Galleria Proves Itself in Revival of Downtown
The crush of holiday shoppers last month at the Glendale Galleria ended a record retail sales year that officials say will net the city nearly $3 million in sales taxes, strengthening its position as Glendale’s largest source of sales tax revenue.
That figure gratifies city officials who once faced criticisms that the mall would not make money for Glendale and would destroy its small-town character. Celebrating its 10th anniversary this year, the Galleria is, by most accounts, a huge success.
Though the Galleria has displaced residents and businesses and brought more traffic and crime to the city, the $160-million, three-level mall has lured shoppers back to Glendale, which had suffered a steady flight of customers to other cities during the 1950s and 1960s. The mall’s success has also catalyzed subsequent retail improvements and office construction downtown, officials and businessmen say.
Redevelopment Zone
“Cities are most motivated by putting themselves back on the map,” said Christopher Leinberger of developer Robert Charles Lesser & Co., a Beverly Hills firm that advises cities on redevelopment. The Galleria anchors the southern end of the city’s 227-acre redevelopment zone, which stretches south from the Ventura Freeway to Colorado Boulevard, mainly between Central and Maryland avenues.
“The role retail plays is crucial to revitalization because it provides activity over a 12- to 18-hour day, and it tends to be an anchor for office development,” Leinberger said. “Certainly, Glendale has done it better than most cities.”
Jim Munson, manager of the Coldwell Banker branch in Glendale, said the Galleria “has propelled Glendale into the future.”
“Now, there is a tremendous demand from retailers who want to be part of the Glendale marketplace,” he said.
With its six major department stores and 240 shops, the Galleria is among California’s top five retail centers in sales. Total sales for 1985 are expected to be near $300 million when the Christmas season is tallied.
Expansion Plans
Plans for a third wing, expected to be announced this year, may make the Galleria second only to Orange County’s South Coast Plaza. The addition is expected to be on a block bounded by Colorado, Orange and Harvard streets. It probably will be connected to the southeast corner of the mall near Buffum’s department store, with a second pedestrian bridge over Central Avenue.
City officials and developers say they want the next phase of the Galleria to include high-priced department stores such as I. Magnin and Bullock’s Wilshire, plus an entertainment attraction such as an ice-skating rink or movie complex.
“We need to increase the shopping day, the experience of coming to the Galleria,” said Daniel W. Donahue, chairman of the board of Donahue-Schriber, formerly John S. Griffith & Co., which also developed Galleria II, the mall’s first addition.
The latest expansion, like the other two parts of the mall, is to be financed with a combination of city and private funds, under the aegis of the Glendale Redevelopment Agency. The city has issued about $45 million in bonds to buy additional land for the Galleria, build parking garages and make other improvements.
The annual cost of amortizing the bonds, however, is covered by the additional $1.1 million collected each year in increased property taxes derived as a result of improvements to the Galleria property during the past 15 years.
The sales tax income from the Galleria provides about one-fifth of the city’s total sales tax revenue, which has become increasingly important since property taxes were limited in 1978 by Proposition 13. The city uses half the sales tax revenue for general funds and sets the other half aside for capital projects. That has helped Glendale to become one of the few cities in the state that can afford to pay cash for its construction projects.
New Jobs
In addition, the Galleria has provided about 4,000 new jobs, which have added to the city’s overall economic health, city officials said.
The price of success, however, has been substantial.
The large crowds attracted to the Galleria include “a certain element who believe in taking something for nothing,” said Glendale police Sgt. Dean Durand, who heads a four-man police substation inside the mall. Of 26 crime-reporting areas in the city, the area that includes the Galleria has the largest number of reported thefts, burglaries and car thefts, police statistics show. But for personal safety, the Galleria ranks as one of the safest spots in the city, Durand said.
The Galleria has also drawn its share of complaints because of heavy traffic on adjacent streets and the difficulty of finding parking despite the 6,200 spaces in its two garages. But city officials say they prefer those problems to the ones created by a dormant commercial district.
Many Shops Closed
More than 100 businesses and 400 residences were leveled to make room for the Galleria. Although the city paid fair market value for properties and for the cost of relocating the businesses, many shop owners who rented space in what had been a low-cost commercial area chose to close rather than move to higher-rent areas in or outside the mall.
Glendale locksmith Harry Monroe, owner of Advance Key and Lock for 17 years, said he saw a lot of clients along Brand Boulevard close their shops because of the Galleria, even though they did not face demolition.
“The Galleria pulled a lot of business off of Brand,” said Monroe, who still spends most of his time working at his Colorado Street store. But Monroe said he is glad he decided 10 years ago to risk a $30,000 investment to open a second store inside the Galleria, next to one of its entrances. “We get an awful lot of walk-in traffic,” he said.
80% Chain Stores
Of the 240 shops at the Galleria, about 80% are chain-operated. For the eight Glendale merchants who had the resources to relocate in the high-rent Galleria from downtown storefronts, the risk apparently has paid off.
