California Apparel News

The basic formula for developing malls is to build a retail center, then lease space to the best retailers around.

Shaheen Sadeghi, chief executive of Lab Holding and developer of the pioneering specialty centers The Lab and The Camp in Costa Mesa, Calif., plans on throwing a new variable into the equation.

He is in the process of redeveloping three city blocks in downtown Anaheim, Calif., that will become the home of the Center Street retail center, opening this summer. Then he will fill the development’s 30,000 square feet with retail concepts that he and his team will develop and manage. The stores will sit in a town that is home to Disneyland and the Angels baseball team, as well as the headquarters of Pacific Sunwear of Anaheim Inc.

“As we create projects, we’ll create products,” Sadeghi said. “It’s our new model, and it’s the only way we’ll get what we want. It was easier for us to create retail than to find the right operators to do this.”

Center Street’s first stores will be Sadeghi-produced and -run shops. One prominent shop will be The Good/California Haberdashery. This 750-square-foot, multi-line shop will offer hats as well as stylish but moderately priced men’s clothing from labels such as Levi’s and Pendleton.

Other stores include footwear shop Heart & Soul and Home Eco:Nomics, a gift shop that opened in April. Also, Sadeghi will open a barber shop and a bar at the retail complex.

Veteran Anaheim independent fashion shop Angela’s Boutique has been doing business on Center Street for years and will remain on the street after Sadeghi’s project debuts.

So far, 85 percent of the project is leased. But Sadeghi is open to leasing space to other entrepreneurs if their projects fit into his overarching vision of catering to a “hip, blue-collar” crowd. Popular local eatery Gypsy Den Café is one such independent business. It is scheduled to move to Center Street later this year.

To develop the project, Sadeghi’s Lab Holding in 2010 paid the city of Anaheim $1.07 million for the rights to renovate the Center Street neighborhood and spent more than $500,000 to renovate the street, said Ruth Ruiz, an Anaheim city spokesperson.

New retail role model

Sadeghi could be on the cutting edge of retail development because only a handful of developers get involved with creating and managing retail complexes and the stores inside, said Larry Kosmont, president of Kosmont Companies, a Los Angeles real estate and economic-consulting business. Kosmont also has been the city manager for a few California municipalities, including Seal Beach and Santa Monica in the 1970s and 1980s. Until February, he was the interim city administrator of Montebello, Calif.

In the future, Kosmont forecasts, entrepreneurs revitalizing urban neighborhoods will be taking on more retail, especially because California last year eliminated communityredevelopment agencies, which often were tasked with revitalizing sagging urban areas with retail. “What these developers are doing largely resembles what redevelopment agencies did—starting turnaround in areas,” Kosmont said. “A lot of the burden for turnarounds will fall into the lap of the private sector. It will take longer, and it will be a lot more difficult.”

The ventures of managing a retail center and running a store are both full-time jobs that require a lot of overtime. However, Sadeghi thought he could wear both hats because his résumé includes gigs in fashion, real-estate development and running stores.

In the 1970s, he worked in New York with American couture designer Charles James. Instead of continuing with high fashion, he relocated to Los Angeles, where he started working with activewear brands. Eventually, he served as executive vice president of Gotcha Sportswear Inc. in the mid-1980s and also was the president of Quiksilver Inc. in 1991.

He left the surf industry to open The Lab specialty center in 1993. The center was intended as a location for boutiques that sold independent fashion brands and weren’t interested in doing business at traditional malls. In 2002, he started The Camp across the street as a specialty center for environmentally minded fashion boutiques, restaurants and activities.

His experiment with developing and running stores started in 2009, when he opened The Camp’s Seed People’s Market ecoemporium. The 12,000-square-foot space sells eco-brands, such as Patagonia, as well as gifts and homewares. People aged 15 to 80 patronize Seed because they want to buy environmentally minded products. Sadeghi said Seed’s sales grew 67 percent from 2010 to 2011.

For Center Street, Sadeghi forecasts he will gain retail traffic from Anaheim residents as well as from the 26 million visitors who annually patronize the Anaheim Convention Center, Angel Stadium and Disneyland. With a population of more than 341,000 people, Anaheim is the home to only one mall, outside of Disneyland, with retail and restaurants. Anaheim GardenWalk opened in 2008 and is owned by The Related Companies.

Center Street should meet with success because there is nothing quite like it in Anaheim, said Paul Zaffaroni, a director in the investment- banking group Roth Capital Partners, headquartered in Newport Beach, Calif.

Center Street’s retail also could mesh with a burgeoning consumer trend. “Today’s consumers are drawn to venues that are consistent with their lifestyle,” Zaffaroni said. “Very few mall-based retailers and developers understand this. It is why projects like The Lab have been well-received by consumers. Urban Outfitters and American Rag also are two retailers that ‘get it’ and that merchandise their stores based on a ‘lifestyle’ versus a ‘product.’”

But product isn’t everything. To complete the package, the boutique’s ambiance and the surrounding neighborhood must be as interesting as the product. “You can buy a T-shirt and dress anywhere,” said Mercedes Gonzalez, director of New York–based buying office and retail consultancy Global Purchasing Companies. “But the consumer wants a story. They want to say that they met the designer, for example.”

Center Street should attract new and unrelated retail, said Rick Caruso, president and chief executive of Caruso Affiliated, developer of popular Southern California retail centers The Grove and The Americana at Brand. “Retail attracts retail,” Caruso said. “Retailers gravitate to where other retailers are successful. Multiple concepts can survive and thrive in a tight radius.”

When The Grove debuted in 2002, the local Fairfax neighborhood of Los Angeles was not known for high-end retail. Since then, high-end and boutique retail, as well as gourmet restaurants, have blossomed in the area, spilling over into neighboring sections.

This year should be Anaheim’s year for Sadeghi’s projects. Construction is expected to be completed this November on the Anaheim Packing District, a complex of restaurants and cafes located one block away from Center Street.

The complex of eateries and bars, being done in three phases, will be located in a number of historic buildings, such as a former packing plant run by Sunkist Growers Inc. and built in 1919. One of the future tenants is the Anaheim Brewery. This summer, gourmet hamburger restaurant Umami Burger is scheduled to open there. By the end of the year, more than 20 restaurants will be doing business at the Farmers Park section of the Anaheim Packing District.