Tiffany’s Suit Over Lease Spotlights Competition Among O.C. Malls

A legal dispute between tony New York jeweler Tiffany & Co. and South Coast Plaza has cast a floodlight on the intensifying competition between Orange County’s high-end shopping centers that may cause mall owners to tighten lease restrictions, retail experts said Friday.

Tiffany filed a $1-million lawsuit against the glitzy Costa Mesa megamall this week, claiming that South Coast used an “illegal and unenforceable” non-compete clause in its lease to keep Tiffany from opening a store in the Mission Viejo mall. The latter has undergone a massive renovation and is reopening next month with upscale new anchors Nordstrom and Saks Fifth Avenue.

Retail experts said other stores also would like to open new locations in Orange County but must battle powerful malls to succeed. The bigger the mall, the more power it has to restrict its tenants’ expansion.

“The mall wars are so competitive that premier malls like South Coast Plaza . . . do it at the expense of surrounding malls,” said Ian H. Brown, senior marketing consultant for the Grubb & Ellis retail properties division.

At the same time, retailers--especially publicly owned companies that are under pressure to continually boost sales--have grown wary about allowing radius restrictions into their leases, experts said.

“There’s a ton of business and money in South County,” Brown said. “There probably won’t be any more regional malls built, certainly within Orange County areas. And there probably won’t be any more anchor tenants coming down the line. So malls that are out there better be the best they can be. They have to be to survive.”