Towne Center Mall Developer Drops Out; Cerritos Starts Looking at Alternatives

The push for a second regional shopping mall in this city is apparently over.

City officials have known for months that plans for a 40-acre retail development on the Towne Center site were in trouble, and last week their suspicions were confirmed when one of the nation’s leading mall builders withdrew from the project.

Officials said the departure of General Growth of California from the proposed $95-million mall development will force the city to consider alternatives for the prime plot across from City Hall at Bloomfield Avenue and 183rd Street.

Among the options, officials said, that will be considered are high-density condominiums or town homes, a smaller retail center, office buildings or an international or “festival” marketplace catering to residents and tourists. Some sort of combination of uses also is possible, they said.

General Growth spent nearly two years trying to package a mix of stores for a Towne Center mall. But in the end the company was unable to satisfy the City Council’s desire to anchor the center with pricey department stores like Saks Fifth Avenue or I. Magnin. General Growth, a Canoga Park-based company, had commitments from just two big retailers, Target discount stores and Mervyn’s department stores.

The council gave the company several extensions to deliver a specific mall proposal. But late last month the council’s patience ran out and General Growth was given until April 6, which came and went without a plan. Last week the council voted unanimously to end negotiations with General Growth.

The action automatically gives Transpacific Development Co. 60 days to decide whether it wants to attempt the mall project. The Torrance-based firm already has an agreement with the city to build a 400-room hotel and 1.2 million square feet of office space on the Towne Center site, which covers 125 acres, including the 40-acre retail sector. Construction on the hotel and the first seven-story office building is scheduled to begin by August. The entire $225-million Towne Center project will take 10 years to complete.

Option to Take Over

Under its agreement with the city, Transpacific had the first option to take over the mall project if General Growth withdrew. Max Nardoni, Transpacific’s director of development, said the firm is “very interested” in developing the entire Towne Center site, including the retail portion.

“We will be making a presentation to the city in short order on what we think will work on that site,” Nardoni said after the council’s vote to end negotiations with General Growth.

Transpacific is known in the development industry for projects that blend retail, office buildings and high-density residential like luxury condominiums and town homes. One such project is Transpacific’s South Coast Metro Center in Costa Mesa, where the company is erecting several high-rise office buildings, 770 condominiums and a small neighborhood shopping center, all within walking distance of Orange County’s new Performing Arts Center.

Nardoni said independent marketing studies show that there is little consumer demand for a second regional mall in Cerritos. “That type of mall is well supplied in the area,” said Nardoni, referring to Los Cerritos Center, which is less that three miles from the Towne Center site.

John Bucksbaum, president of General Growth, agreed that Southern California is saturated with malls. Within a half hour’s driving time of Cerritos, there are 11 regional malls with 41 department stores. And two of the centers, Los Cerritos and Lakewood Center Mall, are among the top six in terms of total sales in Los Angeles and Orange counties. Therefore, Bucksbaum said department stores are reluctant to take a chance on a new mall.

“It is a wonderful site,” Bucksbaum said, referring to its location next to the Artesia (91) Freeway. “Unfortunately, the timing is all wrong . . . Twenty years ago, yes, we could have done it. . . .”

Two Retailers Were Ready

In an April 8 letter to Cerritos Mayor Don Knabe, Bucksbaum said construction on the mall could have been under way by now if the council had been willing to anchor the mall with Target and Mervyn’s. Both retailers were ready to commit to the project, but the council resisted, choosing to hold out for a pair of upper-end department stores. One city official said Target, a warehouse-type discount store, was even willing to upgrade its normal industrial-looking building exterior to meet the council’s wishes that the shopping mall have an upscale appearance.

Tired of waiting, Mervyn’s earlier this year moved into Los Cerritos Center, leasing the space once occupied by Ohrbach’s department store, which closed because of financial troubles. That left Target as the only big retailer lined up for Towne Center.

Bucksbaum, whose company has at least six regional shopping malls under construction or in planning stages on the West Coast, said it would have been “too risky” to push ahead on the Towne Center mall without “interest from several major anchors . . . We invested hundreds of thousands of dollars in the project but it just was not the right time.”

Nardoni of Transpacific said it will take some “creativity” to make the retail end of the Towne Center project viable. Although he declined to discuss specific ideas the firm may have for the site, he did say the company will look closely at some sort of international or “festival” marketplace with specialty shops and restaurants that would draw people from outside the Cerritos area.

The colorful retail concept, which may also include high-density residential development, is not new. The closest examples are Horton Plaza in San Diego and Fisherman’s Wharf area in San Francisco.

In most cases, the festival marketplaces are built around some sort of natural attraction like a harbor or waterfront. And some experts, like Bucksbaum, believe the approach might not work in a land-locked suburb like Cerritos.

“There are a lot of unanswered economic questions about that kind of development,” Bucksbaum said. “In order to make the Towne Center project work, a developer is going to have to deviate from the traditional mall . . . But how much, when and where are the big unknowns.”