Dreams of Upscale Mall May Be Scaled Down to Meet Fiscal Reality

When plans for the city’s last major redevelopment area were taking shape years ago, city officials envisioned that upscale anchor stores such as Saks Fifth Avenue and Neiman-Marcus would grace the commercial portion of the 125-acre Towne Center site alongside the Artesia Freeway.

This week, however, City Council members may have to acknowledge that their upscale dreams have been dashed by the economic realities of the ‘90s.

The City Council is scheduled to vote Thursday on a $15.3-million shopping center proposal that would be anchored by a grocery store and a Wal-Mart, the Arkansas-based mass merchandiser that has become the nation’s largest retail chain.

Granted, Smith’s Food and Drug Centers, a Utah-based chain currently moving into the Southern California market, is regarded as upscale in its field. But in some Cerritos circles, Wal-Mart is synonymous with K mart.

“I’m not sure how complementary (Wal-Mart) will be with a Sheraton Hotel and a $50-million performing arts center,” said Councilman John Crawley, referring to two of the more prestigious Towne Center tenants.

Councilman Paul W. Bowlen described Wal-Mart as “an upscale K mart.”

The shopping center proposed by Vestar Development Co. of Phoenix, Ariz., would also include movie theaters, a host of small shops and restaurants, and possibly another large retail store. An open-air design, the shopping center would spread across 40 acres in the northwest corner of Towne Center near where the 91 Freeway crosses Shoemaker Avenue. The developers would lease the city-owned land, meaning city coffers would receive rent as well as tax revenues.

City Manager Art Gallucci and his planning staff are urging the council to approve the Vestar proposal, one of three the city received for the property. The Vestar plan is the only one that included agreements with two large chain stores.

No upscale department stores approached the city about locating in Towne Center. And it is unlikely that any ever will, according to a study done for the city last year by Economics Research Associates of Los Angeles.

The consulting firm said the socioeconomic makeup of Cerritos and surrounding towns could not support the type of upscale stores that line the streets of Beverly Hills and draw crowds to Costa Mesa.

The proposed Vestar shopping center would generate an estimated $2.3 million in rents and revenues for the city during the first year of operation, according to a recent study by another consulting firm, Kotin, Regan & Mouchly Inc. of Los Angeles. In 20 years, the city would be receiving more than $5 million a year, the consulting firm said.

But some council members said they still are reluctant to surrender the last large piece of vacant land to something less than the upscale mall they originally envisioned.

Councilwoman Ann B. Joynt said the decision is the most difficult of her council career. She acknowledged that if the council rejects the Vestar proposal, Smith’s and Wal-Mart “are going to go somewhere else.”

Bowlen said he is torn between losing the development to another city and trying once more to entice other developers and other retailers to Cerritos. “It’s a tight one. It really is,” Bowlen said.

The proposed Wal-Mart store would be the first in the immediate area. The nearest Wal-Mart stores are in Victorville and Palmdale, according to Cerritos officials.

Councilman Sherman Kappe said he still is concerned about Towne Center’s image. “I would much rather have a more upscale development,” Kappe conceded.

However, he said that he and other council members were sobered by last year’s consultant report, which said an upscale mall would have no market here.

While the population in and around Cerritos is stable and has a high rate of employment, Economics Research Associates pointed out that it is a family-centered area, and that families generally do not have disposable income to spend on luxuries in upscale stores. ERA also said the Southeast area is saturated with malls and that a Towne Center mall would compete against Los Cerritos Center on the west side of town.

In addition, the grande dame department stores, such as I. Magnin or Saks, are barely holding their own against large discount stores and outlets, ERA said. The consultant said the best alternative is what is known as a power center--malls with huge chain stores such as a Circuit City or Wal-Mart that can afford to swamp the competition with lower prices.

When Smith’s and Wal-Mart first were mentioned as the key retailers, the council’s reaction was “no way,” Bowlen said. But council members reconsidered their position as they became more aware of the current economic realities, he said. Some council members traveled to Arizona to tour a Wal-Mart and a Smith’s.