The MacNeil/Lehrer Report; Interview with James Rouse

JIM LEHRER: Good evening. Normally the opening of a shopping center does not qualify as a major news event, but there was one in Boston last weekend that does. More than 100,000 people were there; so were the Boston Pops Orchestra, sports and show biz celebrities, clowns, jugglers, street musicians and a lot of politicians. They were all there to celebrate -- and celebrate is the correct word -- the fact that the Faneuil Hall Marketplace was now completed. There were many different things to celebrate: the saving of some of Boston`s history, the revitalizing of a rundown section of the city, the reversing of the old "downtown is dead and gone" syndrome, as well as the turning around of several gospel-like rules on retailing. They also came to celebrate the man who pulled it off, the well-known developer, James Rouse. Rouse is clearly the hottest, most sought-after developer of his kind in the business today. After spending years building the famous new town of Columbia, Maryland, and suburban shopping centers all over the country, he has now turned his attention -- and his energies - - to America`s decaying downtowns. And Mr. Rouse is with us tonight to discuss some of the whats and whys of it all.

First a detailed look at the Boston project with this film report from reporter Paul Solman of Public Station WGBH in Boston.

PAUL SOLMAN, WGBH, Reporting: This is the Faneuil Hall Marketplace, a twentieth-century renovation of nineteenthcentury market buildings on the site of the famed eighteenth century Faneuil Meeting Hall. Flanked by the $200 million government center project and the city`s restoration of its waterfront, this is a true Cinderella story of retailing, a project which has received national attention since it opened in 1976. It may well be the brightest light in the Rouse development empire. It attracts a million visitors a month, as many as Disneyland on one-tenth the area. It takes in about $50 million a year in retail sales, it generates twenty tons of garbage a day.

The marketplace is made up of dozens of restaurants and food stores, small shops and boutiques, many featuring relatively expensive merchandise. There`s a distinct sensibility to it all, one which attracts a distinct clientele: about thirty percent tourists and the rest suburban shoppers, students and downtown office workers and professionals.

For the retailers the mall is a bonanza. Jack Jensen sells British soaps, jams and jellies in this tiny shop, 300 square feet. Rent is $500 a month, or ten percent of sales, whichever is higher. Ten percent of sales is much higher.

JACK JENSEN, Proprietor: The volume that we`re enjoying, for example, in this one store is probably three times what one would really receive in sales in any other shopping center in the United States.

SOLMAN: Even the proprietor of a shoeshine stand can churn out dazzling profits. She says she invested a total of $3,000.

How long did it take you to make that money back?

JANE DEERING, Proprietor: I was really surprised (laughing) -- almost immediately.

SOLMAN: But don`t rush down here to make your fortune just yet; all retail space is booked, and there`s a long waiting list, even for pushcarts.

From the Rouse Corporation`s point of view, the more money retailers take in the better, since it charges most storeowners ten percent of their monthly sales.

In a central Quincy building, retailers take in an average of $285 per square foot per year. Compare this to a successful suburban shopping mall, which is doing respectably at $100 a square foot. There are shops here, however, that do $2,000 a foot. Workon a percentage of sales, the Rouse Corporation thus makes big money by squeezing maximum dollars out of minimum space.

JOHN BOORN, V.P., Rouse Corporation: Faneuil Markeplace represents to us a major step -- almost a culmination, if you will -- of our attempts to get much higher productivity out of a given amount of square footage. The shops are much smaller than our usual retail centers. We have relied heavily on the owner, the entrepreneur, the single proprietorship kind of operation in which the per-square-foot sales have increased dramatically in much, much smaller stores than we usually put into our malls. We have a national trend in this direction, but I think Faneuil Marketplace epitomizes that trend.

SOLMAN: Ten years ago Cambridge architect Ben Thompson drew up a vision of all this. Thompson has created everything from housing at Harvard to a hotel in Abu Dhabi. He also founded the trendy Design Research retail chain and built its Cambridge home.

