Store’s Success Benefits New Mall : Burbank: Ikea’s splashy opening is an auspicious omen for the $300-million Media City Center.

The much-ballyhooed opening of the Ikea furniture store in Burbank reminded Fred Bruning of the movie “Field of Dreams.” That’s the one where legendary baseball players come back to life to play on an Iowa farmer’s field.

Just as the farmer built the field after a voice told him, “If you build it, they will come,” Bruning hoped that Ikea’s opening would draw lots of people. That’s because Bruning is the chief of staff of Alexander Haagen Co., developer of the $300-million Media City Center shopping mall in Burbank, where Ikea is the first of 150 proposed stores to open.

The day Ikea opened its doors, “I was awake at 3 o’clock in the morning, saying, ‘What if they don’t come?’ ” Bruning recalled.

But they came in droves and are making Bruning’s job easier. The hoopla surrounding Ikea’s opening convinced at least three other retailers to go ahead and open stores in the 1-million-square-foot center, he said. The first of the mall’s two phases opens next summer and is about 80% committed. The other half of the mall opens in 1992.

The project will cover 41 acres and include four office towers and a hotel in addition to the mall. The office-hotel segment is known as Burbank City Center. (The mall initially was known as the Gateway Center but changed its name.) It will be anchored by four major stores: Ikea, Sears, Mervyn’s and Bullock’s.

City officials see the project as a key to invigorating downtown Burbank, long lampooned by Johnny Carson and others partly because of its modest, mostly single-story buildings. For example, KNBC weatherman Fritz Coleman once quipped about Burbank’s founding: “A town with one bank and one Burger King, so they just shortened the name.”

Although stores such as Ikea and Mervyn’s sell affordable merchandise, the mall is also being touted as upscale because fashionable stores such as Bullock’s and The Limited have signed up.

The idea of a major mall in downtown Burbank has been kicked around for nearly 20 years, and now that it’s finally going up, the Media City Center is the only big shopping center now under construction in California, Bruning said. Others have been shelved because of the sluggish economy, he said.

That could be a bonus for Burbank, because the city will be able to attract those stores still able to expand, he said. “We’re one of the few new games in town,” Bruning said.

But the project’s timing, and even Ikea’s hit opening, do not guarantee success for the entire mall over many years. The mall might even run into problems signing up smaller stores if they suffer through a weak Christmas elsewhere.

Mike Zugsmith, who runs a commercial real-estate brokerage in the San Fernando Valley, said, “If this holiday goes poorly, they’ll have a difficult time leasing out those satellite shops.”

Bruning agreed, conceding, “There may be some tenants that have given us commitments that might not go forward if it’s a terrible Christmas” for them. But he and city officials said Ikea’s initial splash bodes well, particularly because Ikea will always be crucial to the entire mall.

“We were pleasantly surprised and pleased,” said William Kelly, deputy city manager and director of redevelopment for Burbank. “It clearly showed how strong a magnet or target store it’s going to be.”

Kelly and other city officials weren’t always so sanguine about Ikea, a Swedish company that has 88 stores worldwide but, until Burbank, had not operated in Southern California. They were initially worried that Ikea would not be a major draw, given the host of other places Angelenos can shop. “There was pessimism,” Kelly said.

Ikea’s opening changed that. Over the long term, Bruning said, Burbank has other factors that should help the mall.

For instance, the nearby Glendale Galleria suffers from its own success, with parking and congestion frequently a problem that will send people next door to Burbank, Bruning said. The Media City Center’s site alongside the Golden State Freeway offers easy access from the San Fernando, San Gabriel and Santa Clarita valleys, he said.

Haagen’s studies also show that, despite an old stereotype that Burbank is a blue-collar town, the average household income within a 5-mile radius of the Media City Center is $2,500 higher than that in the same radius around the Glendale Galleria. This statistic helped persuade Bullock’s, a unit of R.H. Macy & Co., to come aboard, Bruning said.

Diana Novak, a marketing consultant for Haagen, also noted that the entertainment industry--an enormous presence in Burbank--often does well when the economy suffers. (The mall’s name refers to the area’s entertainment, or media, district.) People look to the movies and other entertainment for escape and as a less expensive outlet than, say, a vacation.

Haagen, a Manhattan Beach concern that has built about 50 shopping centers over its 35-year history, worked out what it considers an unusual deal with Burbank to get the mall built.

Haagen could have bought the land for the Burbank mall--at a likely cost of $50 million or more--and added that cost to its total borrowings for the project. That would have raised everyone’s rents, because Haagen’s sole revenue from the mall will be its rent checks. The rents must cover Haagen’s debts and the mall’s operating costs before any profit is earned.

But instead of buying the property, Haagen leased the land from the city for 95 years in exchange for giving the city 50% of its profit from the project. Estimates show the profit could be $1 million by 1996, with half going to the city, Bruning said. If Haagen ever sells the center, the city would get half of the proceeds.

Leasing the land also cut Haagen’s borrowings, enabling Haagen to charge less rent from everyone to cover its bills, Bruning said.

“Most developers would not be willing to do that. But the city had to dig deep into its own pockets to help us entice the major department stores to get here, as in the case of Bullock’s. We felt that was a fair trade,” Bruning said.

There were other incentives. Haagen’s budget includes extra cash to help some retailers build the interiors of their stores--a so-called “tenant allowance.” Also, the city was so anxious to lure Bullock’s that it will effectively pay for the retailer’s $33-million store. In a complex deal, Haagen will build the structure, then the city of Burbank will buy it in exchange for a promissory note that will be repaid from a combination of Bullock’s rent, sales tax revenues and property taxes on the mall.

Although signing up tenants for the shopping mall is going well, things are much slower at the center’s office building complex, which has not yet announced a major tenant. The first tenant is expected to sign on by early next year, said C. Drew Planting, senior broker at Cushman & Wakefield, the offices’ leasing agent. The plan calls for four office buildings--the first two are nine and 10 stories high--with the groundbreaking expected by next summer. Construction would take about 18 months.

However, broker Zugsmith sees potential problems there as well. There’s already ample office space in the area, and Lockheed Corp.’s departure from Burbank is only adding to it because firms that served Lockheed are cutting back or closing, he said.

That means Cushman & Wakefield will have to draw plenty of tenants from outside the immediate area, and Burbank is “an area untested and untried for that volume of office space at that level of quality,” Zugsmith said.

As for the hotel, negotiations are under way with Sheraton, a unit of ITT Corp., but that project also has not been finalized, Bruning said.

Still, Haagen’s willingness to give the city a 50% cut of the profit obviously reflects its confidence that the project will produce sizable returns. Burbank will also get income from sales taxes and other fees from the center that could total about $5 million a year. Ikea, so confident of its success, is even guaranteeing the city that it will pay a certain level of sales taxes each year.

But beyond the cash, Burbank is looking for the mall to give it the upscale image it’s sought for years. Said Kelly, the redevelopment chief: “This is a beginning of a renaissance of our downtown.”