California Apparel News

A wave of high-profile boutiques opened shop in Los Angeles’ Melrose Heights neighborhood in December, and to many, it looked like they made the best real estate choice.

The shopping district, located west of Fairfax Avenue, abounds with smartly designed boutiques representing star designers and some of the world’s most popular fashion brands. With a concentration of top-tier stores, the street’s status as a premier retail strip seems assured. But veteran Melrose boutique owner Gordon Morikawa said that even with all of this retail might, Melrose is falling short of its potential.

“[The street’s] landlords might be looking at this place as a new Robertson, but it’s not,” said Morikawa, who has co-owned Xin boutique at 8064 Melrose Ave. since 1999.

While commercial rents have been steadily increasing—some say perhaps tripling—since 2005, the street has yet to make the leap to become a shopping district where groups of shoppers hang out, similar to Robertson Boulevard or Rodeo Drive. Instead, Melrose Heights retailers say they are faced with enticing shoppers to make special trips to their boutiques. Encouraging destination shopping is tough.

The extra effort might make for a sweeter reward, according to Tarina Tarantino, who runs a self-named jewelry and accessories boutique at 7957 Melrose Ave. The destination customer is more likely to make a purchase. Yet Melrose Heights can improve if it becomes more pedestrian friendly by offering more cafeacute;s and crosswalks. “It is annoying to have to walk two or three blocks to cross the street,” Tarantino said. Morikawa said he hopes a few street improvements, such as crosswalks and perhaps more trees providing shade, would make shoppers more comfortable walking on the street. To make it a reality, he plans to dust off the moribund Melrose Heights Merchants Association, which has been inactive since 2005.

In 2002, he and other neighborhood merchants formed the association to petition Los Angeles City Hall. First on their shopping list was to give their strip of Melrose Avenue a new name. Melrose Heights might appeal to press and consumers, they thought. The merchants succeeded in getting their new moniker. The same year they enlisted Los Angeles–based public relations company People’s Revolution to spread the word about this new area.

They were successful again, and the street experienced a spike. Later, more brand-name retailers started moving onto the street, beginning with Marc Jacobs in 2004.

The first item on Morikawa’s 2008 “to do” list is to organize meetings with the district’s retailers. The next step might be working with local government to get help with city projects, such as getting more crosswalks on the street. Other projects include planting more trees for shade and better street aesthetics and perhaps posting signs in the area to mark it as a special retail area.

Defining the district

The street’s merchants already have the tools to make their area more than a destination, Morikawa said. He defines Melrose Heights as Melrose Avenue between La Cienega Boulevard and Fairfax Avenue. The district does not include Melrose Place, a quiet street behind Melrose Avenue that houses boutiques of iconic designers such as Oscar De La Renta and Carolina Herrera, Morikawa said.

Since 2004, Melrose Heights has blossomed into a Los Angeles address for a wide variety of celebrated streetwear and fashion labels. London-based Paul Smith opened a boutique on the 8200 block of Melrose Avenue in December 2005. At the other end of the fashion spectrum, Los Angeles–based streetwear brand Crooks & Castles opened a store on the 8000 block of Melrose in December 2007.

The attention by the high-profile names has made commercial rents skyrocket. Since 2005, the street’s rents increased from more than $3 per square foot to more than $8 in the past month, according to Jonathan Ahron, managing director of the retail-services group for the Los Angeles office of real estate business Charles Dunn Company.

The good news for the area’s retailers is that the rents may have stabilized.

According to Chuck Dembo, a veteran real estate executive, the street’s rents are settling down to $6 to $7 per square foot. “I don’t expect it to go much higher,” said Dembo, a partner in Beverly Hills–based Dembo & Associates. Rent increases might have plateaued because the economy is slowing down, he said.

If so, that makes Melrose Heights more economical than Robertson—but a step up in price from the nearby shopping district of West Third Street.

Landlords of Robertson’s most popular blocks asked for $15 to $25 per square foot in 2007, according to a study released in November by Beverly Hills–based Sachse Real Estate. Rents for stylish West Third Street ranged from $4 to $7 per square foot.

The other names on west Melrose have the wherewithal to make the thoroughfare into a fashion mecca—albeit a diverse one. In December 2007, streetwear skate brand DC Shoes opened an activewear emporium at 8025 Melrose Ave., and New York fashion label Foley & Corinna opened a 1,000-square-foot store at 8117 Melrose Ave.

For fans of high-profile fashion brands, the street offers flagship stores for labels such as Adidas and Miss Sixty. Art-driven fashion line Betsey Johnson has a store there, as does daring lingerie line Agent Provocateur.

The street offers smart independent shops such as Xin, Creatures of Comfort and Madison. The street also is an address for BCBG Max Azria, as well as the Los Angeles outposts for French brand Diabless. The street’s specialty shops are anchored by Ron Herman at Fred Segal, one of the stores that pioneered Los Angeles’ fashion-boutique scene.

With all of the retail history and spectacular brands on the street, Morikawa said that retail traffic should be more bustling.

While the street enjoys a steady stream of tourists, many of them have been attracted to the area by Fred Segal, Morikawa said. Yet Melrose’s heavy car traffic also may drive pedestrians away.

But the heavy traffic might benefit retailers in other ways, said Charles Dunn’s Ahron.

“[Retailers’ signs] are billboards for the drive-through traffic,” he said.

Morikawa said that the street’s merchants are capable of building more retail traffic on Melrose. “It’s being acknowledged as a great street,” he said. “It’s up to the merchants to make changes.”