COSTA MESA, Calif. — South Coast Plaza, the luxury retail center built on former lima bean fields here that is marking its 40th anniversary, is always evolving.
The shopping mecca has the rights to build a significant addition. Henry Segerstrom, managing partner of C.J. Segerstrom & Sons LLP, which owns the 275-store complex that he refers to as “my baby,” said in an interview that the timing is not right now, but added, “Maybe in two, or a few, years.”
Citing population growth and development in Orange County, Segerstrom said the region is on the cusp of change. Costa Mesa appears poised to become a more urbanized tourist center. Last year, five developers were given approval to build eight 25-story residential buildings around the South Coast Plaza complex, which includes the 8.6-acre Orange County Performing Arts Center.
“The intense pressure of people moving into the area is forcing us to go vertical,” he said. “That in itself has created planning for one new hotel, maybe three. We are just at the threshold of seeing big changes.”
In Southern California’s intensely competitive and crowded retail market, South Coast Plaza has set the standard, reaching $1.5 billion in annual revenues. That volume is propelled by Orange County’s ranking at number 35 among the world’s most prosperous economies, generating $133 billion annually, with an average household income of $94,200.
South Coast Plaza has spent more than $35 million in 24 months on interior and exterior renovations such as new travertine flooring, glass handrails, a glass elevator and teak benches. Tenants have invested $120 million during that period on new store build-outs and renovations.
“The maturing of South Coast Plaza isn’t defined by any single event,” said Segerstrom, 84, seated in the boardroom of the company’s corporate offices near the retail center. “It’s been a smooth growth of what we started several years ago.”
Across from the one-story concrete building housing the Segerstrom real estate empire sits the house Henry Segerstrom’s grandfather, Carl Johan Segerstrom, built in 1915 in what was an agricultural community.
“When my grandfather came here [from Sweden] in 1898, there were 10,000 people living in the entire county. Today, we have three million. You know the expression ‘catching the wave?’ We just happened to catch that wave.”
This story first appeared in the October 3, 2007 issue of WWD. Subscribe Today.
C.J. Segerstrom began amassing land in Orange County in 1898, starting with a 10-acre acquisition and peaking at 2,100 acres in the late Fifties. The farming dynasty eventually diversified into commercial, industrial and residential real estate.
South Coast Plaza sits on 128 acres comprising 2.8 million square feet of retail and dining space.
“If we had been half the size, I don’t think our impact in luxury would have been what it is today,” Segerstrom said. “It takes a huge mass of the same level of luxury to really make everybody satisfied.”
The idea for South Coast Plaza was conceived in 1962, and the center opened five years later, with about 70 tenants and anchored by Sears Roebuck & Co. and May Co.
Henry Segerstrom began courting luxury retailers in 1975. He personally brought in Courrèges, Yves Saint Laurent, Mark Cross and Halston boutiques.
“It opened up a whole new aspect of how you serve the public,” he said. “So in 1975, as we were beginning to see the change to independent stores, that opened the vista to all of Southern California, not just Orange County. We began to see ourselves competing with Rodeo Drive.”
Coining the concept of “borderless marketing,” Segerstrom drew a line 20 years ago from South Coast Plaza to serve shoppers as far north as Pasadena.
“Markets are more defined by a demographic concentration than any political jurisdiction,” he said. Now, 35 to 40 percent of South Coast Plaza’s customers live outside Orange County, and half of those live out of state.
“We have succeeded in getting the international retailers to recognize South Coast Plaza as one of their major store locations,” Segerstrom said.
The center opens 20 to 30 new stores a year, on average, as other doors close. This year, 18 openings have included Bloomingdale’s, Movado, Calypso, Molton Brown, John Lobb and Marni, and the 13 renovations and expansions include Bulgari, which went from 800 to almost 3,000 square feet; Gucci, which expanded to more than 11,765 square feet from 4,438 square feet, and Giorgio Armani, Saks Fifth Avenue and Mikimoto. Still to come in the next few months are Michael Kors, Versace, Canali, Harry Winston, Calvin Klein and Intermix.
“It’s been incredible over the years how many retailers go out of business, particularly in the majors,” Segerstrom said. “We’ve been shifting with changes in retailing but always advancing our mix and looking at the marketplace. It does change, but the major fashion houses of the world don’t change much. Chanel and Cartier, for example, are two of our biggest producers.”
Many stores, including Tiffany & Co., name South Coast Plaza as their top-grossing location in Southern California, ahead of Rodeo Drive.
In fact, fine jewelry is the center’s number-one grossing category per square foot. Boutiques such as Chanel, Christian Dior and Gucci have dedicated fine jewelry departments.
Segerstrom, however, hasn’t ignored fast-fashion.
“I was always curious how H&M and Mango fit in with luxury retailing,” he said. “Those fast-fashion stores can have a complementary role in accessorizing high fashion. In spite of their price points, I think they respect the customer.”
Segerstrom’s advice to fledgling retailers: “Make sure you are in the right spot. Demographics have everything to do with whether you are successful or not.”