County Malls Wage a War of ‘Class’ : Fashion Island Out to Be New Rodeo Drive
During a lunch break, a couple of construction workers on the new $60-million addition to Fashion Island were lounging in their pickup trucks, observing midday shoppers, when a gold Mercedes-Benz coupe streaked by with a bumper sticker that read “Born to Shop.”
“I’ve lost count of Mercedes,” one construction worker was overheard saying to his buddy. “But that’s the first born-again shopper I’ve seen today.”
There may soon be many more such shoppers. The Irvine Co., which owns the aging but profitable Fashion Island mall and surrounding Newport Center office development, is looking to convert even more upscale consumers to the gospel of glitz.
The real estate development concern has kicked off a $200-million project to upgrade the shopping center into a “Rodeo Drive South” and surround it with more expansive office buildings in hopes of emerging from the shadows of the immensely successful South Coast Plaza area development.
The Irvine Co. plans to add up to 70 new tenants to the 90 there now and 180,000 square feet of shops and restaurants to the 1.1 million square feet already there, plus $4 million worth of new landscaping. To lure night traffic to the center, the Irvine Co. is considering the addition of a myriad of evening attractions, including a nightclub, trendy new eateries and theaters.
The shopping center renovation is at the crux of the company’s larger plan to complete the development of the 600-acre Newport Center and improve the symbiotic relationship between the two massive projects. Besides Fashion Island, Newport Center houses one of the county’s largest and best-known office building complexes, where even the landlord, the Irvine Co., has its corporate headquarters.
Plans call for construction of one 16-story building, two 12-story office structures and a second major hotel. They would join 14 other buildings with 2.4 million square feet of office space, now on the rim of Fashion Island.
Despite its glamorous location--overlooking the Pacific between Jamboree and MacArthur boulevards--Fashion Island’s history has not always been a success story.
City Has Changed
When the mall was built in 1967, the words Newport Beach were not yet synonymous with nouveau riche . The Irvine Co. envisioned the mall as a state-of-the-art, regional shopping center that would cater to everyone from the Newport Beach housewife to the Santa Ana house painter. Just as South Coast Plaza would later have its Saks Fifth Avenue and Sears, Fashion Island would have its Neiman-Marcus and JC Penney.
But as the Newport Beach life style jetted economically ahead of the rest of Orange County, Fashion Island failed to quickly shift gears. Currently, the $53,268 median family income in Newport Beach is nearly 40% higher than that of Orange County as a whole. What, then, did the Newport Beach shopper want at JC Penney? Not much. But it took nearly 15 years for the center’s owners to recognize that and buy out the remainder of Penney’s lease and begin replacing other lower-end merchants.
In recent years, half-hearted attempts to appeal to local residents have shown little return at the cash register. Even as more upper-end merchants opened shop, many of their offerings have bordered on the stodgy, customers say. As a result, some shoppers took their business elsewhere.
‘Obsolete’ When It Opened
Some observers say the mall’s problems run even deeper.
“It was obsolete the day it was born,” said Sanford Goodkin, a real estate analyst in Del Mar who has been critical of Fashion Island’s design.
Even Irvine Co. President Thomas Nielsen concedes, “For whatever reason, Fashion Island isn’t what anybody wanted it to be.”
In planning Newport Center, the Irvine Co. anticipated a new freeway along the coast that would dump traffic at its doormat. But the freeway plans, protested vigorously by coastal residents, ultimately were scuttled by state highway officials.
Al Gobar, a Brea real estate economist, said he did a market survey for the Irvine Co. prior to the development of Fashion Island that concluded that its location would be a major handicap. Even the new plans “won’t warrant the expenditure,” he said. After all, he pointed out, “Half its market area is fish.”
‘Sick Baby’
Reg Jones, a Corona del Mar shopping center consultant who was one of Fashion Island’s first managers, said that from the start, Irvine Co. executives “knew they had a sick baby.” Only 10 months after the mall opened, he said, merchants already were complaining about a shortage of foot traffic.
But many who criticize the Irvine Co.’s past stewardship of Fashion Island are quick to credit Donald Bren, the entrepreneur who took control of the Irvine Co. two years ago, for making a valiant effort to wake Newport Center out of its slumber. “When Bren took over it was a real blessing,” said Bjorn Sedleniek, owner of Posh, a men’s clothing store and president of the Fashion Island Merchants Assn.
