Pacific Overture
Just a few years ago, the landmark Pacific Design Center of West Hollywood was about as popular as shag carpeting and beanbag chairs. The “blue whale” and its bright green comrade were emptying out as their showroom tenants folded or fled, and interior designers looked elsewhere for bargains.
But now a rising economic tide and a booming housing market is boosting the fortunes of the more than 150 businesses within the vast Cesar Pelli-designed complex at San Vicente Boulevard and Melrose Avenue, and its owners are hoping that they can win the favor of a host of new tenants.
Only this time, following the lead of other such centers around the country, PDC is not relying on interior designers and their well-heeled clients to attract new businesses. Instead, it is seeking out a variety of creative firms, from advertising agencies to multimedia companies, to lease its empty space.
“The economic landscape PDC will face in its second 25 years is remarkably different than what it was in 1975 when Center Blue opened,” said Joel Polachek, the center’s manager. “In order to move the project forward, we’re repositioning the green building.”
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The first step began last year, when ad agency Dailey & Associates broke the center’s vaunted “trade only” tradition and moved its corporate headquarters into two floors of former furniture showroom space in the half-empty green building. Now Polachek has started moving showrooms to the lower floors so the building looks less vacant and so he can entice production companies and software firms to the upper decks.
The plans have ruffled the feathers of a few showroom owners who are worried that crowds of office workers will put off visiting designers and their well-to-do clients. But so far, none of the showroom operators have threatened to leave and at least some of them are undaunted by the prospect of different tenants.
“I think it’s fine. They’re related industries with creative people,” said Chris Prejean, manager of Giati, a teak outdoor furniture company.
But before PDC can lease space to these companies, it must first fork out about $10 million for some office building fundamentals--plenty of elevators and restrooms. Owners Catellus Development Corp. and WW Design of New York recently hired Los Angeles real estate broker Cushman Realty Corp. to find new investors to ante up enough cash for these renovations.
The design complex must look for alternate tenants because analysts say there is little chance of it attracting enough furniture and fabric sellers to fill the 1.2-million-square-foot complex--much less the long-planned third building of 400,000 square feet.
Although spending for home furnishings and bedding hit an all-decade high of $53 billion last year, according to the Department of Commerce, analysts say fewer are buying the super-luxurious furnishings found at PDC, such as $5,000 mahogany end tables or $1,200-a-yard tiger-striped silk upholstery fabric.
“Today it’s much more casual living,” said Dolores Brucklmaier, a director of fabric and furniture wholesaler Brunschwig & Fils, who has worked in the center since it opened. “Now people are moving out of Malibu and Hollywood to ranches in Montana.”
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Where she once saw 100 designers stop in daily for samples, Brucklmaier now considers it a good day if 15 or 20 designers visit. Competition is broadening at the same time, Prejean says. Companies that used to sell just carpet or fabrics are now selling furniture as well.
Downturns in the economy and shifting tastes have also forced changes at several of the two dozen other design centers around the country, most of which were built in the heady 1980s. The Marketplace Design Center in Philadelphia has leased space among its showrooms to office users, including a long-distance carrier. Centers in Boston and Houston have welcomed office tenants too. And in 1991, two years after the San Diego Design Center opened to much fanfare, it was sold and converted to a corporate headquarters for high-tech firm Qualcomm Inc.
PDC almost met a similar fate five years ago when its owners defaulted on the $200-million mortgage, but the financing and the partnership were restructured and the center was able to hang on. Now, Polachek says, the center is current in its mortgage payments, and occupancy has risen to an average of 70%.
“There have been 45 renewals, new leases or expansions--180,000 square feet of leasing in the last 14 months,” Polachek said. He declined to comment further on the center’s profitability.
The idea for PDC was hatched in the early 1970s by Burt Friedman, a local real estate broker who envisioned a large center where designers could find everything they needed under one roof to decorate a home.
When the bright blue 750,000-square-foot building was completed on a former railroad site in 1975, it was a formidable presence on the local skyline and in the design industry. In just a few years, the center was full, and other furniture and design-oriented businesses that could not pay its lofty rents started moving to the area around it.
Business continued to surge during the mid-1980s, when a bull market and soaring consumer confidence prompted celebrities and other well-to-do homeowners to spend large sums to spruce up their houses. Spending $50,000 to decorate one house was not uncommon, designers say, and the real estate market was red hot.
With business booming and the blue building fully occupied, the center’s owners began construction on a second building, a green one this time, which opened in March 1988.
A year later the real estate market began to cool. The new space was never fully leased, and with homeowners canceling or scaling back redecorating jobs, many tenants went out of business or moved, shop owners say.
Attempts to revitalize the center through special events and sales direct to the consumer were begun and then quickly dropped. Three managers with real estate and design backgrounds tried to pull the center out of its tailspin. The latest, Polachek, is a real estate industry veteran who had worked with Los Angeles developer Wayne Ratkovich on his overhaul of the Wiltern Theatre. He was tapped to run the center 20 months ago.
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A self-described design aficionado who lives in a Rudolph Schindler-designed house in Glendale, Polachek admits even he can afford little of the furniture sold in the center. But, he says, he does not represent the center’s primary customer--it is the entertainment industry elite who are driving the rebound in showroom sales.
“They are a substantial part of the purchasing power that makes this center work,” he said.
And he is depending on these industry executives to do more than buy furniture at the center. With office vacancy rates tightening up to 10% in the neighboring markets of Beverly Hills and Century City, he thinks the high-profile structure will soon be appealing as a corporate address.
Several entertainment companies have already asked West Hollywood City Manager Charles Makinney about the possibility of leasing space in the center. Indeed, the days of designers only may be gone forever.
“I think we would all like to continue to have mainly showrooms, but if there is an alternative use that doesn’t hurt the design center itself, we are going to do it,” said Annette Sharkey Beavers, managing director of the Philadelphia design center and head of the trade group Design Centers International.
