Hard Times at Peninsula Center Reflect City’s Sagging Fortunes
The darkened Buffums store and the rows of empty shops with “For Lease” signs stuck in dusty windows give the Peninsula Center’s interior courtyard a grim, ghost town look.
It is a sight that reflects the hard times that have hit the shopping mall in Rolling Hills Estates and offers a glimpse of a gloomier economic future faced by a city known for its affluence.
The downturn started simply enough. First, Safeway went out of business. Then Buffums department store closed in May, taking away another large chunk of sales tax revenue from the city. In recent months, a dozen or more small shops and businesses have closed their doors.
The 30-year-old center’s occupancy rate has dropped to 75%, according to officials at the mall’s management company. And the center’s economic woes have triggered concerns among finance officials at City Hall.
In Rolling Hills Estates, the city’s $4.4-million budget is still in the black, but officials are worried because the city’s sales tax revenues have fallen dramatically. The sales tax contributes a third of the city’s general fund revenues.
When Buffums went out of business, the city lost $60,000 a year in sales tax. Sales tax revenues are currently bringing in $1.4 million, down $200,000 over the past three years, city officials reported.
“Just because we live on the peninsula it doesn’t mean that we’re not affected by the recession,” said Rolling Hills Estates Councilwoman Jacki McGuire.
City officials have offered to assist the shopping center’s owners and managers to help find a replacement for Buffums and to attract more shops.
“Our big concern is the lost sales tax,” City Manager Douglas R. Prichard said. “We are available to help (the center) in any way we can,” he said.
The center’s future has become a major issue in the Nov. 5 City Council elections. The six candidates for the three vacant seats all agree that “something” has to be done to save the center, but no one has yet come up with a rescue plan.
Some of the shopkeepers in the mall say the center’s manager, Meridian Point Co., must take at least part of the blame for the downturn, claiming that the center has been poorly run. Officials from the management company deny the charge.
The center first opened in 1962. It is a part of the upscale commercial district along Silver Spur Road that serves the entire peninsula. Other shopping areas along the corridor report that although total sales are down, they are doing reasonably well.
The Peninsula Center, at the intersection of Silver Spur Road and Hawthorne Boulevard, is managed by Meridian for the financially troubled Sierra Real Estate Equity Trust ’84, a San Francisco-based investment trust with extensive holdings.
The Peninsula Center was purchased by the trust six years ago and was extensively remodeled, according to Stephanie Bradway, who manages the center for Meridian. She acknowledged that the trust is in some “financial difficulty” and is liquidating some of its holdings. The company put the Peninsula Center on the market in May, with a $30-million asking price.
“Real estate is very depressed, and (Sierra Real Estate Equity Trust ’84) is just trying to make it through tough times,” Bradway said.
The vacant stores and lack of shoppers are telltale signs that the recession has come to rest on the prosperous Palos Verdes Peninsula.
“Everyone is getting killed by the recession; it has hurt everybody,” said Larry Arman, a Rolling Hills Estates real estate broker. Layoffs and corporate mergers in the sagging defense industry and elsewhere have hit the peninsula’s high-salaried white-collar executives hard, he said.
Still, not all of the news is bad in the center. Pavilions, a subsidiary of Vons supermarkets, is doing a brisk business, mall officials said. And T.J. Maxx, a major “off-price” retail chain that discounts high-priced clothing brands up to 60%, reports its 2-year-old store in the center has increased sales by 20% over last year.
“We’re doing more than $100,000 a week . . . making us the top store in our (Southern California) district,” said Barbara Hey, assistant T.J. Maxx store manager.
Even where the news is upbeat, however, there are other signs that hard times have hit some of the peninsula’s shoppers. Hey said there has been a dramatic increase in shoplifting and price-sticker switching.
“Maybe it’s a sign of the times, but one woman tried to steal an $80 pair of shoes the other day, and switching price stickers is always a problem,” she said.
Not every merchant in the center agrees that the economic downturn is the only reason for the Peninsula Center’s decline.
“It’s not just Buffums going out of business that’s hurt us; a big part of the problem is the (center’s) management,” said George Rekenye, owner of The Equestrian, a pricey shop featuring riding apparel, tack and gifts. Rekenye has been in the center for 15 years but is thinking about moving.
The center’s problems started six years ago when the current owners bought the property and remodeled the center, he said. Management officials decided to increase the amount of parking spaces--to the point where it became difficult for customers to drive around, Rekenye said.
“People just didn’t like it, they got mad and don’t come here anymore,” said Rekenye, whose complaint was echoed by other merchants.
Meridian’s Bradway rejected the notion that the management firm was to blame for the vacancies and lack of business. “We work very hard to help the tenants through bad times,” she said.
She said Meridian and the center’s owners have hired a real estate firm to find a replacement for Buffums and to sell the center property.
Meanwhile, the Palos Verdes Chamber of Commerce is doing what it can to spur the economy and to attract more customers to the center and other businesses along Silver Spur Road.
“The chamber is trying to develop plans and projects to bring more people into the area,” chamber President Steve Fowler said.
However, he admits that the overall economic climate doesn’t leave him very optimistic.
“The overall economy on the peninsula still isn’t doing very well,” he said.