Designers Drawn To Vacant Space

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At a time when shopping malls are suffering high vacancy rates, the Glendale Galleria is experimenting with a new way to cope.

The idea: a store devoted to consignment sales by a group of emerging local designers who otherwise might remain obscure.

The designers make and sell jewelry, apparel, art and home ware. Should any of them click with consumers, the hope is they could fill some empty storefronts on their own.

“Every shopping center has the usual national retailers, but it’s important in a hypercompetitive market like this to find vibrant new retail that sets you apart,” Janet LaFevre, the mall’s senior marketing director, said of the 2,800-square-foot space opposite a Nordstrom.

The store, called Local Collection, opened in November and features fine jewelry, women’s hats, body care products, tote bags, candles, furniture and more. Prices range from $6.95 for a hand-painted greeting card to $3,200 for a wall-mounted “light” sculpture that switches on and off.

All the participants are from Southern California, which is, of course, a design center. They range from Freddie Rojas, a women’s apparel designer with a Melrose boutique, to designers still working out of their homes.

The store opened amid a brutal retail environment as U.S. mall vacancies rose to 8.6 percent in third quarter 2009, the highest in at least a decade, according to Canton, Mass., real estate research firm Reis Inc.

While the Galleria will not release its vacancy rate, it has suffered, too. For example, it has struggled to fill a three-story anchor tenant space vacant since the Mervyn’s chain closed a year ago; it only recently signed a one-year lease for part of that space with a discount bookseller. Moreover, the mall’s Chicago-based owner, General Growth Properties Inc., recently declared bankruptcy as vacancies rose and sales fell at its properties.

Jack Plunkett, chief executive of Plunkett Research Ltd., a Houston-based firm that follows the retail sector, said the mall had come up with a novel concept to fill space – but that won’t necessarily lead to success.

“It’s an intriguing idea that can create buzz. If you really use it to showcase California designers, it could be exciting. But I think there are some real challenges,” said Plunkett, primarily pointing to the difficulty of maintaining national merchandise standards. “It would have to be in good taste.”

Shop potential

The well-lighted store with glass windows and wood floors resembles a stylish boutique. Its wide-ranging wares are neatly displayed on shelves or on moveable racks against walls covered with brightly colored art.

The concept emerged last year as the mall’s managers were batting around ways to fill vacancies at the Galleria, which is the fourth largest mall in Los Angeles County with 1.47 million square feet of gross leasable space.

The mall’s leasing team decided to develop a list of potential designers, which they created by first talking to members of L.A.’s fashion and retail design industries. Thirty designers were picked from more than 100 candidates.

“We looked at their work, conducted interviews, looked at photos,” LaFevre said. “We wanted the best of the best. We wanted to come together with a nice collection representing every category.”

While the designers pay no rent, proceeds from all sales are split 50-50 with the mall. According to LaFevre, the Galleria’s income from the venture is already “in the ballpark” of what it would realize from a full-paying tenant. More importantly, several possible leaders have emerged with the potential of having their own shops.

“There is the opportunity of doing new lease deals based on their success. What we want to do is incubate new stores,” she said, adding the idea even could be copied by other General Growth malls. “There are indications that we’re on the right track.”

Holger Graf, the West Hollywood-based proprietor of Graf and Lantz, who makes wool handbags, coasters, wine carriers and accessories, is apparently one of those success stories. He was surprised by how much he’s sold.

“We’ve already had to restock twice,” said Graf, 37, who’s been in business just two years. “We are quite happy. This has worked very well.”

Jennifer Gordon, a spokeswoman for Caruso Affiliated Holdings Inc., which owns eight regional shopping centers in Southern California including Americana at Brand next door to the Galleria, said none of Caruso’s malls has emerging designer stores. But she has heard of similar concepts at malls elsewhere. “People are challenging their creativity to come up with different ways of doing things,” she said.

Design talent

Analyst Plunkett, like Gordon, said he had heard of the concept being tried around the nation, but said that it might not work everywhere, given how few regions are loaded with as much design talent as Los Angeles and Southern California.

“You’d have to resist including Aunt Ethel’s crocheting just because she’s your aunt,” he said.

But husband-and-wife partners Erich and Ellen Schlieske made it through the Galleria’s selection process. They create novelty items out of their Echo Park home. Their eEvil Ink Design novelties include “Elbama” prayer candles bearing pictures of President Obama in an Elvis-type pose that sell for $10.

“It’s pretty unusual to be in a mall. We are like indie novelty designers with an edge. I don’t know how mall-friendly our things really are,” said Erich Schlieske, who said sales of the Obama novelty have nevertheless been strong.

Then there’s Derek McDonald, 41, who last year started creating exotic metal sculptures that go for several hundred dollars, such as a waist-high human figure made out of rusted washers on display at the store.

“This is probably the most exciting thing that could happen,” said McDonald, whose Derek McDonald Artworks studio is in the Orange County’s Fountain Valley. “I’ve gone from 10 hits a day on my Web site to thousands of people in the store. That’s absolutely the biggest thing I could hope for, except maybe a commercial.”

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