Think L.A. already has too many stores? Get ready for more a lot more.
L.A. County dominates the state in the value of retail projects slated for development, with building permits issued for $282 million worth of stores a 50 percent increase over the same period last year, according to the Economic Development Corp. of L.A. County. That dwarfs California’s second-biggest county for retail development, San Bernardino County, with permits issued for $138 million worth of projects.
“Most people acknowledge that there’s too much retail space in L.A. You have the same stores selling the same things, yet it’s no deterrent to development,” said Jack Kyser, the EDC’s chief economist. “You have cities very open to retail development because they need sales-tax revenue.”
Added Richard Giss, retail analyst at Deloitte & Touche LLP: “The landscape is dotted with more stores than are needed.”
Indeed, real estate brokers says mall vacancies average as high as 15 percent. Developers are aware of the numbers, but they don’t seem concerned largely because they believe their projects represent a changing retail paradigm.
“You’re seeing a fundamental shift from the malling of America to the unique development of entertainment centers,” said Mark Tarczynski, urban retail property specialist for CB Richard Ellis Real Estate Services. “Since the baby boomer generation already has the material things it needs, they now enjoy going out to eat, to the movies and to entertainment arcades.”
Many of the coming centers are themed, open-air projects. For instance, The Commons at Calabasas opens Thursday, complete with a Mediterranean landscape that includes cobblestone-paved courtyards, Italian wrought-iron lampposts and French antique limestone statues.
“The malls of yesterday didn’t have amenities, they were pretty sterile,” said Rick Caruso, whose company Caruso Affiliated Holdings is the developer of The Commons. “The new projects provide reasons for people to stay at malls longer, which in turn creates more retailer identity.”
Much of the current building also can be attributed to pent-up demand and a replacement of functionally obsolescent space.
“Real estate came to a standstill in 1991 during the recession. You started seeing new activity in ’96. There was nearly a six-year period there when no development occurred,” said Robert Champion, whose company, Champion Development Group, will open the $18 million, 70,000-square-foot Brentwood Place shopping center in April.