One of Bren’s first moves was to hire Poston Tanaka, former general manager for Earnest W. Hahn, a major Los Angeles builder of shopping centers, to head up the Irvine Co.’s retail activities and oversee the reawakening of Fashion Island. Bren told Tanaka to make the renovation of Fashion Island his top priority. “He said you’ve got to do it, do it fast and do it right,” Tanaka said.
The quickest way to turn the mall around, Tanaka said, is to change the nature of the stores and their shoppers.
“If you create the right tenant mix, sales volumes skyrocket,” said Tanaka.
Small Shops Sought
He said there are no plans to add more major department stores at the mall, which already has Neiman-Marcus, Robinson’s, Buffums, Bullocks Wilshire and the Broadway. Instead, the emphasis will be on increasing the number of small shops, which tend to reap higher sales per square foot.
The mix of business will be drastically improved, Tanaka said, when the trendy Atrium Court building--after numerous delays--opens in May. The building, which is rising on the site of the former JC Penney store, will house a collection of upscale specialty stores, including a posh Irvine Ranch Market, which operates restaurants and sells gourmet foodstuffs.
All of this will take time. Although one retail portion of the project could be completed by early spring, it could take a year before the City of Newport Beach holds its first public hearing on the remainder of the project. If the city approves the company’s plans, it would take another 15 years before the entire project is completed.
Tanaka believes the mall can show a marked improvement in a third of that time.
By following its newly charted course, Tanaka insists, Fashion Island can rise to No. 5 in sales among the region’s centers in five years.
Ranked Low in Sales
In a recent Times survey, Fashion Island ranked 10th in gross sales among the Southland’s 60 regional shopping centers and fourth in Orange County. South Coast Plaza ranked second, after Del Amo Fashion Square in Torrance.
Last year the sales at Fashion Island’s stores totaled $143 million, or $127 per square foot, while South Coast Plaza’s sales were more than double at $380 million, or $248 per square foot.
The promise of a revival at the mall already has attracted some new tenants and is being welcomed by most old-timers. Many say that Fashion Island, with its leisurely atmosphere and absence of crowds, is a better draw for wealthy shoppers than the hubbub of South Coast Plaza.
“The money just rolls out of the hills around here,” said Rebecca Taugher, manager of Apropos, a women’s designer apparel shop in Fashion Island. Taugher said the store’s owners are pleased with their business at Fashion Island and have rejected an invitation to move to South Coast Plaza. When the transition is completed, she expects Apropos’ sales to double.
Echoing those sentiments was Stacy Murphy, owner of Forty Love, a specialty tennis-wear shop. “We can have a very good day with just 20 customers,” she said. When the Atrium Court opens, she expects her business to improve 20%.
Some Merchants Cautious
Other merchants--some who are hardened to years of talk about big changes for Fashion Island--are more guarded in their comments. Larry Falkner, general manager of Silverwoods, a clothing store, is optimistic about the new focus on Fashion Island, but said there is a risk that the center may “overdo” its appeal to affluent shoppers. To the contrary, Thomas H. Barnett, manager of Neiman-Marcus, is concerned that new tenants might not be of the caliber that fits the “uniqueness” of Fashion Island.
Executives at South Coast Plaza, just six miles away, are mostly keeping mum about the Fashion Island renovation. But Maura Eggan, the plaza’s marketing director, did state, “Obviously, South Coast Plaza is not standing still. We have very ambitious expansion plans.” Among those plans are the scheduled openings of Broadway and Robinson’s department stores at the plaza in 1986. These stores may directly compete with their sister stores at Fashion Island.
Recent Irvine Co. studies show that 65% of the people living near Fashion Island drive to South Coast Plaza to do their shopping, while only 22% of those living near South Coast Plaza shop at Fashion Island.
Better Mix in Plans
“The only reason they go to South Coast Plaza is that Fashion Island doesn’t have the merchandise,” said Tanaka, who believes that the key to improving sales volume at Fashion Island is to improve the variety of stores.
The center’s shoppers have their own ideas. Jill Kent, a financial planner for a brokerage firm near the center, said, “I understand what they’re doing, and I suppose it’s right for the area, but I miss the days when you could drop into Penney’s and pick up an inexpensive wedding present.”
And Peggy Bergman, a Santa Monica housewife, said that renovation or not, she will continue to make the 60-mile round-trip trek for one reason only. “My mother’s hairdresser moved here, and Mom won’t go anywhere else.”
