In the Verdugo foothills east of the San Fernando Valley, a tale of two malls offers an illustrative lesson about the slim margin between success and struggle in the L.A. retail arena.

Separated by less than five miles and competing for customers in a demographic base where business is booming and median incomes have been on the rise for years, the fortunes of the Glendale Galleria and Burbank’s Media City Center have taken sharply different turns.

With 232 retail merchants and a vacancy rate near zero, the Galleria generates annual sales taxes of about $4 million for the city of Glendale, second only to the city’s 27-dealership auto row. After years of building its reputation, the Galleria attracts loyal customers not only from Glendale but from Pasadena, the Los Feliz and Atwater Village areas of Los Angeles, and even to the chagrin of officials there from neighboring Burbank.

Its success at drawing in shoppers from a broad geographic base has made the Galleria among the best-performing retail malls in the region.

In contrast, Burbank’s 120-store Media City Center mall has foundered for years, with a 10 to 20 percent vacancy rate. The mall has struggled to attract the sort of innovative, high-profile retailers that would put it on equal footing with its counterpart a few miles to the east.

So, why are these two malls performing so differently? It’s not because one has a superior consumer population; both areas’ demographics are virtually identical. But there are indeed several factors behind their divergent performances, according to those familiar with both facilities. Those factors range from the Galleria’s aggressive recruitment of new businesses to design problems at the Media City Center and a lack of industry expertise by its management.

“I think what’s happened at Glendale Galleria is the owners are very cognizant of retail trends and new lifestyles,” said Jeanne Armstrong, director of development services for the city of Glendale. “They’ve continued to take forward steps, so it hasn’t remained a typical mall with the same stores as everyone else.”

Galleria in ‘The Zone’

Owned by an independent investor group and managed by industry giant Donahue Schriber Realty Group, the Glendale Galleria counts five major retailers as its anchors, an unusually high number. They are Nordstrom, Macy’s, J.C. Penney, Robinson-May and Mervyn’s.

The Galleria was built in 1974 and was expanded by about a third in 1984 to its current 1.4 million square feet of retail space. Without a single movie screen, the Galleria is an anomaly among Southern California malls. Marketing director Annette Bethers said the Galleria has relied on innovation to keep customers coming through the doors.

“We are always looking to bring one-of-a-kind (stores) to the Galleria. Retailers who are on the cutting edge of how they serve their customers,” Bethers said.

Several chains now found in malls nationwide made their debut in the Galleria, Bethers said, including the Disney and ESPN stores and emerging watch retailer Synchrony.

In July, the Galleria opened a new area called The Zone to build loyalty among the Gen-Y crowd, primarily those between the ages of 11 and 20. According to a 1997 Galleria study, Glendale residents in that age group were already spending an average of $2,700 a year at the mall. Situated between Macy’s and Mervyn’s in the mall’s newer eastern wing, The Zone includes a lounge area, a KIIS-FM (102.7) substation and a collection of retailers whose merchandise is oriented to teenagers. Among the youth-oriented businesses in The Zone are Boarders (a skate and snowboard shop), Juxtapose (an apparel store popular with teenage girls), and Planet X (a computer game seller).

“It’s got its own personality,” Bethers said of the mall. “It’s new, it’s evolving, it’s designed to be constantly changing and fresh.”

It also seems to be catching on.

At the Media City Center on a recent afternoon, 18-year-old Paul Ramos said he shops at the Burbank mall occasionally because it’s closer to his North Hollywood home, but he prefers the Galleria.

“It’s just bigger, and there are more stores,” Ramos said of the Galleria. “They have a lot of stuff over there that they don’t have here, like Polo.”

Getting by in Burbank

While the Glendale Galleria has thrived, business has been mixed at best at the Burbank mall since it opened in 1991 as the central component of the $250 million Media City Center.

Built by developer Alexander Haagen, the mall was sold to Manhattan Beach-based Center Trust Inc. in 1997. The city of Burbank initially invested $69 million in the mall in exchange for 50 percent of the profits, as part of an extensive redevelopment package. However, the city sold its share back to Haagen in 1994 for a paltry $10 million when it became clear that the expected profits were not going to materialize.

Negotiations to sell the mall to Los Angeles developer Zelman Development Cos. collapsed last November when Zelman balked at Center Trust’s reported $50 million to $70 million asking price. This spring, Center Trust pulled the mall off the market, saying it would invest between $2 million and $10 million to revamp the facility, which is anchored by Macy’s, Sears and Mervyn’s and includes an eight-screen AMC Theatre complex.

“The problem is not in the marketplace and it’s not in the demographics,” Center Trust executive Joe Paggi said. “It’s a design malfunction and we think we can fix it. It’s not reaching its potential.”

Specifically, the bottom floor of the three-level mall has consistently failed to meet expectations because of the building’s unusual design, Paggi said. Access to the 350,000-square-foot mall from Burbank Village on the east starts on the second level and many shoppers never make it down to the bottom floor, Paggi said.

Despite the presence of an antique hand-carved wooden carousel that is popular among Burbank families, nearly half of the retail space on the bottom floor is empty and has been for some time.

Paggi declined to discuss the exact nature of the improvements being considered by Center Trust but he said the primary objective will be to increase business on the bottom floor.

“The first level has never performed well. The second and third levels have performed adequately, but we think they can do better,” he said.

Looking ahead

Jack Lynch, senior project manager in Burbank’s Community Development Department, acknowledged that the Media City Center mall has never met expectations. One reason, he said, is that Center Trust has not traditionally been a player in the mall market and has suffered from its lack of ties to national retailers.

To that end, he pointed out, the owner recently hired General Growth Properties, a national company based in the Midwest with extensive experience operating malls, to run the facility.

“We think the changes will certainly be an improvement,” Lynch said.

Volga Stepanian is not so confident.

Stepanian manages the Hallmark Gold Crown in the Media City Center mall for her sister, who also owns a card store in the Glendale Galleria. Although both stores have about 2,800 square feet of space, Stepanian said the Glendale store does twice as much business.

“(Media City) is a slow mall. I’ve been here almost two and a half years and I’m not happy with it,” Stepanian said. “I think this mall has a lot of potential. It has the best location, but there are too many mom-and-pop operations; we don’t have the right specialty stores.”

Stepanian had yet to hear of the mall’s planned renovations, a circumstance she said was indicative of Center Trust’s lack of rapport with tenants.

“At the Glendale Galleria, they have meetings every month to talk about what’s going on. Over here, that sort of thing doesn’t exist,” she said.

Despite the problems, Burbank City Manager Bud Ovrom said he believes the mall has turned the corner with the hiring of General Growth. With Burbank’s continued strong economic growth, it’s only a matter of time before the mall begins narrowing the gap with the Galleria, he said.

“If you look at the overall Media City Center, it’s doing very well. The major anchors are doing well,” Ovrom said. “The basement has been a disappointment to all of us, but we feel they are really on the right track.”