BEN THOMPSON, Architect: We proposed, let`s say twenty or thirty restaurants, and we proposed small and very original special food places, places to sit, outdoor cafes, flowers, trees and all those things that frighten great economic minds and many city planners.

SOLMAN: To put together the financing for Quincy Market and make this model into a reality, Thompson needed a developer. But one after another didn`t work out. Finally, in 1972, Thompson contacted James Rouse. Six years later, after a ten million dollar investment of city and federal money and another thirty million rounded up by Rouse, the project is in place.

With the opening of the north market building the expansion of this project will be over. Attendance and sales will presumably level off, and the Rouse Corpora tion, although it owns fifty percent of the project, will focus its attention on other cities.

LEHRER: Mr. Rouse, from your point of view what was the major problem in getting faneuil Hall off the ground?

JAMES ROUSE: Well, the major problem was very clear: it was the state of mind that people have about the American city. It was skepticism, disbelief that it could work; bankers didn`t believe it could succeed and we had great difficulty financing it; merchants didn`t believe it could succeed and we had great difficulty leasing it. And it wasn`t because any of them were mean or nasty or disagreeable, it was simply that there was no track record of success on retailing in the center city; there`s been a steady bleeding away of retailing to the suburbs. So that our biggest single problem was to make people believe that this could succeed.

LEHRER: What caused you to believe it would succeed?

ROUSE: Well, we`ve worked at the city in our company in a lot of different ways, and it`s been our belief for a long time that there`s a deep yearning on the part of people for a lively, festival marketplace at the heart of the city, that if you can create the environment in which this will occur, people will want it, seek it -- that people really would like the intimate, across-the-counter contact with people who run their own stores, that they would like to get away from the prepackaged distribution centers that many stores have become, that a highly personal, small, intimate, lively marketplace would have very deep human appeal.

LEHRER: And you had no doubts about it when you were going to the bank. You had problems raising money in Boston for the Boston project, did you not?

ROUSE: Yes, and that`s really -- I`ve said that a lot, and it shouldn`t be misunderstood as thinking that the banks were bad people. Why is it going to succeed, was their legitimate answer. You`ve got no department store pulling for you, you`ve got nothing there; it`s a dead, worn out area -- why is it going to succeed? And their skepticism was understandable.

LEHRER: What did you tell them when they asked why and why you were so convinced? You couldn`t prove it, could you?

ROUSE: No, we could not prove it.

LEHRER: Why did you feel that? I`m still intrigued with that.

ROUSE: Well, we`ve worked with a lot of people in a lot of places, a lot of stores; we think we`ve come to understand something about what it is people seek. We had the same kind of disbelief when we started a new city; we had it when we first did an enclosed mall -- merchants wouldn`t believe that they could be separated from visibility on the highway. You can`t feel sure about these things, but if you`ve got a rational hunch, then you have to have the courage to chase it.

LEHRER: Is Boston and the Faneuil Hall Marketplace a special case, or do most cities have the same potential for similar developments?

ROUSE: We`re going to find that out. I think Boston is a special place, all right; it`s an extraordinarly civilized city, a lot of central city living, remarkable people. in their response to this. I must say, it`s been overwhelmingly greater than we could have predicted. But I believe that to a greater or lesser extent that this same yearning exists in almost every American city, that in the right place under the right circumstances there is a vacuum that can be captured by creating this kind of a festival place at: the heart of a city.

LEHRER: All right, let`s take a place -- the vacuum, as you say, that the Faneuil Hall Marketplace fills, in Boston`s case. Where do those people come from? In other words, who`s losing the business that the Faneuil Hall Marketplace is now getting?

