Mall May Give Burbank Some Respect : Retailing: The modest downtown has been the butt of many jokes, but the early success of the new Media City Center could put an end to that.
The night before the Ikea furniture store opened its doors in Burbank, Fred Bruning had trouble sleeping.
“I was awake at 3 o’clock in the morning, saying what if they don’t come?” recalled Bruning, chief of staff of Alexander Haagen Co., developer of the $300-million Media City Center shopping mall where Ikea is the first tenant.
But shoppers came in droves, making Bruning’s job easier. The hoopla surrounding Ikea’s opening persuaded at least three other retailers to go ahead and open stores in the 1-million-square-foot center, which is Burbank’s first major shopping mall, he said.
The mall’s developers weren’t the only people breathing a sigh of relief. Burbank officials see the development as a beginning of a renaissance for its downtown--long lampooned by Johnny Carson and others who poked fun at the city, partly because of its downtown of 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.”
But the development--designed to ultimately include four office buildings and a hotel--is going forward at a time of uncertainty for the economy. It is the only big shopping center currently under development in California--others have been shelved because of the sluggish economy, Bruning said. Ikea’s hit opening does not guarantee success for the entire mall in the long run. 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: “Some tenants that have given us commitments 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.”
The mall might also benefit from the relative affluence of Burbank residents. Haagen’s studies show that, despite an old stereotype about Burbank being a blue-collar town, the average household income within a five-mile radius of the Media City Center is $2,500 higher than that in the same radius around the nearby Glendale Galleria.
That statistic helped persuade Bullock’s, a unit of R. H. Macy & Co., to come aboard, Bruning said.
Bruning said Burbank has other factors that should help the mall. For instance, the 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 Interstate 5 offers easy access from the San Fernando, San Gabriel and Santa Clarita valleys, he added.
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, Novak said.
The city of Burbank has more at stake in the shopping mall than its pride. Instead of buying the property, Haagen, a Manhattan Beach-based concern that has built about 50 shopping centers over its 35-year history, leased the land from the city for 95 years in exchange for giving the city 50% of its profit from the project. Estimates show that 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.
Although signing up tenants for the shopping mall is going well, things are moving much slower for the other elements of the 41-acre project.
No major tenant has yet signed up for the office space. 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 first office buildings are expected to break ground next summer.
However, broker Zugsmith sees potential problems there as well. There’s ample office space in the area, and Lockheed Corp.’s departure from Burbank is adding to it because firms that served Lockheed are cutting back or closing, he 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.
