Simon Property begins layoffs; construction department hit
One official said the company expects growth to come from acquisitions, not new building.
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
BOARDMAN -- Simon Property Group is phasing out its engineering and construction management department in the DeBartolo Executive Building in Boardman, eliminating about 50 local jobs and an additional 25 field positions over the next 18 months.
Billie Scott, director of public relations for Indianapolis-based Simon, said officials running the giant mall development and real estate company have decided it is "more prudent" to outsource its mall building and renovation projects.
"Our future growth will be primarily in acquisitions of existing malls, not in building new malls," Scott explained.
Layoffs have begun
Layoffs have already begun in the department, which handled architectural design, engineering, construction, purchasing and project estimating.
Simon will retain some operations in the Youngstown area, Scott said. The Southern Park Mall in Boardman is a Simon property, and the company has a payroll department and some leasing functions still based in Boardman.
Scott could not say how many employees work in those remaining departments and did not have information on the layoff schedule. She said employees have been informed of the plans.
Simon hired outside contractors to design and manage its construction projects from 1960 until 1996 when it merged with Youngstown-based DeBartolo Realty Corp., Scott said. DeBartolo had its own construction department, DeBartolo Property Management Inc., so Simon kept it as a separate, wholly owned subsidiary, shortening its name to the DPMI group.
Not needed now
The industry is building fewer malls now than it did five or 10 years ago, she said, so a company-owned construction department is no longer considered essential.
Youngstown native Eddie DeBartolo Jr. acquired most of the family's stock in Simon last year, about 21 million shares, in a settlement agreement with his sister, Denise DeBartolo York.
DeBartolo Jr. was traveling Thursday and was unavailable for comment. His spokesman, George Farris, said DeBartolo was not consulted in the decision to eliminate the engineering and construction department and has no management or decision-making power with Simon, although he does have representation on its board.
Farris acknowledged that the shopping center industry is moving away from building new malls.
None of the 30 retail development projects DeBartolo Property Group has in various stages of development is an enclosed mall, he said. DeBartolo Property Group, which has offices in Tampa, Cleveland and Boardman, is DeBartolo Jr.'s real estate development company.
Instead of malls, Farris said, retail planners are building "power centers" anchored by a big-box store such as Wal-Mart or Target. Other trends include converting older malls into factory outlet centers, and designing mixed-use properties that include shopping, hotels, restaurants and office buildings.