Anaheim Plaza: the Black Sheep of O.C. Retailing : Malls: The aging shopping center is eating the dust of competitors’ renovations. There’s a glimmer of hope, but only if drastic changes are made.
At first appearance, Anaheim Plaza looks pretty much like any other mall during the holiday season. Santa Claus holds court on a festooned throne. Giant golden sleigh bells hang from the rafters. The aisles overflow with cart vendors.
A closer look, however, reveals why the 35-year-old mall has become the black sheep of Orange County’s retail scene.
The Santa display masks the empty department store behind it, a Robinson’s that closed three years ago. Seasonal stores temporarily occupy spaces left vacant by well-known retailers, such as The Gap, Silverwoods and Miller’s Outpost.
The current bustle is just a Yuletide illusion. The mall’s veteran merchants have suffered through years of declining sales, as newer, brighter malls have prospered. And despite plans for renewal, the outlook is dimly uncertain.
In the roiling world of retailing, Anaheim Plaza is a relic, stuck in time, surpassed by centers kept fresh with renovations and new stores. Even its optimistic manager, Ed Kelso, sadly talks about “the tragedy of Anaheim Plaza.”
Its story--one shared by other aging Southland malls--is one of tough competition, changing demographics, shifting consumer tastes and management missteps. And while the final chapter is not written, it will be a difficult task to reverse the plaza’s flagging fortunes.
Opened in 1955 as Anaheim Center, it was among the first in a wave of shopping centers that dotted booming Southern California. It rose in the middle of a housing tract between Euclid Street--one of Anaheim’s Main Streets U.S.A.--and the Santa Ana Freeway, the conduit which would funnel auto-happy Southlanders to its shops.
They came to browse in the Broadway, its first anchor store on its southern end. Later, they moseyed through Robinson’s on the north end. In between, they could drop into dozens of speciality stores lining an open-air courtyard. Through the 1960s, its 3,850-space parking lot bulged with cars.
But toward the end of the decade, Anaheim Center began to show some signs of age. And there were new kids on the block--the malls.
Malls were the new retailing religion. With their gleaming tile floors, high ceilings and hot-dog-on-a-stick stands, retailers enticed customers to their controlled environments--day or night, rain or shine. In order to remain competitive, Anaheim Center joined the flock.
In 1972, the center’s owner, Prudential Life Insurance Co., spent $4 million to enclose and “bring the shopping mecca up to the standards of its young, wealthy, burgeoning market area,” which stretched from Fullerton to Santa Ana, according to a marketing pamphlet.
The renovated center was renamed Anaheim Plaza. Soon, crowds reminiscent of its 1960s heyday were returning. A Mervyns department store was added as the third anchor. Sales grew at an average yearly rate of 20% from 1974 to 1980, when they were about $60 million.
“There were Christmases in the late ‘70s where it was wall-to-wall people,” recalled John Machiaverna, owner of J. Mac Jewelers.
But other changes were happening around the plaza. Housing and population growth peaked in north Orange County. Competition increased: Three new malls--Westminster, The City and Brea--were built nearby; a fourth--Buena Park--was remodeled. And Prudential put the mall up for sale.
The buyers were the State Teachers Retirement System in Sacramento, in a joint venture with a Utah developer, for an estimated $33.5 million in 1984. The retirement system, which directs the pension fund for California schoolteachers, has since become sole owner.
The new owners were more investors than managers. They seemed more interested in a return on their investment than in figuring out how to best run the mall. So while its competitors dressed up, Anaheim Plaza again began to fall out of fashion. With its dark, earth-tone color scheme, barren corridors and artificial lighting, the center looked about as modern as a leisure suit.
Meanwhile, a renovation wave was under way by shopping centers and malls across the nation, a renewal that is continuing today. “There is an unprecedented amount of renovation of older centers,” said Don Pendley, spokesman for the International Council of Shopping Centers.
Mark Jorgensen, a senior investment adviser for the retirement system, declined comment on the management of Anaheim Plaza. But center retailers say that the center’s officials have admitted several missteps in meetings with store owners.
Charles Cooper, owner of the Hickory Farms store in the mall, said its owners “admitted they bought something they shouldn’t have bought.” At a recent meeting with tenants, center officials said they had initially hoped to sell it for a quick profit but misjudged the market.
“From the time they bought it, they blew smoke,” Cooper said. “They had no intention of redeveloping this mall.”
And the competitive pressures just increased. It faced the Brea and Buena Park malls to the north and The City, Mall of Orange, MainPlace/Santa Ana and South Coast Plaza to the south. Brea and MainPlace launched major renovations that whittled away Anaheim Plaza’s customer base.
Taxable sales at Anaheim Plaza slid from $84 million in 1986 to $56 million last year, a 33% drop. In the same period, the nearby Brea Mall increased its sales from $178 million to $224 million, a 26% increase. The county’s 13 malls together reported an increase in sales of $1.83 billion in 1986 to $2.30 billion last year, also up 26%.
Changing demographics hurt too. The solid, middle-class neighborhood matured around the plaza. The wealthier headed to places like South County and Anaheim Hills. By 1988, the median income near Anaheim Plaza was $35,000, well below Orange County’s overall median of $47,000.
Retailers reacted by relocating. Robinson’s, an upscale department store, headed to the more prosperous MainPlace and closed its Anaheim Plaza anchor store in 1987. The defection caused a chain reaction that started the exodus of speciality stores.
Alarmed at the loss of Robinson’s and other stores, the retirement system hired the Lehndorff Group, a Dallas-based commercial developer, to manage and devise a comeback strategy for the mall. Lehndorff proposed a three-year, $7-million renovation that would have completely updated the mall’s look, adding skylights to an entrance with ceremonial banners. There was talk of two new department stores, a second level of stores and maybe a new hotel.