ROUSE: That`s always a very hard thing to find in retailing. It probably isn`t noticeably being lost by anyone, because the total of retail sales is so huge in a metropolitan area such as Boston that a fraction of one percent will create a very successful place. It comes from everywhere. But at the same time, it creates business. A large part of shopping is entertainment. There are a great many people, I predict, who will be coming to Faneuil Hall Marketplace having a good time there, who may not spend the next weekend in New York or may defer a trip or may not do something else. I think that the entertainment aspect of shopping is very important, and very important to Faneuil Hall Marketplace.

LEHRER: All right. Boston is not your only venture into downtown. Your Philadelphia project, the Gallery, is now a year old. The Gallery is a four-story, glass-enclosed shopping area with 125 small shops and stores sitting between two major department stores. It`s right downtown on Market Street in an area that had pretty well been given up on as hopeless for rehabilitation. What made you think it wasn`t hopeless?

ROUSE: Well, the same kind of thinking. This is a very different place. There was the same kind of skepticism, I might say, on the part of bankers and merchants and business people, but here we had a great department store in Strawbridge & Clothier, and we had Gimbel`s abandoning their old store but building a new one across the street, and we believed that if we could create a dramatically beautiful place between those two stores, we could bring 125 new stores into an area that had been doing nothing but going downhill and that they would be very successful. And that happened. It, together with Boston, as two very different experiences,, brings back a real shaft of hope for what can happen in downtown in the American city.

LEHRER: You know, before the Gallery came in, that particular area there -- Market Street East, I believe it`s called -- was a shopping area primarily for low-income blacks. Is it still primarily a shopping center for low- income blacks?

ROUSE: Well, it wasn`t even that primarily before; it looked like it, but there were all kinds of people there in the stores at that corner Actually, about thirty-five percent -- we took a survey a year before we opened the Gallery, and the shoppers were thirty-seven percent black and sixty-three percent white, and although there has been a huge increase in the volume of business, the shoppers now are about thirty-five, thirty-seven percent black; and the people have come from everywhere. It`s just we were able to show statistically that there were more families with incomes above $15,000 a year, within ten minutes of that location that within ten minutes of any regional shopping center in the Philadelphia metropolitan area. These were people all through downtown who weren`t being served with dramatic, beautiful, convenient, lively re

tailing.So what we have done .is drawn on those people, as well as bring some others in from further out.

LEHRER: You know, while you and others were celebrating up at Faneuil Hall in Boston over the weekend, also over the weekend there were some pickets down at the Gallery in Philadelphia, some blacks protesting the fact that most of the shops in that area, in the Gallery, were owned by whites, and they say they`re profiting from the public expenditure, public investment of $22 million which went into the Gallery project. How do you respond to that?

ROUSE: Well, I very much understand the wrath and frustration of black people in our country. I think that they have been denied and oppressed, and it still occurs. And therefore the breaking out of that frustration isn`t always rational. Here I don`t think it`s rational; I think that this project serves black people as well as white, it created a lot of jobs for black people. There are black merchants, and we try to create more; we try hard to do it, and succeed sometimes. I don`t really think that the activity at the Gallery was against the Gallery;

I think there were other issues involved in Philadelphia that made it crucial.

LEHRER: Finally, on this subject on the downtown zone, I`m sure -

I know for a fact that you`re being contacted right and left now by cities all over the country saying come, we`ve got an idea to revitalize our downtown area. What kind of criteria are you using now in deciding the ones to go with and the ones to reject?

ROUSE: Well, the first thing is the city`s got to be ready to do what it wants to do. There are a lot of cities with a bright spark of desire but that aren`t equipped to do anything. There isn`t the location, there is not the opportunity. And the first thing that a city has to do is make a decent, effective plan for what is to be accomplished -- it`s got to be sure there`s access, got to be sure there`s parking, got to be sure that a site has been assembled and acquired. In Boston and Philadelphia, when we were invited to come in, the site was there, we were able to make an intelligent, sensible deal for the city and for us, and that`s the first condition that the city has to get itself in. There are many cities working to do that, cities like Milwaukee, where we`re working now, and Baltimore and others.

