A Place in the Sun
Are the glossy sheen and high-ticket merchandise at the newly redesigned Santa Monica Place enough to brighten tough times?
After nearly two years under construction, the Santa Monica Place retail center in Santa Monica, Calif., reopened on Aug. 6 as a glittering, three-level luxury lifestyle center.
Santa Monica Place developer Macerich Co. closed the 1980s-era mall in 2008 and, with a $265 million remodel, completely changed its look from an enclosed shopping center to an open-air retail and dining district with sweeping views of the beach and the Pacific Ocean.
But even with a roster that includes high-profile retailers—such as Bloomingdale’s, Barneys Co-op, Nordstrom, Kitson, Louis Vuitton and BCBG Max Azria—the lifestyle center is opening at a time when consumers are still reluctant to spend.
According to the SpendingPulse Luxury Index survey, released by market researchers MasterCard Advisors, spending on high-end restaurants, department stores and boutiques grew a scant 0.2 percent in July compared with last year. SpendingPulse’s analysts considered this growth to be flat because there was double-digit growth in the Luxury Index from May through April 2010. Michael McNamara, SpendingPulse’s research vice president, said consumers demonstrated a reluctance to make larger purchases in July and were trading down. (See related story here.)
Santa Monica Place is the first luxury retail center to debut in Southern California since The Americana at Brand opened in Glendale, Calif., in 2008. According to the International Council of Shopping Centers, it is the only major mall to debut in the United States this year.
Santa Monica Place management is confident that the retail center will be successful despite the tough economic climate—thanks to the retail center’s unique situation. The 560,000-square-foot mall already has an existing customer base, said Anne Singleton, vice president of leasing for Santa Monica Place. “It was a mall before” she said. “It’s a readjustment of what was there.”
Plus, the center’s neighbors include Third Street Promenade, one of Southern California’s top retail districts, and Santa Monica’s Main Street, one of the city’s bustling shopping and dining areas.
Santa Monica Place’s anchors include Bloomingdale’s, Nordstrom and a third level filled with unique, gourmet restaurants. The mall anticipates attracting crowds of office workers seeking good lunches. It also expects foreign and domestic tourists to shop there as well as well-heeled locals. For some of Santa Monica Place’s tenants—including Nordstrom—this will be their first location west of the San Diego (405) freeway.
Many new tenants eagerly signed contracts because Santa Monica Place offered an unbeatable deal, said Catherine Nation, the executive vice president of retail for Los Angeles–based label Johnny Was. The deal was incentive for the company to take its first steps into the retail side of the business with its first-ever boutique.
The area’s steady traffic also provided an incentive, Nation said. “It is amazing how much foot traffic is down there,” she said. “There are so many people.”
The new mall might take business away from other Westside malls such as the Westside Pavilion and Beverly Center, said Jack Kyser, chief economic advisor for the Southern California Association of Governments.
“A lot of retail venues have been badly hammered,” he said. “It’s the smaller malls and strip retail centers that have been hurt the most.” However, the novelty of Santa Monica Place may redirect shoppers and tourists from the region’s other high-profile malls.
Owners and operators of other malls contend they won’t be affected by Santa Monica Place’s reopening. Beverly Center General Manager Jeff Brown said his mall serves a completely different customer than Santa Monica Place. “We’re more fashion-forward,” he said. “We’re building a luxury stronghold here with new tenants such as Fendi, Prada and the expansion of Louis Vuitton and Dolce & Gabbana.”
Traffic is so dense on Los Angeles’ Westside that many of its residents will opt to shop close to home, said Jay Luchs, executive vice president of retail leasing for CB Richard Ellis and a partner in the Malibu Village retail center, based in Malibu, Calif. Well-to-do shoppers might stay closer to their neighborhoods, he said.
“The city of Santa Monica will benefit the most,” he said. “A more upscale shopper will be going there now. Third Street Promenade attracted a more mid-level shopper.”
Santa Monica Place is more than 74 percent leased, according to Singleton, and the mix ranges from upscale department stores and luxury shops to teen chains to independent branded boutiques. Along with Bloomingdale’s and Nordstrom, other Santa Monica Place fashion stores will include 7 For All Mankind, All Saints Spitalfields, Angl, True Religion, Ted Baker, Betsey Johnson, Burberry, Charlotte Russe, Coach, Ed Hardy, Eva Varro, Ever, Hot Topic, Joe’s Jeans, Juicy Couture, Love Culture, Kenneth Cole and Tory Burch.
And there’s more to come. According to Singleton, by the first quarter of 2011, the center will be more than 90 percent leased.
