Shopping Center King : Ernest Hahn: Born to Shop for Mall Sites
OK, I’ll admit it. I love to shop. My 12-year-old daughter loves to shop. It wasn’t until I met Ernest W. Hahn, though, that I knew whom to blame.
A friendly fellow, slightly balding with white hair, Hahn was waiting for me in the parking lot of his Rancho Santa Fe offices when I arrived a few minutes late. “I was afraid that you had gotten lost,” he said in a tone of genuine concern.
Where was his concern, I asked myself, when I bought that $100 dress last week at my neighborhood mall?
It’s all his fault, you know, the proliferation in California of regional and local shopping centers. Oh, he didn’t build all of them, but he did develop more regional malls on the West Coast than anyone else.
The Courtyard in Rolling Hills, Plaza Pasadena, Hawthorne Plaza, Fox Hills Mall, Santa Monica Place: They’re just a few of the 50 regional and 20-some neighborhood shopping centers developed by Ernest W. Hahn Inc., now headquartered in San Diego.
And it wasn’t enough to hook Californians like myself on shopping. Hahn also developed out of state: The Fashion Show Mall in Las Vegas, Clackamas Town Center in Portland, Ore., The Tivoli in Denver and The Mall of Memphis, to name a few.
Ernest W. Hahn Inc. still owns as many regional shopping centers as the company is years old. Like many yuppies, it is celebrating its 40th anniversary this year.
The shopping center industry is about as old as the International Council of Shopping Centers, which will mark its 30th anniversary next May. So the industry grew up and was influenced by the Baby Boomers.
A publicist for Ernest W. Hahn Inc. proudly stated: “Ernest Hahn was there, on the heels of these babies’ first steps, always exploring new ideas and taking chances.” No more chances than I take of spending more than I should every week when I step inside my local mall, I thought, but I was wrong.
Back in 1977, Hahn took some big chances, incorporating housing, office and recreational space in the master plan for his University Towne Center in La Jolla, which he considers a forerunner of today’s regional mixed-use retail center.
That same year, he installed ice rinks as focal points in many of his centers. He didn’t know then what a poll taken lately in all Hahn Inc.-operated centers disclosed:
Fifty-four per cent of the shoppers said they visit the shopping centers without having a specific purchase in mind--they just want to browse or be entertained. I found that out almost as soon as my daughter could walk, let alone skate.
Ice rinks at malls were forerunners of the mimes, jugglers, marching bands, even the design at one of Hahn Inc.'s newest malls: San Diego’s 11-acre, $140-million Horton Plaza, which Hahn calls “the Disneyland of merchandising.” Can’t say I always want to go to Disneyland, but I was drawn to Horton Plaza for the entertainment. Then, of course, I went shopping.
Hahn took some of the biggest chances of his career at Horton Plaza, which has received nationwide acclaim since it opened last August and in February was second only to a center in San Jose in terms of the company’s retail sales.
John M. Gilchrist Jr., the 41-year-old president and chief executive officer of Hahn Inc. who started with Hahn as a 19-year-old college sophomore, wrote in an operations update last summer that Horton Plaza is the “catalyst for a $3-billion burst of commercial, residential and tourist-related development.”
Before Horton Plaza opened, it was viewed with skepticism because of its location in the middle of a downtown that was rife with porno theaters, liquor stores and run-down businesses. Hahn has since been praised for being the only developer with enough courage and faith to attempt the project and see it through--well, mostly through.
The center’s four department stores, 150 specialty shops, numerous fast-food outlets, restaurants and seven-screen cinema are open, but a repertory theater that was supposed to be completed last year just opened May 31, and the ranch market that was expected to open in January is now scheduled to be ready for customers in late August or early September.
From the beginning, Horton Plaza was plagued with delays. It took Hahn about 10 years from start to finish. Not unusual for a downtown redevelopment project, Hahn says philosophically.
Horton Plaza is unusual, though, because it is a mixed-use redevelopment project that is the centerpiece of a new downtown, and it is intriguing to look at, like the Hotel del Coronado, built in 1888 across San Diego Bay. By inviting such imaginative design, by Jon Jerde, for such a grandiose project, Hahn took another chance.
Financially, Hahn also took some chances on Horton Plaza, though he sold his company in 1980 for $270 million to Trizec, a Canadian firm with $4 billion in income-property assets. Eight years earlier, Hahn Inc. had gone public, another chance, one he now considers a mistake “for an entrepreneurial business with growth reflected in properties.”
