Working the Crowd

Old Pasadena and Santa Monica’s Third Street Promenade are the envy of civic leaders just about everywhere who would like to turn a bad part of town into a high-rent destination of choice. By most reckonings, those two retail districts are models of successful city planning.

Now, however, civic leaders in Pasadena and Santa Monica are hearing footsteps, but not from competition. What they fear is that the shoppers and strollers who make Old Pasadena and the Promenade sizzle will someday lose interest and walk away--just like they once left Westwood.

The damning contrast is obvious on a recent Saturday. People are walking elbow to elbow on the crowded sidewalks of Old Pasadena, while cars are crawling slowly through the intersections. Near the J. Crew clothing store, a better-than-average blues band is attracting a crowd, while a man and woman with medieval haircuts demonstrate an ancient hurdy-gurdy. A group of teenagers with Technicolor hair push past several couples in late middle age, who sip on Starbucks coffee and fresh fruit juice while window shopping at the historic storefronts along Colorado Boulevard.

In Westwood Village on the same afternoon, the scene is very different. While hardly deserted, the crowds are noticeably thinner. The streets are dotted with empty shops and for-lease signs. It is difficult to believe that this listless scene was one of the most crowded and popular shopping districts in Los Angeles in the mid-1980s.

In fairness, the story of Westwood is not over. Two proposed multiscreen theater projects, as well as ongoing investment activity, could help bring about a revival of the shopping area in the next several years.

Still, the Westwood experience raises some serious questions that haunt property owners and public officials who manage the currently popular shopping districts.

Is there an inescapable boom-and-bust cycle? Does popularity inevitably lead to a takeover by teenagers, and low-end “impulse” retail shops selling T-shirts, frozen yogurt and fast food? Does Los Angeles simply burn out its favorite gathering spots through overuse? Are there strategies or laws or ordinances that could protect the commercial viability and security of such places?

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Those questions are not academic to Marsha Rood, development administrator for the Pasadena Housing & Development Department, which manages Old Pasadena.

“We understand the boom-and-bust cycle,” she said. The decline of Westwood, Rood added, has been a case study for Pasadena as it seeks to maintain the vitality of its shopping district.

One key to success is to offer a range of businesses and prices. But keeping desirable tenants--while discouraging the less desirable ones--is a hard process to manage.

A dramatic case in point can be found in Berkeley, where the City Council in the 1980s attempted to stabilize the tenant mix in at least three of the city’s popular shopping areas. Ordinances “froze” the existing mix of tenants through the use of quotas, said Vivian Kahn, former zoning administrator for the city and now a principal at Kahn/Mortimer Associates, an Oakland-based planning and architecture consulting firm.

The Berkeley laws set a limit on the number of certain kinds of stores and restaurants that operated in a given district. Officials established quotas for banks, service businesses, restaurants, hair-care establishments, printing shops, gift shops, and clothing stores, among others.

As a concession to landlords, those with “nonconforming” tenants not normally allowed under the quota would be allowed to keep that tenant in place, or another tenant in the same category.

The system quickly developed problems, according to Kahn.

“The quota slot became a commodity in and of itself,” she said. When a restaurant moved out of a given space, “the landlord, knowing that a restaurant can generate higher rents than a shoe-repair store, would hold the space off the market until he found another restaurant” to fill it.

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And other landlords, eager not to lose the right to “nonconforming” uses under the restrictive system, started forcing some tenants to go into new lines of business, just so the landlord would not lose the right to lease space to a restaurant in the future.

“We had a landlord tell a gift shop owner that he had to put a coffee urn in the back of the store, because the landlord did not want to lose his right to serve food,” Kahn recalled.

The laws remain in effect in Berkeley today, with only minor changes.

Although Santa Monica has not enacted restrictions as sweeping as those in Berkeley, a combination of ordinances, zoning and some behind-the-scenes matchmaking has helped to maintain the vitality of its Third Street Promenade.

“Some broad government controls are important,” said Robert O. York of Fransen Co. of Santa Monica, a retail consultant to Bayside District Corp., the nonprofit company that manages the Promenade. Among the most important controls, he said, is zoning, which has limited new movie theaters to Third Street, where they serve as a magnet for visitors.

Other Santa Monica ordinances discourage fast-food outlets in the area and cap the number of bars and liquor licenses on Third Street in an attempt to spread those types of businesses onto neighboring Second and Fourth streets, according to York.

In addition, York acts as matchmaker between “desirable” tenants and landlords. In other cases, he acts as match-breaker.

“If you want to remove some of the boom-and-bust nature of the street, you have to learn some lessons from shopping centers,” such as keeping a balance between well-known retail chains and unique local merchants, York said, “so the street will not be felt as generic.”

(A similar philosophy prevails in Old Pasadena, where about 60% of those doing business are local merchants, according to Rood.)

Ideally, landlords should be discouraged from hiking rents as high as the market will bear, York said, or for holding out for the highest-rent-generating tenant in every case.

“There is a natural business cycle that comes into play when an area starts to take off and rents begin to exceed even the ability of large merchants to keep up,” he said.

Another management technique is to encourage merchants to rethink the way they use space. For instance, York has persuaded tenants who were originally looking for a store on a single level to occupy entire small buildings on several floors, even though that arrangement of space goes against conventional wisdom in the retail trade. “We have broken a lot of rules in Santa Monica,” he said.

At the same time, York sometimes discourages agreements between less desirable retailers and landlords. Although he does not have the power to break deals, “I have been scrambling very hard to put some better tenants in front of landlords, to let them know they have options.”

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The strategy has paid off for Third Street Promenade, which has about 500,000 square feet of commercial space and generates about $400 a square foot annually in retail sales, which is on par with the Westside’s best regional malls. “We are truly holding our own,” York said.

In addition, city sales tax revenue from the area have nearly quadrupled over the last nine years. “What makes that growth much more impressive is that it did not occur through massive development, but through ‘re-tenanting’ and rehabilitating existing buildings,” York said.

Pasadena, on the other hand, thinks that good planning, rather than city ordinances, is the best way to preserve vitality and a desirable mix, according to Rood.

“We do not look at Old Pasadena just as a retail district,” she said. “It is not a themed shopping center. It is a place where people live, work, shop and play.”

Instead of relying chiefly on entertainment and food, as did Westwood, “We are encouraging a lot of different uses, including cultural institutions, such as museums and theaters, workplaces, neighborhood-serving stores, such as drugstores and dry-cleaners.”

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Housing is another important part of the Old Pasadena mix, said Rood, who cited new apartment developments in downtown Pasadena, including market-rate apartments, senior housing, single-room-occupancy hotels and “live-work” space where artists and craftspeople can conduct business out of their homes in specially zoned areas.

The presence of housing discourages crime, according to Rood. “People who live in the area have an extremely high standard of maintenance and security. There is a built-in constituency to keep [the area] going,” she said.

To succeed, Rood said, Old Pasadena must above all be comfortable to residents. “We are adding additional lighting, benches, street furniture and trees, to make it a very enjoyable experience, paying attention to details, to make it a comfortable public living room.”

At the same time, Old Pasadena intends to remain a real downtown and not merely an outdoor shopping center, Rood said. That means some rough edges, she said.

“We have a tattoo parlor and a sex shop and some urban roughness, and that needs to be respected.”