Builder Has Grand Design for Success
About a year ago, Christopher S. McKellar, president of McKellar Development Corp., was building his dream house overlooking La Jolla Shores. He wanted it to be perfect, inside and out, with exactly the right wallpaper, floor covering and fabric to upholster the furniture.
But much to his frustration, he could not find the furnishings he wanted locally. Instead, he was forced to make 10 trips to Los Angeles to shop at the mammoth Pacific Design Center.
“That experience was excruciating,” McKellar recalled. It convinced him that San Diego needed a design center of its own. So he decided to build one.
“San Diego is virtually an untapped market” for interior furnishings manufacturers, according to Leonard Lemlein, whom McKellar picked to head the project. Lemlein was leasing officer for the International Design Center in New York City.
Ground Broken
If McKellar and Lemlein have their way, San Diego will not be untapped much longer. Last month, McKellar Development broke ground for the San Diego Design Center, a $45-million development on 13 acres in Sorrento Mesa.
Scheduled to open in the fall of 1988, the four-story, 320,000-square-foot facility designed by Santa Monica architect Johannes von Tilburg will have the capacity to house about 100 showrooms for manufacturers serving the interior design, architectural and landscaping markets.
But whether the design center will be successful remains questionable. While nobody doubts the vibrancy of the commercial and residential building market in San Diego--the lifeblood of interior design--questions have been raised as to whether the San Diego interior design community can and will support a center of this magnitude.
“Somebody there didn’t do their homework,” said Marty Swenholt, executive director of Design Center South in Laguna Niguel, a potential competitor of the San Diego center and who believes McKellar’s operation can’t succeed.
Opinions Mixed
Local interior designers also have mixed opinions. While generally enthusiastic, they wonder if the San Diego Design Center will provide something not already available locally through the showrooms on Morena Boulevard known as the Canyon Creek Design Center or by traveling either to Design Center South or the Pacific Design Center in Los Angeles.
“I don’t feel under-served,” said Robert J. Verbeckmoes, a local interior designer and former president of the local chapter of the American Society of Interior Designers. “Many of us feel a lot of loyalty to Canyon Creek,” added Janine T. Brown, another designer and current president of the San Diego Chapter of ASID. “And I think the design center may suffer from poor timing. The design center in Orange County has just expanded and manufacturers may not want to spread themselves too thin.”
Indeed, the San Diego Design Center (SDDC) simply may be too late to attract top-flight manufacturers.
“There is a question as to how many showrooms a manufacturer needs,” said Robert Cadwallader, a Greenwich, Conn.-based furniture manufacturer and former president of Knollsource office furnishings, a major supplier to the commercial interior design market, and a member of SDDC’s industry advisory board. “San Diego is going to have to do something major to put itself on the map.”
With more than 60 design centers operating across the country, the map is getting crowded.
Despite the warnings, McKellar exudes confidence. “We have to be a success immediately,” he conceded. “We can’t grow into it. But we have the right management team to attract the right tenants to be a force right away.”
Moreover, he insisted, “A design center is desperately needed and long overdue. San Diego is big enough and sophisticated enough not to have to shop in L.A. for everything.”
First tenants of the San Diego Design Center agree.
“The San Diego design community has suffered greatly by not having a design center,” said John Franzese, president of Office Furniture Specialists of San Diego and the first tenant to sign a lease with McKellar.
“They don’t know how much they have suffered by having to go to L.A.,” he said. “They haven’t had things to show or expand their customers’ horizons.”
Like Shopping Malls
Design centers are like shopping malls used exclusively by interior designers and their customers. To shop at one, a person either needs to hold an interior design license or be accompanied by somebody who does.
The merchandise, ranging from furniture to floor coverings, is sold at wholesale prices to designers who then add a retail markup. Showrooms generally display furnishings targeted either for commercial and office sites, known as the contract market, or for homes.
“People want well-designed interiors as well as exteriors. A design center is an organizational strategy to put all the resources under one roof,” said Miriam Furman, editor of The Designer, a trade magazine.
The granddaddy of design centers and the largest in the country is the Chicago Merchandise Mart. Established in 1930, it has 4 million square feet of showroom space and 1,000 tenants. More than 3 million customers pass through every year. Trends and fashions in interior design usually make their debut at the Merchandise Mart’s Neocon show each June.
In 1976, the Pacific Design Center, with 725,000 square feet of showroom space, opened in Los Angeles. After an early struggle, the center, with its Westweek show held in March, has emerged as a major force in the design industry.
In the 1980s, the move toward design centers has accelerated and, not surprisingly, Southern California and the Southwest have been seen as prime sites for them. In 1984, Birtcher Development Company, which developed the Pacific Design Center with Santa Fe Southern Pacific Corp., opened Design Center South in Laguna Niguel. This year, Birtcher added 115,000 square feet of space to the Laguna Niguel center.