Meanwhile, city officials, anxious to keep one of the city’s only shopping malls and one of its largest taxpayers, commissioned the Washington-based Urban Land Institute to study the situation.
The study concluded that the plaza could survive as a “discount center,” particularly if the Broadway were to convert its store into an outlet for final sales merchandise. It also recommended a name change to counter public perceptions that the plaza is “a tired and obsolete center that has steadily deteriorated in the face of increased competition from larger shopping malls.”
Armed with their studies, mall officials carted their renovation plans off to a shopping-centers convention in May, 1989, in order to court retailers. But in an abrupt about-face, the retirement system decided instead to put the mall up for sale and stopped signing multi-year leases.
That decision sparked a new round of vacancies of major tenants, who needed assurances that they would be able to conduct business for several years. At one point, the vacancy rate climbed to more than 30%. Mall managers tried to fill the spaces the best they could, moving in an Anaheim city museum and school district vocational training center or renting to non-chain shops. Nothing seemed to help.
“We’ve had many days where we don’t see anybody for a couple hours,” groused a manager at the Kay-Bee Toy Store a few weeks ago.
Alice Denunzio, co-owner of the seasonal Specialty Gift Emporium, said, “The only people who come to this mall are the neighborhood residents (who) refuse to go anywhere else.”
Some retailers complain that they are unable to elicit the retirement system’s attention when they try to point out problems that need to be remedied. Vance H. Ready, owner of Animation Alley Collectibles & Gifts, wrote to the retirement system’s chief executive officer, James Mosman, in October to report a range of deficiencies, from filthy restrooms to the curtailment of shuttle bus service between the mall and major Anaheim hotels.
As of last week, he had not received a response. “If it wasn’t for my love of animation and animation art,” said Ready, poised over a television set playing old Warner Brothers cartoons in a back room, “I would be out of here.”
Some of the gripes have settled down now that the usually busy Christmas season has arrived at the mall, but not the residual bitterness. Cooper said that his sales were up this year over last for the four-day Thanksgiving holiday.
He does not mince words, however, in venting his frustration over the lack of improvements at the mall or in finding a new anchor store. “They (the owners) need to come here and put some life into this mall,” Cooper said.
Machiaverna said he has considered moving his jewelry store, but he fears that he would lose his regular customers. He would rather stay and sign a long-term lease if the mall commits to a refurbishing. “I’ll spend a lot of money in this store if I’m going to stay here 10 years,” he said. “I just want to see if they are serious.”
Some potential new anchor stores have explored the possibility of locating in the mall. One was Ikea, a stylish, European-inspired chain of furniture stores, which recently opened it first Southern California outlet in Burbank. Talks were held but never went past the preliminary stages, according to Brad L. Hobson, a senior project planner for the Anaheim Redevelopment Agency. One problem, he said, was that the cost of improvements needed to bring in a new anchor tenant were deemed too high.
Still, the pension system is beginning to sound serious about renovating Anaheim Plaza. For starters, the owners confirmed that the mall is no longer for sale and is considering renovation plans.
To further that goal, the pension system hired the O’Connor Group, a New York-based retail development firm, to manage the mall. The group owns the Laguna Hills Mall, where it unveiled plans for a massive expansion project last month.
There are other encouraging signs as well.
Mervyns manager Debbie Curtis said the store outsold 10 other company stores in its Orange-south Los Angeles County district during morning sales on the crucial Friday following Thanksgiving, typically the biggest shopping day of the year. The Mervyns store is slated for a $2-million renovation, with or without mall improvements, she said.
The recent passage of Proposition M, a half-cent sales tax to fund transportation projects in Orange County, could hasten the solution of one of the biggest impediments of attracting a major new anchor store--the lack of an exit from Euclid Street onto the southbound Santa Ana Freeway.
“With the right kind of approach, something exciting can happen there,” said Lisa Stipkovich, director of the city’s redevelopment agency. “It’s going to be unique.”
Still, retail and real estate analysts say Anaheim Plaza’s future is far from certain. They say that the freeway access problem must be solved and new anchor tenants found. Or the mall should be turned into a theme or “power center,” perhaps focusing on electronics.
“There’s been such dramatic changes in retail,” said Robert Dunham of the Newport Economics Group. Sales of traditional department store anchors “have really not gone anywhere.”
Whatever the direction, the mall’s believers are ready for changes. But even that might not be enough: “The rest,” said mall manager Kelso, “is crossed fingers.”
A Plan to Improve Freeway Access
Anaheim Plaza mall has a high-visibility location, nestled between housing tracts just off the Santa Ana Freeway. But access is a problem: there are no on-ramps onto the freeway heading south. A study has recommended reconfiguring the ramps to better serve the plaza and Euclid Street.
SALES AT ORANGE COUNTY MALLS
Anaheim Plaza was the only mall in the county to have lower total sales in 1989 than in 1979. The figures below have not been adjusted for inflation.
Dollar figures are in millions
Mall 1979 1989 % Chg. Anaheim Plaza $59 $56 -5% Brea Mall 85 224 163 Buena Park Mall 62 131 111 The City 43 78 81 Fashion Island/Newport Ctr 108 194 80 Huntington Center 76 156 105 Laguna Hills Mall 85 145 70 La Habra Fashion Square 25 25 0 MainPlace/Santa Ana 30 185 516 Mall of Orange 83 126 52 Mission Viejo Mall * 144 NA South Coast Plaza 210 672 220 Westminster Mall 141 171 21
* Built in 1979
Source: State Board of Equalization
