Caruso is bullish on Brand

Borders bookstore, with its three-story curved glass front looming over Broadway and Brand Boulevard, is on its last legs, selling everything not bolted down as its corporate parent descends into bankruptcy.

Adjacent shopping centers, the Glendale Exchange and Glendale Marketplace, have struggled for years. Across Brand Boulevard, the former Mervyns site has been vacant since 2008.

But Rick Caruso is on a Glendale shopping spree. In the last few months the developer’s Glendale empire — the 15.5-acre Americana at Brand and a corner strip mall on Central Avenue — expanded to include two new properties flanking the Americana and another 140,000 square feet inside the Glendale Galleria.

Caruso lured Nordstrom — one of four Galleria anchor stores — away from its home of more than 30 years and will place it in a new building on the properties he just acquired at Colorado Street and Orange Avenue.

“I’m betting on Glendale,” he said. “I’m making a big bet, and I think people can talk with their money.”

Caruso’s surge comes as other money has been walking away from downtown.

Raud Alamin, a Bay Area investor who owns the Borders building, said the bookseller has about a month to secure a tenant to take over its lease. The agency handling Borders’ assets has been contacted by two drug store chains about the Glendale site, he said, though a Rite Aid is open steps away at the Americana.

But Alamin said Borders may not consummate a deal on the timeframe set by the bankruptcy court.

“If none of that develops, by the end of April we would take over the property,” Alamin said.

Last year he was in discussions with outdoor gear retailer REI, but Alamin said talks have cooled. He said he also would consider selling the building.

“We’re exploring all options,” he said.

General Growth Properties, the Chicago-based owner of the Galleria, suffered a blow when Caruso struck his deal with Nordstrom, which, like many department stores, owned the property it occupied within the mall. It is the second anchor General Growth has lost in recent years, including Mervyns, which filed for bankruptcy in 2008 and closed all its stores.

General Growth acquired the Mervyn’s space, but has yet to find a new tenant.

Whether he backfills the Nordstrom space with one or several retailers, Caruso made it clear that he doesn’t want the redevelopment at the Galleria to stop.

“But the thing I’m most interested is the redevelopment of that whole wing,” he said, referring to Galleria II, the part of the center between Central Avenue and Brand, which includes both Nordstrom and the Mervyns site.

“The Galleria has sat there without being updated for years,” Caruso said.

In a letter to General Growth last week, Caruso proposed a complete makeover of Galleria II into condominiums, a hotel or office space.

General Growth has not responded, and the company’s spokesman, David Keating, declined to comment on the matter.

“Our focus remains on providing an unparalleled shopping experience at Glendale Galleria,” he said.

Commercial real estate agent Mark McGaughey, who was leasing agent for the Galleria from the mid-1970s to 1983, said everyone will benefit if Caruso and General Growth can work together on a strategy to update the space.

“The city of Glendale will function better and have higher sales if the entire downtown core is cohesive,” he said.

On the other side of Brand, change is also coming.

Glendale Marketplace was listed for sale several months ago and is now in escrow, according to several commercial agents. The firm listing the property, Jones Lang LaSalle, declined to comment. Caruso said he is not the buyer.

The 10 Mann Theatre screens at the Glendale Exchange will go dark at the end of June, while the lease for the four Mann theaters in the Marketplace runs through 2018, theater Chief Executive Peter Dobson said.

Dobson questioned whether Caruso’s expansion has benefitted the city. Nordstrom was already in Glendale, and Dobson said his business and retailers in the Exchange and Marketplace suffered as the city and Caruso teamed up to create the Americana at Brand.

“It’s terrible what has happened,” Dobson said. The Americana, he said, has “cannibalized what’s there.”

Caruso isn’t buying that.

“The Marketplace and the Exchange were suffering before we built the Americana,” he said. “They are poorly designed, poorly maintained and poorly tenanted.”

His efforts, he said, have “clearly been accretive to the city’s health,” with a 75-store mixed-use center replacing a sleepy part of downtown, a planned new Nordstrom and a chance to add other retailers in its place.

Caruso said he has nothing else in the works right now in Glendale, but, he said, that could change.

“If there is an opportunity to buy storefronts along Brand to the north of us, I would do it in a heartbeat,” he said. “I think that real estate is going to explode in value.”