Santa Monica Place set to reopen as upscale outdoor shopping venue

Since designing Santa Monica Place mall more than three decades ago, Frank Gehry has become a world-renowned architect and Santa Monica has become one of the most lively and thriving beach cities.

The suburban-style mall, however, languished in time, walled off from the increasingly vibrant street life.

Now a developer is betting it can become hip again. Macerich Co. spent $265 million to rip the mall at Third Street and Broadway down to its steel foundations and rebuild it as a three-story outdoor shopping venue.

Next Friday, after more than two years locked behind construction barriers, the new Santa Monica Place will open to the public.

Because of the still-challenging economic environment, it will be one of only a few major shopping centers in the U.S. to open in 2010. What’s more, the 550,000-square-foot Santa Monica Place will be decidedly upscale.

It will have Nordstrom and Bloomingdale’s department stores, white-tablecloth restaurants, a food market and a mix of mostly high-end retailers. It will in effect extend the popular adjacent shopping district, the Third Street Promenade, another block.

The old mall, anchored by Macy’s, performed above industry standards, said Arthur Coppola, chief executive of Macerich, but sales fell far short of what they could have been. The affluent Westside — even with all its pricey boutiques and fine restaurants — is “underserved” with luxury shopping opportunities, he reckoned.

“It was a very ambitious plan to shut down a regional shopping center already [grossing] $400 a square foot” every year, Coppola said, “but it had the opportunity to be so much more.”

Evidence was literally across the street. Stores in the Promenade pull in an average of about $1,000 per square foot, real estate brokers said.

Santa Monica Place’s shortcomings had been plain since the Promenade took off in the 1990s, but there were hurdles in the way of transforming the mall. Long-term leases with mid-price department stores Macy’s and Robinsons-May hindered the mall in attracting the high-end retailers Macerich coveted.

A break came in 2006, when Macy’s parent company bought out Robinsons-May, freeing up one of the department-store spaces.

Nordstrom agreed to be a part of the new Santa Monica Place. The Seattle-based chain already had a branch in Macerich’s Westside Pavilion near Century City, but nothing in the demographically desirable neighborhoods around Santa Monica.

“It’s just a terrific location, with Third Street and the pier nearby,” Nordstrom spokesman Colin Johnson said. “We think this is going to be a destination center.”

With Nordstrom onboard, Macerich persuaded Macy’s to upgrade its spot in the mall to a Bloomingdale’s, a more upscale chain owned by Macy’s Inc. Santa Monica Place then had the pillars of a luxury mall and it was able to recruit other high-end retailers such as Barneys New York Co-op, Tiffany & Co., Betsey Johnson and Louis Vuitton.

Macerich also made another gamble, opting to make food the mall’s third anchor — restaurants and food stores will take up a third of the space in the center. In a departure from the old days when malls were known for such simple fare as Hot Dog on a Stick, Santa Monica Place will have six chef-driven fancy restaurants and nine fast-casual dining spots.

A marketplace inspired by tenants of the Ferry Building in San Francisco will open on the dining deck a few months after the rest of the mall. It will house 27 independent purveyors of such delicacies as gourmet chocolates, cheeses and fresh bread.

“It’s an artisan environment intended to cater to foodie types of people,” Coppola said.

The outdoor third level, with olive trees, lounge areas and heaters, is intended to be a social gathering spot for local residents, architects David Rogers and Rick Poulos of Jerde Partnership said. If tourists notice what the locals are up to and decide to join in, all the better.

“Usually the third floor of a mall is death for retailers,” Rogers said. “Food is the perfect use for that space.”

The pair were conscious of reworking an early work by Gehry, who went on to design Walt Disney Concert Hall and other international landmarks. But there had been little of his flair evident in the design of the mall. Perhaps the only signature feature he incorporated into the building was the use of chain link for signage, and that’s been preserved.

Rogers and Poulos discussed their plans with Gehry. “He was completely with us,” Rogers said.

Macerich had once hoped to demolish Santa Monica Place and replace it with a 10-acre complex of high-rise condominiums, shops and offices over underground parking. The company scrapped the ambitious plans in 2006 after being hit with a wave of opposition from local critics who said it would overwhelm the city’s downtown.

The architects’ goal with the scaled-down current design was to unblock the flow of downtown foot traffic, making the transition from the Promenade to Santa Monica Place near seamless. “Once you pull the plug out of the bottle, you have great wine,” Poulos said.

If it is a success in the near term, it will be bucking the trend.

The mall industry in much of the region is still in tough shape, commercial real estate broker Michael C. Jensen of Pacific Retail Partners said. Rents have been reduced as much as 50% at some shopping centers in Southern California since the recession began.

“This has been a painful period because of a lack of consumer demand,” Jensen said.

In some locales, malls have turned to tenants such as karate schools, doctors’ offices and glow-in-the-dark miniature golf to fill space, said Jesse Tron, spokesman for the International Council of Shopping Centers.

But the new Santa Monica Place could have a better shot than most.

“You are now going to attract high-income people who will go to that mall instead of going east to Beverly Hills,” Jensen said. “I believe that mall is going to do very well.”