Big Chains Hit the Valley--Just Not This One

Hoping to hit pay dirt in Los Angeles County’s lucrative but crowded retailing stream, several national and regional chains are staking a claim in the county’s northern territory--in part because they are unable to find space closer to the mother lode.

Last month, Stein Mart Inc., a Florida-based discount department store chain (think upscale Marshall’s) opened its first Los Angeles County store in Stevenson Ranch, in the growing Santa Clarita Valley.

In mid-November, Dillard Department Stores will open a 150,000-square-foot branch in the Antelope Valley Mall in Palmdale, a move that will mark that chain’s entry into the Southern California market.

And last week, Lowe’s Cos., the nation’s second-largest home improvement retailer, announced plans to build a 150,000-square-foot warehouse superstore on 13 acres of vacant land in Palmdale. That store, along with one in Long Beach, is slated to open late in the year to make the chain’s debut in Los Angeles County.

Real estate professionals with decades of experience tracking retail deals in the San Fernando Valley said the “mature” (read jampacked) region has almost no existing vacancies for these large incoming chains.

“For somebody who wants 150,000 square feet of space, it’s a struggle to find it,” said Jack Persky, vice president of real estate properties for CB Richard Ellis, who is based in the Sherman Oaks office. “That kind of space, large bulk space in a good area--there just aren’t any vacancies.”

The upshot? One valley’s loss is another valley’s gain as the chains find easier prospects in the growing Santa Clarita and Antelope valleys.

“We will wheel and deal,” said Bill Ramsey, Palmdale’s director of administrative services, sounding a bit like a used car salesman. “We’ve got 102 square miles of city and not much of it’s built out. So we can deal.”

In the case of Dillard’s, which has 350 stores nationwide, Palmdale tossed in the promise of sales tax rebates to help cement the deal.

Wes Cherry, vice president of real estate for Dillard’s, said the incentives, up to $2 million in sales tax rebates to cover infrastructure work, didn’t have much influence on the company’s decision to position its only Southland store there. But clearly, it didn’t hurt.

And the deal won’t hurt Palmdale, which has been aggressively wooing retailers and has seen its sales tax revenue more than double in the past 10 years--from $3.1 million for the year ended June 30, 1989, to $8.6 million expected for the current fiscal year.

David Walter, a manager in Palmdale’s office of economic development, said no incentives were given to Lowe’s.

In that case, a Lowe’s official said, the land’s the thing.

The East Coast-based chain--a major competitor to industry leader Home Depot--typically seeks 12 to 15 contiguous acres for its stores, said Brian Peace, director of communications for Lowe’s.

“They’re used to the wide-open spaces of North Carolina,” said Guy C. Lammers, who tracks Valley real estate for the Charles Dunn Co. “Try finding 12 continuous open acres of space in the San Fernando Valley. That’s just the way it is.”

Peace said the company, which is embarking on its first major expansion west of Lubbock, Texas, makes size a selling point.

“We operate the largest home improvement stores in the industry,” he said. “And unfortunately, our options [for store locations] are limited by the availability of parcels of land. The closer you get to the urban centers, the more scarce the land that’s available. That impacts our ability to locate stores in those areas.”

But Peace said Lowe’s is determined to become a major player in the profitable home improvement arena in Southern California. Home improvement sales in the metropolitan region account for about 25% of the $38 billion in sales in the 11-state western region, he said.

To tap into that vein, the company has announced plans to spend more than $500 million in the Los Angeles area to build 30 home improvement superstores over the next four years. One San Fernando Valley real estate source said he expects the company to strike a deal to settle in the Valley within the next 12 months.

Like Lowe’s, many chains look to locate not just one store in the region, but several--enough to allow the chain to achieve a critical mass.

“It’s really tough to come into metro L.A. with one store,” said Dillard’s Cherry, noting that advertising and distribution costs for a single store in urban Los Angeles would be “phenomenal.”

“One store or two stores could not absorb that expense,” Cherry added. “You have to have a number of stores to spread that cost around.”

Palmdale, he said, “is sort of a market all its own.”

Indeed, most retailers said they don’t expect shoppers to trek from Los Feliz to the Antelope Valley just to visit the new retail recruits.

That’s why it’s important, they said, for the stores to come to the shoppers.

Mike Fisher, executive vice president for stores for Stein Mart, said he expects his chain too, to migrate into the San Fernando Valley soon, but he declined to say where or when.

A number of deals are expected to come together this week when the International Council of Shopping Centers meets in Las Vegas.

Meanwhile, Fisher said the company is looking at possible stores in Thousand Oaks, the Glendale area and Pasadena, among other communities.

“We are aggressively populating stores in the Southern California market,” Fisher said. “We’re not going to just have a wide ring around L.A.”

Unlike the less-developed areas upstream, the myriad land parcels in the Valley that could be assembled to accommodate a larger store are owned by myriad owners.

And the negotiating process to put those pieces together can be time-consuming and not always successful.

While those deals come together, chains that are new to the region can spend a little time learning about the Southland consumer. And even though the Palmdale shopper may not have the same buying patterns as shoppers in Burbank, it’s a closer match than say, Pittsburgh.

“A lot of the lessons we learn will be appropriate to other stores in the L.A. area,” said Stein Mart’s Fisher.

“We’ll certainly learn a lot about the Southern California customer. We’ll learn a lot about the California lifestyle.”

Valley @ Work runs each Tuesday. Karen Robinson-Jacobs can be reached at Karen.Robinson@latimes.com.