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Malls are 'soft targets' for terrorism, experts say: Risks aren't scaring away holiday shoppers

December 17, 2007

The deadly shooting spree at a Nebraska mall this month highlighted a challenge confronting Simon Property Group Inc. and other shopping center operators: how to protect their properties from violent acts, or even terrorism, while also leaving them welcoming to shoppers.

Most retail real estate owners have ramped up security since the 9/11 terrorist attacks, though experts say shopping centers, like schools, remain "soft targets" for terrorism.

"Shopping center owners have been very concerned about security for their patrons for a long time," said local terrorism consultant Peter Beering. "The bad guys can import techniques that have been used far away."

But the owners rarely discuss security measures publicly.

"We do not disclose or discuss our enhanced security measures and/or proce dures that we have in place or may institute at any given time, some of which are visible to the public, with others intentionally less noticeable. Disclosure of such information could potentially compromise our efforts to provide a safe and secure environment," said Les Morris, a spokesman for Indianapolis-based Simon Property Group. Simon is the nation's biggest mall owner but doesn't own the Omaha mall where on Dec. 5 a gunman killed eight people inside a department store before fatally shooting himself.

In the aftermath of the 9/11 attacks, malls ramped up security, adding more patrols, more and better cameras, and planters and other large objects to redirect traffic near buildings. Mall owners also locked down heating and air-conditioning ventilation systems to virtually eliminate outside access, said Malachy Kavanagh, a vice president and spokesman for the International Council of Shopping Centers, a New York-based trade organization.

The trade group also initiated a terrorist-response training course for shopping center owners, Kavanagh said. Beering was on the committee that put it together.

Shopping centers are exposed in part because of the throngs who visit them, especially during the shopping season leading up to Christmas. Simon says its 379 properties in 41 states receive 2.8 bil lion visits a year.

Simon announced in March 2002 that it had purchased $200 million in terrorism insurance for its portfolio. CEO David Simon did not disclose the cost at the time, but called the premiums manageable for tenants, who ultimately shoulder the cost.

"It was extremely important that we secure coverage that would provide protection for our properties but not impose an unreasonable burden on our malls' tenants, many of whom are small-business owners," Simon said.

A Simon regulatory filing this year says the company now has up to $1 billion in coverage for certain kinds of terrorist acts, but still could take a substantial financial hit if one occurred.

"Our higher-profile properties ... could be potential targets for terrorism attacks due to the large quantities of people at the property or in the surrounding areas," the filing says. "Threatened or actual terrorist attacks ... could directly or indirectly impact our properties by resulting in lower property values, a decline in revenue, or a decline in customer traffic and, in turn, a decline in our tenants' sales."

While consumers are aware of the security issues and the threat of terrorism, they're flocking to malls anyway, said Richard Feinberg, a retailing professor at Purdue University and the director of its Center for Customer-driven Quality.

"They attribute [threats] to problems that are far away," he said.

Shoppers agree.

"You are going to run into [trouble] anywhere," said Annie Clark, who works in Indianapolis but lives in Crawfordsville. "But you always have to take precautions, especially during the holidays. I don't take my purse [when I shop] and I watch everybody."

Feinberg said imposing drastic security measures, such as installing metal detectors at mall entrances, would be an overreaction.

In Middle Eastern countries, like Israel, metal detectors and body searches in shopping centers are common. But those countries have far more political terrorism.

"That would have a very negative impact on shopping here," Feinberg said.

Added Beering: "The cost ... [would be] staggering and the cost of lost time would be greater. Absent a very specific threat ... [adding] metal detectors is not appropriate."
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