<i> This</i> Is a Mini-Mall? : Beverly Hills’ Pricey One-Stop Shops
In a city awash in examples of wretched excess, it was only a matter of time before Beverly Hills spawned the world’s most expensive mini-mall.
But Two Rodeo Drive is not simply another example of the ubiquitous Southern California one-stop shopping spot, any more than Beverly Hills is just another West Coast city. When it opens next month, the $200-million project will double the amount of retail space on one of the nation’s most famous shopping streets and will house one of the country’s finest collections of designer fashion and jewelry outlets, including Tiffany & Co., Christian Dior, Charles Jourdan, Valentino, Sulka and Cartier.
Although exclusive stores aren’t new to Rodeo Drive, the concept of designing a separate “shopping district” around them is. The Two Rodeo project attempts to redefine the outdoor mall by splitting the 1.25-acre site with a street of hand-set cobblestones and adorning each store with its own facade and other elaborate architectural disguises.
The result is that each of the 23 stores looks like a separate building, sharing only lavish details such as copper roofs, bronze doors, granite colonnades and terra-cotta and brick facades. Developer Douglas Stitzel said the design was modeled after some of the famous shopping boulevards of Europe, such as Rome’s Via Condotti.
“I’ve got one of the finest retail locations in the world, and I thought the quality of the project should be in keeping with that,” Stitzel said. “It’s the little details that stand the test of time.”
Those little details carry a big price, however. With a cost of more than $1,500 per square foot of space, Two Rodeo is one of the most expensive retail projects ever constructed. Rents also will be among the costliest on Rodeo Drive, up to $225 per square foot annually.
To lure high-end tenants, Stitzel had to offer financial concessions of more than six times the prevailing rate offered by other Rodeo Drive landlords. Over the long term, the incentives will knock as much as $1 million off the leases for some tenants--money they will be contractually obliged to spend on store improvements.
One concession the developer will not make, however, is that his timing is unfortunate. Although signs are mounting that a recession is imminent or already under way, Stitzel remains upbeat, and experts in the commercial real estate field say the prime location and tony tenants of Two Rodeo give it a fighting chance of success even in a bearish economy. Project officials say 85% of Two Rodeo has already been leased--a high pre-opening occupancy figure for such an expensive project.
“The retail market is soft right now, so it’s a tough climate,” said Tam Antebi, retail leasing specialist with Grubb & Ellis Co. in West Los Angeles. “It will help them that they have some very special stores.”
The project’s location on the corner of Wilshire Boulevard and Rodeo Drive has long been considered a potential commercial gold mine by developers. Bidders for the former parking lot included Donald Trump and investor Marvin Davis. An affiliate of Columbia Savings & Loan originally won approval to develop an office and retail complex, but the city rejected its plans and Stitzel was awarded the site for $47.6 million in 1987.
City officials said Stitzel’s plan, which nearly tripled the amount of retail space without violating Beverly Hills’ strict building height ordinance, made the most economic sense for the corner site. To increase the space, Stitzel incorporated an engineering plan that would create the largest number of ground-floor storefronts possible, since ground floor shops generate more business and higher rents.
By creating a new cobblestone street in the middle of the project, Stitzel used the slope of the site to bring the ground floor along the new street, Via Rodeo, up to what is actually the second-floor level on Rodeo Drive. As a result, the six shops that front Rodeo Drive will have a ground floor, as will the stores that open on Via Rodeo. The result is a project containing nearly 90,000 square feet of ground-floor space, even though the entire site covers just 53,000 square feet.
Beverly Hills officials also agreed to let Stitzel extend the project site under Rodeo Drive as long as he doubled the number of parking spaces. Stitzel also agreed to provide two hours of free public parking for anyone shopping in the area.
True to the developer spirit, Stitzel’s concession to provide free parking was done with his best interest at heart: There is only one pedestrian exit from the underground parking garage, and all shoppers emerge right in the middle of his project.
“The creativity and imagination used in the project is what will make it work,” said Beverly Hills City Councilman Maxwell Salter. “Adding the extra parking spaces in an area where these jokers are charging a month’s rent for parking was critical.
“For people who want to do high-end shopping, it’s very convenient, and I think it’s a real shot in the arm for Rodeo Drive.”
So far, it has been a successful venture for Stitzel. This summer, a Japanese development company and a Japanese department store chain agreed to buy up to a 90% stake in Two Rodeo for more than $200 million. Stitzel will retain the minority interest.
Stitzel said the expensive materials used on the project--the sidewalks are limestone and the cobblestones were imported from Italy--were selected expressly to attract high-end tenants. Two Italian artists were commissioned to create a sidewalk fountain and two bronze sculptures. Even the parking lot elevator bespeaks wealth: The doors are bronze and the interior is padded with leather.
“I could have filled the project with very good tenants, but in order to get the very best names, I decided that I would just have to consider it the cost of doing business,” he said. “Did I have to spend $12,000 for (bronze) leaf for each door? No. But when you think of wonderful shopping districts around the world, they all have that kind of quality.”
Whether it’s enough to attract Southland shoppers and glitz-seeking tourists remains to be seen. Traditional shopping centers lure browsers with a mix of bookstores and affordable food outlets. Two Rodeo will have no bookstore and just one cafe. It’s main food merchant will be Stringfellow’s, an upscale restaurant and dance club.
Councilman Salter and others say, however, that the project fits in well with Rodeo Drive’s well-established image as a shopping haunt of the rich. People looking for doughnut shops and low prices, after all, have hundreds of other mini-malls to choose from.
“If you’re shopping for a $30 pair of jeans, you don’t go to Rodeo Drive,” Salter said. “There’s nothing wrong with buying a $30 pair of jeans, but Rodeo Drive is not where you look. It’s an $80 jean street. And that’s the image we want to maintain there.”
