California Apparel News

One year after Gov. Arnold Schwarzenegger and Jay Leno toasted The Americana at Brand lifestyle center at its black-tie gala debut in May 2008, the ambitious retail and residential project is weathering a tough economy and, in some cases, fine-tuning its retail mix.

The poor economy has seen several of its chain-retail tenants shut their doors at the $400 million retail center, located in Glendale, Calif. High-profile Los Angeles boutique chain Kitson announced on July 23 that it will whittle down its Americana footprint from its current 15,000-square-foot emporium to a 4,000-square-foot boutique in the center. Scheduled to debut on Nov. 1, the new Kitson store will move into the Americana space formerly occupied by Australian retailer Peter Alexander.

Kitson owner Fraser Ross said he originally gambled on a big space at The Americana because the economy was booming. He said the Glendale store’s upcoming move is merely a way to find a space where it can thrive. “Retail is trial and error,” Ross said. “Mistakes make you much more successful.”

Despite a few hiccups and wrong turns, Ross said he believes The Americana will meet the expectations of success. The lifestyle center’s owner, Rick Caruso, “has the golden touch,” Ross said. Caruso Affiliated, the development company Caruso founded, pioneered the lifestyle-center concept with Los Angeles retail center The Grove. As a result of The Grove’s success, Caruso has been held up as an inspiration by architects and other developers seeking to duplicate the success of its mix of luxury and a Disneyland-like ambiance.

Before The Americana opened in May 2008, high-profile luxury retailers such as Tiffany & Co. and Barneys New York Co-Op signed on to the center, anticipating sales would be similar to those found at The Grove. But the poor economy has taken a toll on the initial forecasts.

The Americana’s Ruehl boutique is scheduled to close along with the 28 other Ruehl-brand stores owned by Abercrombie & Fitch Co. Other tenants shuttered or scheduled to close include The Americana’s Lucky Kids location and Peter Alexander and Kira Plastinina stores. (Australia-based Peter Alexander and Russia-based Kira Plastinina shut down all of their American stores.) The Americana’s Aveda salon also closed its doors recently.

But despite the recent closures, the retail center is 92 percent leased, according to an Americana spokesperson. An 8 percent vacancy rate places The Americana above the national average, according to trade group International Council of Shopping Centers. The average is a 10 percent vacancy at shopping centers across the United States, according to an ICSC representative.

And Caruso executive Paul Kurzawa said The Americana will quickly bounce back from the setbacks of a few tenants leaving. Kurzawa made no prediction of how long it will take for the retail center to achieve the great business originally forecast for it, but he said, “It takes a long time to get established in the marketplace.”

In the meantime, more people are spending time at The Americana, according to Kurzawa, the executive vice president of operations at Caruso Affiliated. The number of cars parked at The Americana showed an 11 percent increase in June compared with the same time in the previous year. “Tenants are excited about the future for The Americana,” Kurzawa said.

Some say the luxury stores of The Americana had the misfortune of selling champagne in a beer market. The center’s shoppers have been favoring the inexpensive wares of fast-fashion retailers Forever 21 and H&M, according to Stephanie Ghanem, visual manager at The Americana’s Forever 21 location. “You have a very money-savvy customer in Glendale, and when they come here, they are going straight to Forever 21 and H&M,” Ghanem said. She has been working at The Americana’s Forever 21 location since it opened last year.

The city of Glendale had forecast The Americana would contribute $1.8 million in sales tax within two to three years of operations, said Glendale Director of Development Services Philip Lanzafame. “They would have [met] the forecast if we weren’t experiencing the worst economy in 80 years,” Lanzafame said. He added that in the city’s view, The Americana has not fallen short, because it has attracted many visitors to Glendale. It also has provided city residents a much-needed place to relax. Favorite hangouts are on the lifestyle center’s lawn and by its ornate fountain, which is dominated by an 18-foot-high, gold-leaf statue, The Spirit of American Youth.Forging aheadEven in a down economy, Caruso Affiliated continues to expand. Along with its nine retail-center properties, mostly located in Los Angeles County, the developer intends to build luxury property The Miramar Beach Resort and Bungalows in Montecito, Calif., just outside of Santa Barbara. On April 9, Caruso Affiliated announced complaints against the hotel’s development—including appeals to the California Coastal Commission and California Environmental Quality Act lawsuits—were withdrawn. Construction is scheduled to begin later this year or in early 2010.Caruso Affiliated was dealt a setback in June when Los Angeles County Superior Court Judge James Chalfant requested

Caruso rewrite 11 points for the environmental-impact report (EIR) for The Shops at Santa Anita, a 60-acre lifestyle center adjacent to the Santa Anita Racetrack in Arcadia, Calif. It is located more than 16 miles east of The Americana.

Holding up construction of The Shops at Santa Anita is the Chapter 11 bankruptcy of project partner Magna Entertainment Corp. The company, which filed for bankruptcy in March, owns the Santa Anita Racetrack. The Shops at Santa Anita center was supposed to be constructed on a parking lot at the racetrack.

No matter what happens with the other Caruso projects, Todd M. Russell, former Caruso leasing vice president, said he thinks The Americana has the right stuff to brace for a downturn. “They have movie theaters, quick-serve food and parks. It’s everything wrapped in one,” he said.