When Santa Monica Place closed its doors in January 2008 for a long-delayed renovation, the economy was in a tailspin – and prospects for the aging mall were not much better.
Two years later a lot has changed.
Despite a still weak retail market, owner Macerich Co. said the property – which is being converted from a closed mall to an open-air shopping center at a cost of $265 million – is about 85 percent leased and set to open Aug. 6.
Moreover, Macerich appears to have been successful in moving the property upscale, signing on retailers such as Tory Burch, 7 for All Mankind, Burberry, Michael Kors, Ted Baker and Kitson L.A., among others.
Indeed, the new lineup is impressing retail experts who saw the mall turn staid and fall out of fashion with shoppers over the last decade despite its strong location and Frank Gehry design.
“Macerich is going to give Century City a run for its money and I think Westside Pavilion is going to get whacked,” said Matthew May, president of May Realty Advisors, a Sherman Oaks-based brokerage that specializes in retail. “In Santa Monica there is still money there and there are still tourists.”
Other signed tenants include Coach, Joe’s Jeans, True Religion, Ed Hardy and Swarovski. The roughly 550,000-square-foot property also will include a rooftop restaurant deck with ocean views. A food court will have seven sit-down restaurants.
Underscoring Santa Monica Place’s move to the upscale: Only a “handful” of the former tenants will be back once the mall reopens, according to Randy Brant, executive vice president of real estate at Santa Monica-based Macerich.
“Santa Monica is a very unique opportunity in that you have a very high-end customer, and two tourist (groups),” he said. “There are the tourists that travels from quite a distance and even other countries, and then the local tourists, the people that live in the San Fernando Valley, for example, that come to Santa Monica primarily on the weekends.”
One of the country’s largest mall operators with more than 70 regional malls, Macerich bought Santa Monica Place in 1999 and only arrived at the current makeover after its first attempt was met with a firestorm of criticism.
In 2004, the company proposed tearing down the complex and building high-rise condos, shops and offices in its place, but residents felt the project was out of character with the city – and especially with the adjacent, low-rise Third Street Promenade. In retrospect, residents did the mall developer a favor, considering how weak the condo and office market still are.
But the current makeover has not gone seamlessly. Macerich announced early last year that it would delay the reopening a year so anchor tenants Bloomingdale’s and Nordstrom would be ready for the opening. Previously, the department stores would have debuted after the rest of the mall opened.
Retail rents are still down and vacancies up both locally and nationwide, but the market is not as soft as it was last year. May noted that Westside retail is holding up better than other parts of Los Angeles because the area has “the density and the affluent marketplace.”
Gabe Kadosh of May Realty Advisors brokered a lease for food court tenant Pinches Tacos, a well-reviewed West Hollywood Mexican eatery.
While he couldn’t discuss the terms of the lease because of a confidentiality agreement, Kadosh was impressed with Macerich’s approach to development.
“They certainly opened and brightened things up. I think that will have a huge impact,” he said, noting Pinches Tacos is being allowed to create a large mural for the side of its space, something unusual for a mall operator to approve.
Pinches Tacos co-owner George Anaya said he’s excited to open in the mall, even though he typically wouldn’t consider putting his restaurant in a shopping center.
“From the stores they are attracting to what the mall looks like now, it is a huge difference from what it was,” Anaya said.
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