While he has been in business downtown for only a month, Dan Maughan already knows he made a good choice.
The bath-and-body products he stocks at his retail store, Moon and Sun, are selling briskly at all kinds of stores, but they’re ubiquitous in retail areas except downtown.
That spells opportunity for Maughan. In fact, the downtown retail scene is still pretty much wide open, but that could be changing. With shops like Maughan’s and, if all goes well, a full-service supermarket, retailers are starting to scout for downtown locations, as entertainment and residential developments start popping up in the area and foot traffic in the city’s urban core grows steadily.
“The retail is coming,” said Linda Dishman, executive director of Los Angeles Conservancy.
Nonetheless, Maughan appears to be a bit ahead of the curve. While there is something of a chicken-and-egg conundrum involved, conventional wisdom says that residential development must come first. And that residential development is in full swing. Current projections by the Downtown Center Business Improvement District are that 18,000 people will live downtown by 2004, which would create a solid consumer base for selling retail goods and services.
“We’re starting to see the empty spaces starting to refill with service-types of folks,” said Randall Ely, vice president and COO of the BID. “Once word gets out about the Staples plan, that will increase.”
The Staples Center plan is a $1 billion retail project that would be anchored by a hotel and 7,000-seat performance theater and include restaurants, retail and apartments. The project is gaining momentum after a recent landmark agreement with local community groups and labor unions.
Ted Tanner, senior vice president of real estate for Anschutz Entertainment Group, is considered the architect of the Staples Center plan. As such, he may be among the most significant forces shaping downtown’s future retail scene. An architect and urban planner by trade, Tanner also has played key roles in redevelopment of Union Station on the other end of downtown.
“I’ve been around downtown for awhile,” Tanner said, “I’ve watched it grow into a vibrant urban center. It’s potential is there.”
Other projects, such as TrizecHahn Development Corp.’s 7th + Fig retail mall, are making progress. TrizecHahn recently announced the additions of a Gold’s Gym and Arnie Morton’s steakhouse to its growing list of tenants there.
Retailers will undoubtedly benefit from other types of development going on around downtown. For example, Maughan’s beauty products shop, located on the ground floor of 611 W. Sixth St., has cut a deal with the upscale hotel going up across the street. The hotel has agreed to let Maughan market his imported beauty products and corporate gift baskets directly to hotel guests.
And while Maughan said he already enjoys steady demand from the 9-to-5 workaday crowd, he’s aiming for more.
“I would like to see more of a New York-style community,” he said. “What’s nice is we have a captive market, but if you had residents you might get more business in the early evening or on the weekends.”
Retail sales volumes are already rising at downtown’s Macy’s Plaza, said Robert Cushman of Cushman & Wakefield of California, who is general manager of MCI Center at Macy’s Plaza.
Overall sales at the retail mall were up 2 percent in 2000 over 1999 and up 6.5 percent in the first quarter of this year, compared with the like year-earlier quarter.
“I think it’s actually getting some momentum now,” Cushman said, adding that Macy’s Plaza is 95 percent occupied. “It appears people are getting excited about the fact there is more residential going in.”
But the retail action will remain at relatively modest levels until the residential projects become more established, according to Ira Yellin, a principal of Urban Partners, which owns a few properties downtown, including Grand Central Market.
“Retail in any part of downtown will never be truly strong until we have a critical mass of residential population,” Yellin said. “I think we are developing that critical residential base, but it’s still quite small. We need 100,000.”
Yellin’s tempered outlook comes even though one of his firm’s properties, the Bradbury Building at Broadway and Third Street, recently leased space to Sprint Corp. for a retail operation. It could be a sign that national retailers are catching on, downtown observers said.
“We hope it will be,” Yellin said. “We had AT & T; there a few years ago. They left when they cut back on retail products.”
Yellin and company have been more fortunate than most retail developers, landlords and merchants. Grand Central Market has maintained a strong business through the city’s economic ups and downs. Yellin attributes the market’s longevity to its diversity and adaptability.
“The market has been in existence since 1915. It has lived through all the evolutions of downtown,” Yellin said. “The trick is, we have 50 independent merchants doing their own business. They keep adapting to the needs of the population that comes through that market at any period of time.”
Meanwhile, other merchants along Broadway have not been as responsive since their clientele started falling off in the early ’90s, as Latino shoppers found more retail options nearer to their homes and stopped coming downtown. The once-lively shopping district still struggles.
“On Broadway, it’s still very, very weak and erratic,” Yellin said. “It has not fully emerged from the ’90s. There’s a lot of vacancy and not too many comers.”
Wooing those “comers” is the duty of folks like Amy Anderson, Broadway Initiative Coordinator for the Los Angeles Conservancy. Anderson said she’s working to publicize the once-bustling theater and shopping district as a place to do business.
“I think it’s about trying to promote Broadway and the historic core in general as an environment for change,” Anderson said. “I think there’s definitely more people downtown and more people champing at the bit for more amenities and more amenities open at night.”
Through the conservancy, Anderson is focusing on promoting the area along Broadway between Third and Ninth streets. Her efforts are focused primarily on saving the city’s physical heritage and serving the growing residential community.
“The best way to preserve a building is to be proactive about it,” she said. “Before a building is threatened (with demolition), suggest a use for it.”
One use that has been gaining popularity is restaurants, said Amy Raine, a director at Cushman Realty Corp. who helped Maughan find his retail space.
And while the nascent influx of eateries is encouraging, the growth of retail shops is sluggish at best.
“What we’re not getting is consumer products. We still have a kind of void there,” Raine said. “We did California Pizza Kitchen, restaurants and coffee shops, but no new GNC stores, no new Radio Shacks. The ones that are here have been here a long time.”
One of the obstacles to enticing new retailers downtown is tradition, Raine said. Even as foot traffic increases slowly, some old habits die hard.
“I think what has happened over the years is the landlords downtown have expectations for the hours of their buildings,” she said. “For retailers, it’s not worth it to go downtown when your hours are limited to Monday through Friday, 9 to 5.”
Maughan, who spent several years with Merrill Lynch on Bunker Hill, said it was circumstances that pushed him to realize an idea he had been kicking around. When his wife’s Korean family wanted to move to the United States, opening a retail business was the quickest way to get them here. And Maughan knew just where to do it.
“Elsewhere, there’s a lot of competition, but downtown, there’s nothing else like it,” he said. “We believed in downtown. It’s only getting busier and busier.”
And that would be great with Tanner, who said the ultimate goal is for more people to enjoy the developments that he is helping to create for Anschutz Entertainment Group.
“I do it for my own personal satisfaction of seeing something done, get built,” he said. “Equally, though, is to enjoy other people using it. That’s the ultimate goal.”
