Nordstrom at Odds With Segerstrom on Expansion
Nordstrom feels that it has already outgrown its year-old South Coast Plaza store, but a plan to expand back into a portion of the store it vacated appears to have fallen through.
Officials of the up-scale retailer say that mall developer Henry Segerstrom’s insistence on increasing the number of flashy, Rodeo Drive-style retailers at the Costa Mesa center has all but killed their expansion hopes.
James F. Nordstrom, president of the Seattle-based chain, said Monday that the company almost a year ago began negotiating to lease and reoccupy up to 25,534 square feet of space next to the third floor of its South Coast Plaza store. The area has been empty since last May, when Nordstrom closed its three-story, 120,000-square-foot Costa Mesa store and moved into a new, $27-million facility twice that size.
Nordstrom had envisioned using the vacant third floor space to expand some of its popular, more moderately priced departments such as women’s shoes, active sportswear and casual wear.
The plans aren’t dead and forgotten yet. But Nordstrom described them Monday as “certainly wounded” and said expansion now seems unlikely. “Henry (Segerstrom) wants control over the center, and, frankly, we don’t agree” about how to best fill the vacant space, Nordstrom said.
Nordstrom said that Segerstrom, managing partner of C.J. Segerstrom & Sons, which owns the mall, “envisions the space strictly as a boutiquey” area filled with “Lina Lee kinds of shops--very, very top of the market” merchandise. (Lina Lee, a designer women’s clothing store with two Rodeo Drive locations and a third shop in Manhattan’s Trump Tower, opened a $1-million-plus boutique at the Costa Mesa mall late last year.)
Nordstrom, on the other hand, “wants to be all things to all people. The departments where we needed more space are not necessarily what Henry wanted to put in. We didn’t agree,” Nordstrom said.
In fact, the former Nordstrom space has been gutted and completely remodeled into about 30 up-scale specialty shops. The first and second levels--in what is dubbed the Nordstrom Wing--are now 100% leased and include such top designer retailers as Luis Vuitton, Charles Jourdan and Ted Lapidus.
A South Coast Plaza spokeswoman, Maura Eggan, said Monday that she “couldn’t say” whether Segerstrom is only willing to lease the remaining space to chi-chi retailers but said “the store mix there (on the first two floors) now is very up-scale.”
South Coast Plaza footage reportedly is leasing at a monthly base rate of about $3 to $6 per square foot or at least 7% of gross sales, whichever is higher. Smaller shops pay higher rents than larger, department store-type operations.
But even without the extra space, Nordstrom evidently isn’t suffering.
The South Coast Plaza store has turned a profit since the day it opened in 1978. Soon after opening, the store became Nordstrom’s flagship, overtaking the chain’s downtown Seattle store as the sales volume leader.
Since opening last May, the new, 225,000-square-foot store has emerged as the first branch in Southern California ever to go over $100 million in annual sales. Nordstrom said the current year’s sales are “considerably higher.”
The Costa Mesa store will be the chain’s largest until August, 1988, when a 330,000-square-foot Nordstrom is scheduled to open in downtown San Francisco.