He and his employees had retained 75% ownership, though, and when the company was sold to Trizec, 41 of them became millionaires--"some to the tune of $10 million or $11 million,” he was reported as saying. Hahn realized about $100 million. Forbes magazine calculated his personal fortune at $150 million.
That was before he gave away or pledged $25 million through his foundation, which he established in Rancho Santa Fe in 1980, when he went into what he terms “semi-retirement.”
Bad Time for Mortgages
Some “retirement”! Besides establishing the charitable foundation, now nearly depleted of funds, Hahn also stayed on with Hahn Inc. in what he describes as “a part-time advisory position” as chairman of the board.
He joined the board of Trizec, started building a complex with 850,000 square feet of offices with developer Harry Summers in La Jolla, where Hahn Inc. and Hahn himself will move in July, and built--with his son Ron--another shopping center: Palm Desert Town Center, where he took another chance and, in terms of profits, won.
It was a bad time for mortgage rates. “But the desert never looked bad to me,” he said. “I’ve lived there for 37 years.” He also maintains an estate in Rancho Santa Fe.
He commutes by air. A pilot for 35 years, he is jet-rated and still, at age 66, flies almost every day.
He owns two planes and shares ownership with Summers in a 90-foot yacht that they keep in the Caribbean. Hahn also jet skis, water skis, swims and plays tennis.
He has nine grandchildren and three great-grandchildren, all living near his home in Rancho Santa Fe. He and his wife, Jean, will celebrate their 46th wedding anniversary this year.
Started as Messenger
He grew up in the Los Angeles suburb of Hawthorne, the son of German immigrants. “So the German work ethic was in me, I guess,” he said.
He got his first job, as a bank messenger, at $70 a month, during the Depression. “Everyone was the way I was"--work-oriented, he remembered.
He worked as a bank teller in Hawthorne when he met the late John K. Northrop, who was then laying plans to start an aerospace firm. Hahn worked for Northrop Corp. in 1940, but was drafted into the military in 1944.
“When I got out of the Navy, I decided that there was no point going back to Northrop, because there would be nothing to do there after the war.” He chuckled. “Anyway, the contracting business sounded like a good business, so in 1946, I started with my good buddy (high-school friend Stewart St. John), remodeling storefronts out of an office in a (Hawthorne) used-furniture store.”
Sought Private Developments
Ten years later, he bought out his friend--"because I wanted to stay in the private sector.” St. John wanted to build schools and other public buildings.
Hahn wanted to specialize in retail development, which--in the suburbs--was then developing into what we know as shopping centers. Defined by the International Council of Shopping Centers, the shopping center is a “single enterprise under one management or facility with abundant adjacent parking.”
Hahn stayed in the Hawthorne area with offices in El Segundo until after he sold the company. About 22 years ago, he started building to keep.
“Our first regional center was in Santa Barbara, and the company still owns and operates it,” he said of La Cumbre Plaza, completed in 1967.
He calls shopping centers “the darling of real estate. They command such fantastic prices (when they sell). The return on investment is dramatic, and--with department stores having a proprietary interest on each corner--shopping centers are protected during inflation.”
So will he build more? “Personally, I have no plans to build another mall,” he said.
Thank heavens! If he did, it would be just another invitation for me to spend money.
But wait. Hahn added: “I’m still looking for new opportunities for the company.”
More regional malls? Only in a few cities--like Austin or San Antonio, he said, “because we’ve filled the reservoir.”
Gilchrist estimated that the company will build one or two regional malls a year through 1990 and is looking at other types of retail development like the small malls the company is planning in Bakersfield and the Fresno/Clovis area.
Other Retail Projects
The firm is also planning redevelopment centers in Burbank and Novato, as well as retail projects in Denver, El Cajon, Rancho Cucamonga and Woodbridge, Va., in addition to expanding Santa Anita Fashion Park in Arcadia.
Centers under construction include Valley Fair in the San Jose/Santa Clara area, due to open in October, and Bridgewater Commons in Bridgewater, N. J., expected to open in the spring of 1988.
“We’ve slowed down because of a change in the nature of our business,” Gilchrist said, but the business--with Hahn’s influence--will go on.
I smiled at that, but my husband sighed.