Study Advises Against Plan for a Mall at Towne Center

An upscale shopping mall in the Towne Center redevelopment area would have little chance of success, because the department store business is slow and there are not enough high-income residents to support such a mall, a marketing report indicates.

Forty of Towne Center’s 125 acres near the Artesia Freeway had been earmarked for what the city called a “high-end” mall, with a Neiman-Marcus or a Saks Fifth Avenue to attract a Mercedes-Benz crowd.

If the council accepts the consultant’s conclusion and scraps the mall idea, it must find another use for the land and another way to satisfy its desire for higher sales tax revenues. The council will discuss the analysis and the future of Towne Center at its meeting Wednesday.

A hotel recently opened at the Towne Center and the city’s Community Arts Center is under construction. Office buildings are slated to cover most of the property, which is in the center of the city.

The way to increase sales tax dollars, marketing analysts said, is to concentrate on the city’s existing mall, Los Cerritos Center at the south end of the city.

Los Cerritos Center is in a position to become what the analysts called a “powerhouse” mall, one that attracts volumes of shoppers by virtue of its size and variety of retail outlets. Currently the center is in competition with the nearby Lakewood Mall of about the same size, the report said.

The single-story Los Cerritos Center could be expanded by adding a second level and by decking the parking lots, the market report suggested.

Some council members doubted that a second mall in Cerritos could be successful and hired Economics Research Associates to conduct the market analysis.

Among the skeptics was Mayor Ann B. Joynt. She said this week that the analysis tells her the city should not move too quickly to develop the 40-acre parcel but wait until the best possible proposal comes along.

Joynt pointed out that the consultant termed the parcel extremely valuable because it has freeway visibility and its own access ramp on a major east-west traffic artery.

During her campaign last year, Joynt said she believed the city should turn its attention to upgrading Los Cerritos Mall, lest it lose its competitive edge in the area.

“The super mall,” Joynt said, “is becoming more and more the location for success and the small mall is having a tougher time competing.”

Unlike some cities, Cerritos can afford to go slow on development because it has ample tax revenue from Los Cerritos Center and the nearby Auto Square. The city has a budget surplus this year of about $20 million.

The department store industry is currently in a state of financial turmoil, the market analysis contends. “Too many department store operators are competing for a slow-growth market, and discounters and specialty retailers continue to provide strong competition.”

As examples of the turmoil, the analysis pointed out that Macy’s has decided to delay its expansion into Southern California. The analysis also cited the collapse of the Federated Department Stores chain, which owns Bloomingdale’s.

In addition, it takes affluent shoppers to keep the more upscale department stores in business, according to the report.

“Support for very high-end specialty retailers (such as Neiman-Marcus, Saks Fifth Avenue and Bloomingdale’s) is a very narrow market niche,” said the study.

While the population within a four-mile radius of Cerritos has solid middle-income buying power, there is not a high percentage of households that have yearly incomes of more than $75,000, the study said. It takes households with that sort of income to support the more expensive department stores.

According to data presented in the market study, the number of households within a four-mile radius of Cerritos with incomes over $75,000 is 11.2%.

By comparison, around the Fashion Island mall in Newport Beach, the percentage is 18.3%, the study said.

“The Cerritos . . . area is heavily family oriented, resulting in a lower per capita income,” the analysts said. “This means that there are relatively fewer single people who tend in some markets to be more fashion conscious and spend more.”