The second condition is that it must be in the right location. There are many cities that have an old railroad station or an old theatre district or something else that has a romantic note about it, but a romantic place won`t substitute for a wrong location.

LEHRER: When you say location, you mean where people are, where people live and where they can get to.

ROUSE: Well, to b e successful downtown I think that place has got to be convenient to and appeal to the downtown business community, the men and women who are there during the day. It`s got to be accessible and accepted by people who would come at night for dinner, and for shopping at night. And that means access to the outlying population away from downtown. It`s got to have parking, and it must have parking that is reasonably priced. And then there must be that sense of city about the place that people are prepared to love their city again. That isn`t always true.

LEHRER: All right now, Mr. Rouse, you haven`t always been interested in downtown. Quite the contrary, in fact. Suburban shopping malls have been your company`s major enterprise. One of your latest is this one in Augusta, Georgia. You`ve built thirty-five of them so far in places like Paramus Park, New Jersey, Cherry Hill, New Jersey; others are in Baltimore; Tampa, Florida; and Fort Worth, Texas. You have three more under construction and six others are in various stages of development, is that correct? Is that an accurate...?

ROUSE: That`s a good summary.

LEHRER: You know, some might say, Mr. Rouse, that you and your suburban malls have been part of the downtown`s problem, building all these malls which drain away from downtown. Do you see it that way?

ROUSE: Not quite. There are two different situations, I think, in the American city: the big American city, the American city of let`s say 500,000 people and on up, could not really accommodate at its heart the retailing that needed to be done in an expanding, growing metropolitan area. The development of regional centers on the major highways at the edge of a city was a rational thing to participate in the retail growth of the metropolitan area. But in all cities, little and big, downtown had the opportunity to play, and should play, a much more important part in retailing than it has over the last fifty years. I`ve said many times, and I believe it to be true, that the moderate-sized city of 250,000, 300,000 people and less really doesn`t need a regional shopping center if the people, the city, the state, the government somehow had been equipped to go in and make the downtown function as it should. But that readiness didn`t exist, either in state of mind or in ability to act, and therefore there was a real vacuum even in smaller cities. The hope would be for the country, I think, that the smaller cities would find a way to make downtown function effectively; and that doesn`t just mean closing a street. It means access, it means parking, and it means creating a beautiful, lively place that is an environment more attractive, more appealing than a regional shopping center.

LEHRER: And remove the need for a regional shopping center.

ROUSE: That`s right; that`s right. And in a market area of 250,000 people, downtown alone could do that job, if it would do it.

LEHRER: Some have suggested, as you know, that the country is rapidly becoming overmalled, there are just too many of them; that`s the solution to the problem, put up a malled shopping center. Do you agree? Is that idea getting carried away with itself now?

ROUSE: Well, it`s our experience that the only unsuccessful malls in America are those that are badly managed; and there are a good many. But there are very few circumstances in which major regional department stores go into a location with stores in between that can`t be successful. Now what this means is that if they are successful there is an obsolescence in retailing: strips along the highway, strip centers, corner stores that really aren`t convenient, aren`t attractive, don`t meet the contemporary demands or yearnings of people. And therefore what suffers is not so much the malls as it is the obsolete retail space; that`s what is losing out in America, I think.

LEHRER: All right. Much of your national reputation before Faneuil Hall in Boston came with the development in the mid 60s of your new town, Columbia, Maryland. Located between Washington and Baltimore, the idea was to create a town from scratch with every physical and social need thought out ahead of time. It now has a population of 50,000 people, one of those residents being none other than you, James Rouse. Columbia has been open now for eleven years, is that not right?

ROUSE: That`s right.

LEHRER: What`s your verdict on it?