Jeweler Don Kirshner has owned a Glendale business for more than 30 years, and most of his shops were on Brand Boulevard. He was one of the first merchants to sign up for a Galleria location.
“Business is substantially more than it was on the street,” Kirshner said. “Obviously, if I didn’t make the move here I would be dead.”
Among other merchants who moved into the Galleria and succeeded are other jewelry stores and a music store.
Consumer dollars from the surrounding 10 to 15 miles--from Northeast Los Angeles and from the San Fernando and San Gabriel valleys--are being spent in Glendale because of the Galleria, city surveys indicate. City officials and business consultants say it is impossible to measure how much business the Galleria has taken from retail areas in Northeast Los Angeles and the San Fernando and San Gabriel valleys. Where business is slow, however, merchants generally blame the Galleria.
Change in Habits
“There used to be a tendency for people to shop on the local boulevard, “ said Mary Lou Kinney, a longtime Chamber of Commerce member in the nearby Atwater district of Los Angeles. “But you have to figure that places like the Galleria have changed that.”
In a candid assessment of the Galleria’s retail prowess, this year’s marketing plan for the nearby 58-store Eagle Rock Plaza notes: “In no way can we directly compete with the Glendale Galleria. We must and will reach for our own segment of the market through strengthening community relations and family-oriented promotions.”
The Galleria has especially taken a toll on retail shops in Burbank, which was originally Glendale’s main competitor to be home to the Galleria. Now Burbank, after losing its bid for the Galleria, hopes to begin to recoup lost business in 1988, when developers plan to open a 30-acre mall anchored by Nordstrom, Broadway, J. C. Penney and Robinson’s department stores. It is to be built east of the Golden State Freeway between Magnolia and Burbank boulevards.
‘Won’t Even Notice’
“We can take our estimated $100 million in annual sales” and Glendale “won’t even notice because we’ll be taking business from the west and the north,” Burbank City Manager Robert Ovrom said.
The Galleria’s success does not surprise Jerome Lipp, former president of Carter Hawley Hale Properties Inc., who led negotiations with Glendale for the partnership that built the first phase of the Galleria between 1973 and 1976.
“The strength of the Glendale market was its lack of competition, its affluence and location,” said Lipp, who was responsible for developing properties for Broadway department stores until his retirement.
“I didn’t need a market study. It was something you could read at 30 miles an hour through a dirty windshield,” Lipp said.
But city officials were not convinced until a 1971 city study found that Glendale’s retail market share, total sales and property values had declined for several years. The City Council then decided that a large-scale renovation of downtown would be impossible without city help.
Redevelopment Agency
In 1972 the city created a redevelopment agency whose projects included assembling 28 acres by purchasing and condemning the mostly older residential and commercial properties in the south end of downtown. The agency, composed of the Glendale City Council, eventually purchased about $12 million worth of property for the first phase of the Galleria, a 158-shop mall with four major department stores.
The partnership of Carter Hawley Hale; M. J. Brock & Sons Inc., a construction company, and developers John S. Griffith & Co. paid $4.3 million for its portion of the property, about $1 million less than the city paid for it. In addition, the city built an $8-million parking garage and spent about $3.5 million for new streets, sidewalks and other improvements.
Lipp said it didn’t hurt his development team’s negotiating position when “the mayor of Burbank came to me and said, ‘We’ll give you any block you want.’ ” Former Glendale City Manager Jerome Keithley said he knew at the time that, depending on which city got the Galleria, the other would have to wait a long time for its own retail project.
‘Whiplash’ Attempts
“We obviously wanted to be ahead of Burbank, and sometimes the developers would try to whiplash us that they would go to Burbank,” Keithley recalled.
Besides the city, the department stores that finally agreed to join the Galleria venture have fared well.
The J. C. Penney store in the Galleria, remodeled last year, is second only to the chain’s Northridge store in sales for the Los Angeles area and is sixth in sales nationwide, store officials report. The Broadway store is among the top five in sales among 41 stores in Los Angeles, Orange, San Diego and Riverside counties, company officials say.
The Broadway, Nordstrom and J. C. Penney stores each sell more than $40 million worth of merchandise a year, developer Donahue said.
2nd Phase Begins
Donahue’s firm began the $85-million Galleria II in 1981. Completed in 1983, the second phase was built on two blocks along Broadway from Central Avenue to Brand Boulevard and includes the Nordstrom and Mervyn’s department stores. The project added 550,000 square feet to the original 1-million-square-foot Galleria I. The two are linked by a shop-lined pedestrian bridge spanning Central Avenue.
The city gave the developer a $7-million discount on the 6 1/2-acre parcel and paid for another $5 million in improvements for the center.
Donahue-Schriber included in the project a 12-story office building. By the end of January, Donahue said, the building will be fully leased.
Although some have argued that Glendale’s downtown retail areas would have eventually seen a revival through normal market forces, Donahue said nothing else could have approached the Galleria’s sales efficiency.
“If the city didn’t take the risk and form the redevelopment agency, acquire the land and put up the garages, then it wouldn’t be reaping the rewards,” Donahue said.
