Malls Shopping for Success With New Look and Role in Community
Not even the biggest and best shopping centers can rest on their laurels. And those that are doing poorly have little choice but to reinvent themselves, as San Fernando Valley’s malls are demonstrating with their latest round of renovations, expansions and make-overs.
Mall owners are investing in modifications that range from a $2.5-million teen-oriented shopping area at Glendale Galleria to a $35-million renovation of Westfield Shoppingtown Promenade in Woodland Hills.
In some cases, as at Glendale Galleria, mall owners are trying to improve upon what retail experts say is a successful center.
In others, as at the Promenade and in a planned make-over of the Fallbrook Mall in West Hills, the changes are designed to breathe new life into malls that have become outdated or must change in order to survive near a stronger competitor, said retail expert Jim Rosenfield of Santa Ana-based J. M. Rosenfield & Associates.
What’s happening in the Valley is indicative of what’s happening nationwide, Rosenfield said.
“Malls are continually having to reinvent themselves because of changing tastes and preferences among consumers,” Rosenfield said.
The following are among the projects recently completed, underway or planned at Valley malls:
* Northridge Fashion Center this month is opening 50,000 square feet of new retail space in an expansion of the 1.5-million-square-foot center at Tampa Avenue and Nordhoff Street.
* Sherman Oaks Galleria’s transformation from a mall to a combination shopping, entertainment and office complex is scheduled for completion early next year. The property at the 405 and 101 freeways in Sherman Oaks will include 700,000 square feet of office space, plus 300,000 square feet of new shops, restaurants and movie theaters, according to Allen Young, a CB Richard Ellis broker, who is marketing the project on behalf of owner Douglas Emmett & Co.
The entertainment portion of Sherman Oaks Galleria will include a 16-screen, 4,000-stadium seat Pacific Theatres complex, Young said.
The remodeled center also will include a Cheesecake Factory restaurant and a 50,000-square-foot prototype Tower Records-Video-Books store, Young said.
* Glendale Galleria’s renovation of 15,000 square feet of retail space in the 1.5-million-square-foot mall to create “The Zone,” was completed in July. The Zone includes youth-oriented retail shops, a lounge area where teens can gather and a bulletin board where they can exchange messages, said Annette Bethers, marketing director for the mall.
* Westfield Shoppingtown Promenade’s $35-million make-over of the lower level of the 600,000-square-foot center is now underway. Renovations, slated to be finished in the spring, are expected to “transform the center from a well-located but weak high-end specialty center into an entertainment-retail center,” according to a Westfield’s quarterly financial report.
* Plans for a major renovation of the Media City Center in Burbank are “very preliminary,” but the owners “hope to do something in 2001,” said Joe Paggi, a senior vice president with owner Center Trust, a Manhattan Beach-based real estate investment trust.
* A make-over of Fallbrook Mall is designed to transform the enclosed mall into “a million-square-foot outdoor value, dining and entertainment center” beginning next year, according to the center’s owner, Chicago-based General Growth Properties.
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Last week, however, the mall suffered the loss of its 10-screen General Cinema multiplex. The move came as part of a nationwide cutback by General Cinema, which is considering bankruptcy.
* The $70-million renovation of the 860,000-square-foot Glendale Fashion Center into an open-air shopping center by Phoenix-based Vestar Development Co., which acquired the 35-year-old regional mall in 1997.
* The addition of 30,000 square feet of retail space, either completed or soon to be finished, on Town Center Drive in Valencia. The space is the latest of 250,000 square feet of shops and restaurants in an outdoor setting, next to the 790,000-square-foot Town Center Mall.
The current projects might be described as the latest round in a series of make-overs that began in the mid-1990s, when an improving economy and rising retail sales emboldened many mall owners to expand or renovate, often adding movie theaters and restaurants to create ‘entertainment-oriented” shopping centers.
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Among the new tenants at the Promenade in Woodland Hills will be an Italian restaurant and bakery, a 24,000-square-foot Barnes & Noble superstore and Jillian’s, a family entertainment center, featuring bowling, restaurants, billiards, dancing and an arcade, said Catharine Dickey, a Westfield spokeswoman.
Rosenfield said the Promenade, like Fallbrook and Sherman Oaks Galleria, typifies the trend for centers to transform themselves into something other than a traditional enclosed mall to remain competitive.
Events of the last few years have divided malls into the haves and the have-nots, Rosenfield said.
“Some malls have improved, like Sherman Oaks Fashion Center, Northridge Fashion Center, Topanga Plaza. But if you look at those that have not made it, some of them are either too close to more successful malls or need to be altered,” Rosenfield said.
The Sherman Oaks Galleria, the Promenade and Fallbrook are examples of malls that “needed to be reinvented into something that’s appropriate for the community,” he said.
One change that boosted the fortunes of some malls--the addition of stadium-seating theaters--had the opposite effect on centers that didn’t get new theaters, he said.
“I’m not sure anyone realized how popular the new stadium-seating theaters were going to be, to the detriment of the older theaters,” Rosenfield said.
But the theaters have turned out to be problematic, even at malls where they’re doing well.
The proposed sale of Valencia Town Center has been put on hold, because of the bankruptcy of Newport Beach-based Edwards Theaters, an anchor tenant there.
The mall is still for sale, said Marlee Lauffer, a spokeswoman for owner Newhall Land & Farming Co. Though the outcome of the Edwards Chapter 11 bankruptcy proceeding remains uncertain, Newhall expects the theater will continue to operate at Valencia Town Center, because Edwards does extremely well there, Lauffer said.
The ultimate effect of theater bankruptcies on mall owners has yet to play out, according to Gary A. Glick, an attorney with Cox, Castle & Nicholson, but it may be more likely to hurt mall owners who are already struggling.
“Bankruptcy law in many ways preempts lease terms, and it allows the theater owners to reject any leases they don’t like. They can pretty much pick and choose which leases they want to assume and which they want to abandon,” Glick said.
That’s likely to mean theater operators will rid themselves of leases at older, less popular theaters in generally less successful malls, Glick said.
That means losses of revenue for mall owners, who generally can recover only about a year’s worth of rent from a bankrupt theater operator--if that--regardless of how much time is remaining on the leases, he said.
Replacing theaters with other tenants is also a tough proposition, because theater space requires expensive renovations to make it suitable for other retail uses, he said.
Besides the renovations of existing Valley shopping centers, more brand-new retail space is on the way.
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Los Angeles-based Zelman Development Co. recently signed an agreement with the city of San Fernando to create a 12-acre shopping center anchored by a big-box retailer at Truman and Lazard streets.
The agreement gives the developer six months to write a proposal for the center, obtain financing and identify major tenants for the project. Brett Foy, vice president and general counsel for Zelman, said no estimate of the project’s construction cost is available. City officials said construction could begin in a year.
