California Apparel News

Consumer spending is forecasted to take a dip this year in Orange County, the home of venerable retail centers such as South Coast Plaza, yet the county’s newest malls are banking on the tourist dollar.

Located adjacent to Disneyland, the Anaheim Gardenwalk retail center debuted in June. Its management anticipated a significant amount of its business to come from Disney tourists and conventioneers buzzing around the nearby Anaheim Convention Center, according to Gardenwalk developer Bill Stone.

More than 16 miles west of Anaheim, The Strand retail center is scheduled to open in the first quarter of 2009 in Huntington Beach, Calif. The Strand will feature a boutique hotel as well as surf fashion stores to help keep tourists anchored at the beachfront location of The Strand. The aim of much of Huntington Beach’s seaside development is to convince tourists to stay longer than one day at the beach, said Laurie Payne, a spokesperson for the city of Huntington Beach.

Tourists and conventioneers spend $8.3 billion in Orange County annually, according to the Anaheim/Orange County Visitors and Convention Bureau. However, economist Esmael Adibi warned not to underestimate the spending power of Orange County residents. He said the business of developing malls will have a bright future in Orange County, which serves as the address of top malls such as South Coast Plaza; Fashion Island in Newport Beach, Calif.; Irvine Spectrum in Irvine, Calif.;and The District at Tustin Legacy in Tustin, Calif.

“In general, Orange County loves malls, and the trend for the future is more regional malls,” said Adibi, a professor at Chapman University in Orange, Calif. Adibi authors semiannual economic forecasts for Orange County and the state of California.

With gas prices continuing to rise, Adibi said that car-loving Orange County residents will find themselves needing more options for one-stop shopping, such as a mall. “In general, the strip-mall stores might have a hard time competing,” Adibi said.

Orange County’s best-known malls are concentrated in the southern, coastal area of the county, and there might be opportunity to build more malls in other sections of the populous county of more than 3 million people, Adibi said.

Anaheim Gardenwalk was designed to be a quiet refuge for tourists and conventioneers, said Stone, principal of San Diego–based Excel Realty Holdings. The mall offers sit-down restaurants, including California Pizza Kitchen and Bubba Gump Shrimp Co. In a few months’ time, the retail center will earn its “Gardenwalk” name when its walls will be covered by bougainvillea and bird-of-paradise plants.

“It’s a place to relax after a day at Disney or the Anaheim Convention Center,” Stone said. “It’s a pleasant place to wander through.”

The Gardenwalk is located at 321 W. Katella Ave. on 19.3 acres at the former site of the defunct megachurch Melodyland Christian Center. It is located by Disneyland and Disney’s California Adventure theme park, which will be adding new attractions and hotels in the next few years.

Gardenwalk also is placed near a site where Disney has been long rumored to be building a third unnamed theme park around Harbor Boulevard and Katella Avenue. A Disney representative would not confirm plans for a third park.

In an upcoming phase of Gardenwalk’s development, two hotels will be built. They will be operated by Disney and be part of the Disney reservation system, Stone said. Along with 866 hotel rooms, there will be 560,000 square feet of timeshare housing on the grounds of the retail center.

The Gardenwalk is 80 percent leased, Stone said. A handful of fashion retailers have already opened. Among them is the first flagship store for surf brand O’Neill, which takes up 3,350 square feet of retail space. There are also branded apparel stores for Harley-Davidson Motor Co., as well as contemporary stores Red Apparel, G-Stage, Tommy Bahama, White House/Black Market and Ann Taylor Loft. Also scheduled to open are a Chico’s and a Brooks Brothers store.

Stone had forecasted one-third of Gardenwalk’s guests were going to be conventioneers. However, he was pleasantly surprised at how many Anaheim residents patronized the place. At Gardenwalk’s Roy’s Restaurant Hawaiian Fusion Cuisine, 60 percent of recent patrons were Anaheim residents, according to Stone.

The Strand in Huntington Beach is being developed by CIM Group Inc., which also owns the Hollywood & Highland retail center in Los Angeles. The Strand, located on the corner of Pacific Coast Highway and Fifth Street, will offer a 157-room hotel that will be operated by San Francisco–based Joie DeVivre Hotels.

Fashion boutiques to be opening at The Strand include a branded shop for surf brand Rip Curl, surf and skate boutique Active,and Forever 21. There will also be a CVS drug store and a Johnny Rockets restaurant. CIM Group did not respond to interview requests for this story.

And there’s high-end retail in the works in Huntington Beach. A short ride from The Strand is the site for Pacific City. The mixed-use development, which has been planned by Newport Beach–based Makar PropertiesLLC., will feature 200,000 square feet of retail, restaurant and office space. It is scheduled to debut by late 2009. There also are plans to build a 250-room W Hotel on the site as well as residential units ranging in price from $800,000 to $2 million.

Existing Huntington Beach businesses are anticipating increased traffic above the 11 million people who currently visit Huntington Beach annually. However, smaller businesses such as Three Dice Huntington Beach surf shop, located adjacent to The Strand, do not know if they will be around long enough to enjoy the bigger traffic. “My landlord wants to keep the place as it is—classic Huntington Beach,” said Jay Murakami, the surf shop’s manager. “But what’s going to happen if someone offers him a lot of money [for the property]? He could change his mind.”