. Require stores to pay a premium over basic rent if their sales exceed a certain level.
Burt P. Flickinger III, a consultant to the consumer industry, said Mr. Simon had an “uncanny ability” to identify the kinds of merchandise that would be successful. He also was ahead of the curve in foreseeing that department stores would be challenged by stores concentrating on a single area, like electronics, Mr. Flickinger said.
Among the company’s most prominent projects, which were often done with partners, were the Mall of America in Minneapolis and the transformation of the old Gimbels store in Manhattan on 33rd Street into a vertical urban mall.
Mr. Simon was one of the first to attract movie theaters into shopping centers, after noting that huge parking lots were largely vacant in the evening. In the late 1970s and early 1980s, he ventured into movie production himself. By far his most financially successful effort was “Porky’s” (1982), a raunchy adolescent classic.
In 1983, Mel and Herb Simon bought the Indiana Pacers professional basketball team, which city leaders feared would move to Sacramento. They promoted Donnie Walsh from assistant coach to general manager, and reached the Eastern Conference finals six times in 11 years. (Mr. Walsh is now the president of basketball operations for the New York Knicks.)
Melvin Simon was born in the Williamsburg section of Brooklyn on Oct. 21, 1926. When he was a young boy, his father, a tailor who had emigrated from Central Europe, moved the family to the Bronx, where Mel grew up. He excelled at school and graduated from the Bronx High School of Science. He graduated with a degree in accounting from the City College of New York.
He then served in the Army and was stationed at Fort Benjamin Harrison in Indianapolis. He supplemented his military pay by selling encyclopedias door to door. After his discharge, he accepted a job as leasing agent for $100 a week.
“In a couple years, I decided I wanted to be the person to make the decisions,” he said in an interview with Indiana Business in 1991. “That’s how we got into developing.”
Herb and the other brother, Fred, went to Indianapolis to work for the company. Fred resigned in 1983 to pursue other interests. Mel owned two-thirds of the original company, Melvin Simon & Associates, with Herb owning the rest.
The company went public as Simon Property in 1993 in what was then the largest initial public offering in the history of real estate investment trusts. The Simon family remained the largest shareholder. Forbes estimated Mr. Simon’s personal wealth at $1.3 billion.
Mr. Simon’s first marriage, to Bess Meshulam Simon, ended in divorce.
In addition to his brothers, Mr. Simon is survived by his wife of 40 years, the former Bren Burns; his daughters, Deborah Simon, Cynthia Simon Skjodt and Tammy McCauley; his son David; and 10 grandchildren. Another son, Joshua Max Simon, died in 1999.
In his early days in business, Mr. Simon had a reputation for flamboyance. He favored tomato-colored suits, and an often told story depicts his throwing a shoe at Herb during a business meeting. He was always known for attentiveness: Forbes in 1989 reported that he took the call from a merchant upset about signs in a parking lot.
“Why should he call some stranger?” Mr. Simon said.
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