ROUSE: Well, it`s a very heartening experience. I think that in Columbia it has been possible for people to live in a sense of community with one another, with openness towards each other; I think the individual creativity of people has been ignited, enabled, brought forth; I believe it`s extremely convenient. You must think of Columbia as an alternative to sprawl and as against a mass of suburbs thrown across the landscape with schools here and churches there and shopping somewhere else. The fact that this is a well-planned community with stores and churches and schools and public transportation and recreation areas, it just provides a magnificent life compared to the disorder and accident of sprawl.

LEHRER: You set out to have racial and economic diversity, even within neighborhoods in Columbia. Has that worked?

ROUSE: Yes, it has worked. I guess one of the proudest aspects of Columbia is the remarkable racial openness -- a black-white openness, but this in turn has made, surprisingly, a lot of other people comfortable. There are seventy-five Chinese families in Columbia; I wouldn`t have thought that until I stumbled upon it as a fact, and I think they`re there because it is such a racially comfortable place to be.

LEHRER: You know, the enthusiasm for new towns has dropped off considerably in recent years. Why is that?

ROUSE: Well, it`s a great mistake; it`s a great danger to the United States, because we do know how, now, to develop cities more rationally than by the accident of sprawl, but what happened when the great recession came in `73-4-5, that it caught a whole federal program of new towns just getting under way. And it smashed them. And that of course was a tremendous cost to the federal government; it caused disillusionment....

LEHRER: Gee, whiz, new towns won`t work.

ROUSE: But what it really meant was that there`d been a severe economic blow before they`d had a chance to get going. And that was too bad.

LEHRER: You still think it`s a viable idea.

ROUSE: I know it is.

LEHRER: Look, some other projects that you have under way: one involves housing for low-income people here in Washington. Tell me about that particular project.

ROUSE: Well, we face a real problem in this country that we aren`t able to deal with yet very effectively, and that is that we have large numbers of very poor people living in dreadful circumstances. Our public housing program is very limited and is not going to grow in very large numbers, and the bottom limit that we can come down to in private housing is quite high; and in between the future for many poor people is just hopelessness. This program by a volunteer group called Jubilee Housing, Inc., formed out of a church group, has as its purpose rehabilitating housing for the very poor where they live, in those apartments -- not moving them. It doesn`t mean making fancy living, but it means making fit and livable places, and doing it in very large part through volunteer effort, of people coming in to help the tenants, with the tenants themselves also working to fix up the apartments, to paint them, clean them up, make them fit, and then, by raising public money from private contribution to do the work that volunteers can`t do. This started with ninety apartments, two apartment buildings in what`s called the Adams-Morgan area up near Columbia Road, and those ninety apartments are being taken step by step into a livable condition with white and black volunteers working with people in the apartments. There are now two other buildings that have moved forward. It not only is important in what it`s doing for better housing, and it`s doing that, but it`s causing these people -- average income $5,500 a year per family -- to feel a sense of hope and support and somebody cares. It`s still new; been working at it about four years, Jubilee Housing has. But I think that it`s going to grow, going to spread and going to become a very effective part of finding housing for the poor in Baltimore. Incidentally, HUD just made a grant of $1,800,000 to Jubilee Housing to help it in this effort.

LEHRER: There are a lot of other things we could talk about -- your development of a new capital city in the African nation of Tanzania, an awful lot of other things -- but let me ask you in the minute we have left, what else is in the back of your mind? There are all these many things we`ve talked about; is there any other great idea or new idea out there that you want to try in the development area?

ROUSE: Well, I guess my hope and our company`s hope would be that in some city in America you could take hold of a big enough part of an old city to remake it into the best that it ought to be. We continue to look at the American city as a problem to be dealt with; if we can only find an American city, American cities, that will ask themselves what would we be like if we worked? What would be the Perfect city? And then try to make it that.

LEHRER: All right. And on that we have to leave it. Mr. Rouse, thank you very much for being with us tonight.

ROUSE: Thank you, sir.

LEHRER: See you tomorrow night. I`m Jim Lehrer. Thank you and good night.