Shopping Center’s Rebirth Comes at a Low Price

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La Cienega Boulevard between Third Street and Beverly Boulevard is a study in contrasts.

On one side sits the Beverly Center, the venerable Westside mall anchored by a Macy’s and a Bloomingdales.

Across the street sprawls the much more modest Beverly Connection, considered by some to be the center’s ugly stepsister.

All that is changing – at least to some degree.

After years of struggling in the shadow of its hipper and flashier competitor, the Beverly Connection is beginning to emerge as somehing its owners believe can stand on its own: a center for discount fashion retailers.

A renovation is under way at the 322,000-square-foot shopping mall featuring such major discount retailers as a Loehmann’s Men store and Nordstrom Rack, both of which opened less than two years ago.

Coming next month: a Ross Dress for Less.

“Given that it’s a value-oriented shopping center, we think it’s a good fit with our customer profile,” said Bobbi Shaville, senior director of investor and media relations for Ross Stores Inc., a Pleasanton company that owns Ross Dress for Less.

The resurgence of the mall is a bit of a surprise.

In 2005, owner Vornado Realty Trust, a New York real estate investment trust, announced a $125 million makeover that would have converted the mall into a mixed-use development with 62 luxury condominiums and 177 assisted-living units, including facilities for Alzheimer’s patients.

The development would have reduced the number of stores, dealing a commercial blow to a retail center once home to a Rexall Square Drug that, in 1947, boasted being the “world’s largest drugstore.” Other highlights include being the site of California’s first Starbucks, which opened in 1991.

Bad times

But eventually the Starbucks closed, as well as an AMC movie theater, a Daily Grill restaurant and a large Ralph’s grocery store, all casualties of retail booms in the Hollywood and Miracle Mile areas, as well as competition from Grove in the Fairfax District.

The closures left the mall a shadow of its former self. But the proposal to build the two high-rise residential towers at the site was withdrawn in 2008 due to strong opposition from community groups that had challenged the expansion in court.

Instead, the owners redesigned the parking structure to improve traffic flow and remodeled the midcentury-style shopping center to give it a more modern look.

Shopping center executives would not discuss, for the record, the ongoing changes at their mall, including how much they have spent or expect the improvements to cost. Privately, however, they admit that the place has developed into a bargain shopping center in a convenient location surrounded by the high-end stores at Beverly Center as well as quaint eateries and boutiques along Third Street.

The changes come at a time when retail sales have slumped nationally, posting a 6.2 percent decline last year, the largest since 1992. At the same time, though, discount chains are faring somewhat better. For example, Nordstrom full-line stores experienced a 7.2 percent decline in overall sales nationally while sales at Nordstrom Rack were up 2.5 percent, according to Colin Johnson, a spokesman for Seattle-based Nordstrom Inc.

Jack Plunkett, chief executive of Plunkett Research Ltd, a retail consultancy based in Houston, said Vornado appears to be taking the right approach by targeting discounters.

“Certainly it’s a good time to position yourself for high value and low prices, so the change could make the center more competitive,” he said. “Consumers are trying to stretch their dollars, so stores positioning themselves as offering everyday low prices have a good chance of gaining customers.”

That’s certainly what Ross hopes will happen, Shaville said. “Our customer is very value oriented,” he said. “She wants a bargain, in some cases needs a bargain, and what I’ve been told by our real estate folks is that the Beverly Connection is value oriented.”

Nordstrom Rack shares the same strategy. With 69 stores nationwide, the chain – which carries much of the same merchandise as Nordstrom full-line stores but at 50 percent to 60 percent of the price – moved in in September.

“We’ve known for some time that we have loyal customers in that area,” Johnson said. “We wanted to have another way to serve them through a Rack store there. We felt that the Beverly Connection is the area’s best value fashion center.”

Still, though, the mall’s vacancy rate is about 15 percent. That’s well above the soft national average, which hit 9.1 percent in 2009, up from 8.3 percent in 2008. But mall management expects that number soon to go down.

A new Yogurtland, offering soft-serve yogurt, is expected to open at the center in two to three weeks. In addition, mall executives said they are looking for a major grocery store and perhaps a sit-down restaurant aimed at the dinner crowd.

According to some patrons, however, the ongoing improvements still have a way to go.

Australian tourists Bob Smart and his wife, Beryl, visited the mall on a recent quiet weekday. They said they preferred the food at Beverly Connection’s Bakery Café to anything across the street at the Beverly Center. But they weren’t so impressed by the improvements at the discount center so far.

“It looks a little bit tired,” Beryl Smart said. “I think it still needs to be spruced up.”

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