HOT SPOTS—Big Field in the Running for Next Mega-Retail District

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In the past 10 years, the runaway popularity of Old Pasadena and Third Street Promenade in Santa Monica has become the stuff of retailers’ dreams.

So where will the next open-air retailing bonanza emerge?

There are a number of contenders, according to local industry experts.

Among the newest entries is Santa Barbara Plaza in the Crenshaw District, where Earvin “Magic” Johnson has once again joined the team negotiating to redevelop the project. Jerde Partnership International Inc. of Universal CityWalk fame has been brought in to design it.

Initial plans call for the Santa Barbara Plaza site to be connected in some way with the Baldwin Hills-Crenshaw Plaza Mall and its popular Magic Johnson Theatres multiplex, located directly across Marlton Avenue. That connection might be made through a pedestrian walkway or by closing off Marlton to vehicle traffic.

The developer wants to anchor the project with medium-sized tenants that would benefit from being close to Magic Johnson Theatres. Among the possibilities are restaurants and apparel retailers such as Old Navy and The Gap.

In the Fairfax district, The Grove is a likely contender to emerge as a major attraction through its eclectic combination of retail shops anchored by a Nordstrom store and the landmark Farmers Market. The Grove, which is being developed by Caruso Affiliated Holdings, is being developed on Fairfax Avenue between Third Street and Beverly Boulevard.

Another area in the running is just east of Old Pasadena along Colorado Boulevard. Paseo Colorado is a mixed-used project anchored by a luxury hotel and state-of-the-art theater complex. And with office and residential components, the project could benefit from having a built-in clientele.

Developer TrizecHahn Development Corp. also hopes the area will piggyback on the success of Old Pasadena, which thrives on the uniqueness of its historic buildings old storefronts and warehouses that were restored and converted for use as shops, restaurants, movie theaters and apartments.


Ingredients of success

Like Old Pasadena and Third Street Promenade, these emerging districts are blessed with relatively affordable land, good access, available parking and a customer base with plenty of disposable income. Real estate observers say those are all keys to success.

“I think you’d look for a high-density population, in a place like Santa Monica or Pasadena, and also affluent people, again, like in Santa Monica and Pasadena,” said Alfred Gobar, of Placentia-based Alfred Gobar Associates, a retail analysis firm. “You also want two other things access to a broader trade area, through a freeway, and a user-friendly redevelopment agency that would help facilitate things.”

Along with finding the right space for an open-air mall project, developers must also find just the right blend of retailers.

Jack Kyser, chief economist with the Los Angeles Economic Development Corp., noted that it wasn’t until several movie theaters were added to the mix that Third Street Promenade began to flourish.

Success also requires a healthy dose of national chain stores, like The Gap and Victoria’s Secret. Both have locations in Old Pasadena and on the Third Street Promenade.

Yet creating the right combination of entertainment and retail is becoming more and more elusive.

“It’s chemistry,” Kyser said. “It’s almost like you don’t know how the chemicals are going to react. Do you have the right movie theaters, restaurants, shops? Fifth Avenue in New York, one of the most legendary walking streets, has lost its magic. Now you’ve got Gap, Baby Gap, etc. But there is no formula. You have to be very careful.”


Other contenders

Other areas around Los Angeles that could emerge as the next hot shopping/entertainment district include the Hollywood & Highland project, also being done by TrizecHahn. It is combining retail shops with a 3,200-seat arena to serve as home to the Academy Awards. City officials and area merchants are hoping the mega-project will act as a catalyst to rejuvenate the entire area along Hollywood Boulevard, as people are drawn to the project.

Another ambitious project in the works is the one planned for a site next to Staples Center, where L.A. Arena Co. is exploring the possibility of a 1,200-room convention center hotel coupled with a retail district.

There are also a number of existing pedestrian areas that could be jump-started back to life, including Westwood Village and Pine Avenue in downtown Long Beach. But the pitfalls of each of these areas are many.

“It wouldn’t surprise me if someone would come in and try to renovate Westwood,” said Richard Giss, who is a partner in the consumer business group in the L.A. office of Deloitte & Touche.; “But the problem with Westwood, it doesn’t have low rents and low prices. For a developer to do it, they would have to get control of the whole area.”

One difficulty with an area like Pine Avenue, where the rents are considerably cheaper than in Westwood, is demographics.

“They don’t have the affluence, but they do have good freeway access,” Gobar said. “But when you go inland from Pacific Coast Highway, you get into some pretty skuzzy neighborhoods.”

That said, the location of L.A.’s next great open-air mall remains somewhat of a mystery: “If I knew that, I wouldn’t be an accountant. I’d be out there developing it,” Giss said.

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