Buying into Americana
Visitors to Glendale’s Americana at Brand will notice some changes at the glitzy open-air center. There’s free parking Mondays through Thursdays. Some restaurants offer kids-eat-free lunch specials. Signs tout a weekly European-style farmers market, which begins today, and huge banners advertise free rent in the center’s luxury apartments.
And in a sight that has become familiar at malls around the nation, displays at many of the Americana’s upscale shops promote the latest markdowns, such as one outside the Peter Alexander boutique that reads: “Beat the recession. Everything is almost free!”
Combining retail, dining and entertainment with condos and apartments, the Americana is shopping mall magnate Rick Caruso’s first residential mixed-use property. He opened the 15.5-acre, $400-million lifestyle center a year ago at a dicey time for the economy, and some wondered whether the recession would hamper his most ambitious development yet.
Despite the signs, the Americana, which opened almost a year ago, is clearly a hit.
Like the Grove, Caruso’s upscale shopping mecca in Los Angeles, the Americana is often packed, with people lounging on the meticulously landscaped lawn and snapping photos in front of a Las Vegas-style fountain. In the Americana’s short existence, Caruso said, 1.5 million cars have parked in the garage and about 16 million people have checked out the property -- or about 77 visits for each of its hometown’s roughly 207,000 residents.
The center’s Cheesecake Factory and Pinkberry rank among those chains’ top performers, the companies’ representatives said. Attendance at the movie complex has “exceeded expectations” and continues to grow, said Amy Wood, vice president of marketing for Pacific Theatres.
Said Caruso, “I couldn’t be happier with the success of the center.” The free parking and farmers market represent extra service for customers, not a reaction to problems, he said.
How the center’s popularity is playing out in its retail stores is less clear. Several store employees said business had been sluggish amid the economic downturn and worried that the center’s other offerings were detracting from the shopping experience.
“It’s kind of like Disneyland on the weekends,” said Jennifer Fowler, assistant manager at women’s boutique Free People. “People come here to ride the trolley and see the fountain and maybe to eat, but not to shop.”
At high-end shoe retailer Stuart Weitzman, where a pair of heels can run hundreds of dollars, the store has offered regular discounts on shoes and handbags to try to drive sales, sales associate Christina Martirossian said.
“Every day is different. One day we’ll be super busy, but most of the time it’s slow,” she said. “It hasn’t been that great -- hopefully it’ll pick up.”
With shoppers scrimping, the Americana is facing a shifting consumer mind-set that is disproportionately hurting high-end retailers. Compared with the mid-priced stores found at malls such as the Glendale Galleria across the street, the Americana’s shops -- Tiffany & Co., Kate Spade and Juicy Couture among them -- tend to be more expensive.
“When we went there, the retail experience seemed to be a little slow catching on,” said Richard Giss, a partner in Deloitte & Touche’s consumer business division in Los Angeles. “I don’t think the stores per se are overpriced, but the part of the retail spectrum that they’re in is doing worse than other parts of the market. People don’t feel good right now about conspicuous consumption.”
Americana regular Sarah Canahuati, 37, is one of them.
The stay-at-home mom from Studio City goes to the shopping center weekly for live music and a playground jaunt with her 3-year-old son, Ethan. But beyond stopping for lunch at one of several restaurants that offer kids-eat-free deals on Tuesdays, Canahuati rarely buys more than a book from Barnes & Noble.
“We’re not doing the Americana any favors,” she said. “They’re all high-end stores, which is fantastic when times are good, but not when everybody’s shopping at Target.”
Caruso isn’t worried. The developer, a former Los Angeles Police Commission president who has built a fortune from his real estate properties, says it’s all part of designing a center that is more than “just a shopping destination.”
“If you want to come on our property and do nothing but read the newspaper or go for a walk or hang out with your kids, great,” he said. “Because if you do that, then I know when you want to shop or you want to dine or you want to see a movie, you’re going to come back and you’re going to do that with us.”
Many store executives said even though sales weren’t booming, they saw a lot of promise in the Americana.
“I’d be lying to you if I said business was phenomenal across our company or for any particular location,” said Michael Celestino, executive vice president of stores for Barneys New York, which has a Co-Op store at the Americana.
That store, he said, has “performed better than average in terms of our other Co-Op stores against this economic downturn. My gut would be that as the economics improve, we’ll find that that location for us is within the top tier.”
Harlan Bratcher, chief executive of A|X Armani Exchange, said the company’s Americana store would take about three years to become profitable, which is typical, but so far was “coming close to expectations.”
“It’s pretty good,” he said. “Could it be better? Sure, but we blame that on the economy, not the location or the development.”
Caruso said the number of retailers that were underperforming was relatively small.
“There are some retailers that are on the property that are having systemwide issues, and we’re getting impacted,” said Caruso, who declined to mention specific businesses. “I would say there’s probably, that I’m aware of, four or five retailers that don’t make plan -- aren’t making the goal numbers that are set for them by corporate -- out of the 80. It’s a very small group.”
Glendale city officials report that the Americana, which opened May 2, collected $269,605 in the second quarter of 2008, which ended June 30. That rose to $282,027 in the third quarter and $330,406 in the last three months of the year, including the crucial holiday shopping season.
To get the Americana built, Caruso waged a seven-year battle that included fighting a ballot referendum against the project funded by General Growth Properties Inc., owner of the Glendale Galleria. (General Growth filed for bankruptcy protection Thursday in the largest real estate Chapter 11 filing in U.S. history.) Galleria executives have come to accept the fancy neighbor across the street and even acknowledge that the mall might be benefiting from its presence.
After the Americana opened, the Galleria’s year-over-year sales tax revenue rose in the second and third quarters, Glendale city officials reported. But as the economy slumped in the fourth quarter, retailers’ busiest sales period, the Galleria brought in $1.6 million in sales tax revenue, down 9% from a year earlier.
“We’ve seen an enhanced level of traffic at the shopping center this last year and I think we’re seeing good cross-shopping that’s really facilitating both properties,” said Janet LaFevre, senior marketing director at the Galleria.
“Years ago we were concerned about the impact and the design concept of it, but we’ve moved on.”
With a well-rounded lineup of offerings and experienced managers, Caruso has positioned the center to do well, said Phil Lanzafame, Glendale’s director of development services.
“Critics would say when you introduce something new, like the Americana, you are simply cutting up the pie into smaller pieces,” he said. “In Rick’s strategy, the pie grows.”
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BEGIN TEXT OF INFOBOX
Americana at Brand
Cost: $400 million
Size: 15.5 acres over four city blocks
Shops: 75
Restaurants: Eight
Residential: 100 condos, 238 apartments
Movies: An 18-screen Pacific Theatres cinema
Fountain: 80 feet wide, sprays up to 100 feet in the air in time with an 11-song playlist
Other attractions: Trolley, 180-foot elevator tower with 1,000 LED lights that dance to the fountain music, 12-foot outdoor crystal chandelier, weekly farmers market, shopper concierge
Source: Times research