CityWalk Not Standing Still

With the opening of CityWalk seven years ago, Universal Studios Hollywood was at the leading edge of the “shopper-tainment” trend--mixing quirky retail stores with theaters, themed restaurants and nightclubs.

With malls around the country copying the concept, CityWalk doesn’t quite stand out like it once did. So, like a theme park opening a hot new ride, CityWalk this spring will debut a major expansion that could help it again stand out from the crowd.

The new attractions include an IMAX 3D theater, a Latin dance club, a dueling piano bar and a “virtual” Nascar motor speedway, where up to 12 drivers can race each other. New restaurants will be mainly fast-food gourmet.

“We’re going to have the first quick-food versions of Jerry’s Famous Deli, Versailles and Gaucho Grill,” said Larry Kurzweil, president and chief operating officer of the Universal Studios Hollywood theme park.

Universal executives say they spent the better part of a year just looking for businesses that would create a buzz.

“We were looking for choices and concepts that had a lot of attitude, fun and energy,” Kurzweil said, adding that new stores will include shops selling vintage apparel, Harley-Davidson clothes and film memorabilia.

The expansion, due to open in April, will add 93,000 square feet to the 300,000 square feet of retail-entertainment development on top of the hill in Universal City. The number of venues will increase from 40 to 65.

If Universal executives are at all anxious about customer demand, they’re not showing it. CityWalk already draws 9 million visitors a year, they say--many of them dropping by after a day touring the adjacent Universal Studios theme park.

“The key concept is that this is an extension of Universal Studios Hollywood,” Kurzweil said. “That’s not something other kinds of shopping-entertainment places can offer.”

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Analyst Greg Lubushkin, a real estate partner for PricewaterhouseCoopers agrees the theme park gives Universal an advantage over other entertainment-heavy shopping centers.

“You never see an empty store in CityWalk,” Lubushkin said. “They’ve tried to do the same thing in Orange County with the Block at Orange, but it’s been a lot slower to take off. Universal’s affiliation with the studio and the theme park seems to help quite a bit.”

Richard Giss, a retail analyst with Deloitte & Touche LLP, also believes the theme park is the key to CityWalk’s success.

“If you took CityWalk and put it in the middle of some other city without the attachment to Universal, I’m not sure it would be as successful,” Giss said.

Still, the panache of a studio theme park doesn’t necessarily mean a sure-fire success. Traffic has been slow at a second CityWalk Universal that opened last year near its Orlando, Fla., theme park, according to Tim O’Brien, an editor at the trade magazine Amusement Business.

“But I would chalk that up to a soft opening,” O’Brien said. “The park didn’t really advertise that much because they weren’t sure when businesses were opening. First, some restaurants opened and then the cinema came online. But it’s a building process.”

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Locally, Kurzweil said he thinks the biggest competition hasn’t been the shopping malls but rather new theater complexes that have sprung up in the Valley.

“We’ve seen more than 100 new screens open in the Valley in recent years,” he said. “That means consumers have to drive by a lot of new multiplexes to get here.

“But I think we’ve continued to stay out front. Part of our formula is to get a collection of very legitimate, very real brand-name tenants willing to step outside of their own box and create something unique. We think we offer a wonderful evening as opposed to just going to see a movie,” he said.

Universal has three types of agreements with CityWalk venues. The retail shops and several restaurants have standard leases, and pay Universal rent for the right to be on CityWalk.

In other cases, Universal operates restaurants as a joint venture with the parent company of the chain. And in other cases, Universal owns the business outright and licenses the name.