Next March, Birtcher will open another 460,000 square feet at the Pacific Design Center. And it has assumed leasing and management responsibilities for the Southwest Design Center in Phoenix, where it plans to add an additional 250,000 square feet.
San Diego Fails to Draw
With that kind of expansion, why has San Diego been ignored by major design center developers until now? Despite respectable efforts over the past nine years, Canyon Creek, with only 22 showrooms, has not enjoyed the same kind of visibility nor has it attracted the same number of national suppliers that a major design center should.
“To many major manufacturers, California is still mysterious,” said Judy Skalsky, a spokeswoman for the San Diego Design Center. “When (manufacturers) would discuss their expansion plans, they would leave California to last and then not get to it.”
Not so, responded Design Center South’s Swenholt. According to Swenholt, both Birtcher and Trammell Crow Co., another major developer of design centers, studied the potential for a design center in San Diego for two years.
“We turned it down,” Swenholt said. “San Diego is not the place for a thriving design center to be. The affluent growth (needed to support a design center) is in southern Orange County.”
A study conducted for McKellar by the accounting firm Laventhol & Horwath came out differently. It showed that more than $1 billion will be spent in 1987 on wholesale and retail furnishings in San Diego County alone, enough to support a design center.
Moreover, the San Diego Design Center may not be dependent solely on local business. “We never planned to just serve San Diego,” said Lemlein. “We will appeal to Orange County and Phoenix.”
A poll of ASID members in Arizona conducted for the planned San Diego center indicated that 21% of designers there would be “very likely” to trade at a design center in San Diego.
“I can’t believe that somebody in Newport Beach would drive past Design Center South to go to San Diego,” said Swenholt, who added that the key to attracting designers to the center is in luring top quality manufacturers. “Manufacturers with showrooms here and in L.A. don’t need another one 60 miles down the road.”
“It is not a question of how many showrooms a manufacturer needs but how many they can operate profitably,” countered Lemlein. “Manufacturers who are closing showrooms in centers in Houston and Dallas are going with us.”
Two-thirds Leased
At the time of the ground breaking, the San Diego center had commitments for 20,000 square feet, with leases representing an additional 100,000 square feet in the pipeline. Lemlein anticipates the center will be two-thirds leased when it opens. In contrast, the International Design Center in New York was only about 55% leased when it opened last year, Lemlein said.
Space at the San Diego center leases for $15 per square foot per year, about half the cost of space in the Pacific Design Center as well as Chicago and New York. It is also less than the $18 to $22 per square foot charged by Design Center South in Laguna Niguel. Of the five companies that have signed leases, three are local and two are regional. One national company had agreed in principle to a lease but had not signed as of the ground-breaking ceremony.
In part to differentiate itself from Design Center South, Lemlein plans to concentrate on attracting suppliers for the contract market, or those manufacturers catering to the businesses and commercial markets. One floor, or a third of the leasable space, will be dedicated to contract vendors.
One local designer said the San Diego center’s focus on the contract market could be a smart strategy. “We have been strapped from the point of view of availability and diversification of product,” said Gregory M. Ziol, president of the San Diego chapter of the Institute of Business Designers, an association of designers who specialize in the contract market.
“We need a larger palette to work from. We hope this will be a contract stronghold.”
Only 15% of Design Center South’s business comes from the contract market. “There is a reason,” Swenholt said. “Contract manufacturers are not interested in locating in smaller areas.” Instead, they prefer to stick with the big centers in New York, Chicago and Los Angeles, she said.
Lemlein believes that eventually half of the showrooms at the San Diego Design Center will represent manufacturers that do not have a presence in San Diego. The other half will be local outlets that will relocate. That could have a dramatic impact on the 9-year-old Canyon Creek Design Center.
Cambridge West, a multiline furniture distributor currently located at Canyon Creek, has already signed a lease with the San Diego center. “For the industry to grow, we need more space, more outlets and more sources. Canyon Creek can’t offer that,” said Larry Stone, vice president at Cambridge West. He believes that many of the major showrooms there will move to the new design center within the next year or so.
Donna Vinton, vice president of the Don-Janais Inc. showroom and outgoing president of the Canyon Creek Design Center, disagrees, saying the San Diego Design Center won’t have any effect on her business for four or five years. “We have worked hard to provide for designers and have earned our points,” she said.
Whether it succeeds as planned, struggles along, or fails entirely--it took the Pacific Design Center 10 years to fill up and a similar center in Dallas recently went bankrupt--the San Diego Design Center should have a dramatic impact on the interior design industry in San Diego. It will be a visual symbol and a cultural monument for the industry, Skalsky said, and a symbol of a new sophistication and maturity in the San Diego design world.
Others are more cautious. Said Janine Brown: “We have a wait-and-see attitude. But if they attract manufacturers other than those who are already here, it will be a valuable tool.”
