Atlanta Firm Plans to Purchase, Revamp Shops at Palos Verdes

Seeking to turn around a struggling shopping mall in one of the wealthiest areas in the nation, an Atlanta-based real estate development company said Tuesday that it plans to purchase the Shops at Palos Verdes in Rolling Hills Estates and turn the enclosed mall and a stretch of adjacent roadway into an open-air shopping district.

Cousins Properties Inc., which has developed several California retail centers, including the new Los Altos MarketCenter in Long Beach, has entered into contracts to purchase the 400,000-square-foot mall at 550 Deep Valley Drive for an undisclosed sum from Phoenix PV Associates, May Department Stores Co. and I. Magnin Inc.

The two department store companies own the space where anchor stores Robinsons-May and Macy’s were until they closed last January. The remaining 230,000 square feet is owned by Phoenix, whose president is Palos Verdes Estates resident Ron Florance.

Cousins plans to spend $65 million to turn the mall into the Avenue of the Peninsula, a shopping center that would be similar to Santa Monica’s Third Street Promenade. Cousins officials said the purchase of the mall hinges on approval from the city to allow the developers to close off an adjoining portion of Deep Valley Drive to create a trendy pedestrian retailing area.

Several Rolling Hills Estates city officials called the proposal an important step in revitalizing the mall.

Hearings are scheduled this week before the city’s Traffic and Safety Committee and Planning Commission.

“The conceptual plan sounds like it will provide the kind of shops and services that the residents want,” said City Manager Doug Prichard. “It will also provide foot and vehicular traffic to surrounding businesses.”

Plans to sell the mall come on the heels of a yearlong effort by city and business officials to revamp the shopping district on the tony hillside. Sales tax revenue has been declining for years. The closure of the mall’s two anchor stores has cost the city an additional $250,000 a year in lost sales tax revenue.

An economic study funded by Peninsula businesses and Rolling Hills Estates, where most of the area’s retail shops are, found that the 156,000 Peninsula residents had an estimated $783 million in spending potential but that they were spending only $202 million of it on the hill. The study emphasized the need to make changes in the mall because its “fortress-like appearance showed little hint of the shopping and dining opportunities inside.”

National stores such as Ann Taylor and Williams-Sonoma report that their shops at the mall are successful, but many retailers have struggled. The mall has a 24% vacancy rate and total sales revenue in 1997 is expected to drop from $55 million in 1996 to $30 million.

In an unusual step for a mall owner, Florance opened a cosmetics emporium in the mall last month. Before Macy’s and Robinsons-May closed, those stores’ makeup counters took in an estimated $6 million a year.

Florance had also made plans to redesign the mall, which included putting an upscale market and bank on the street level of the Macy’s building and adding a parking lot out front. Regal Cinemas, which now has nine theaters in the mall, wants to build an additional nine cinemas with stadium seating and up-to-date sound systems.

In the end, Florance lacked the capital, and Cousins saw the mall fitting the profile of its “Avenue” concept, which is also being developed in Orlando and Cobb County, Georgia.

Cousins officials said they plan to move forward with a modified version of Florance’s vision. The project is expected to take as long as two years, and Cousins hopes to get it underway by August.