New Retail Player Jumps Into L.A.-Area Fray

After years of litigation, debate and a voter referendum, the $400 million Americana at Brand lifestyle center in downtown Glendale, Calif., is set to open...

Workers are rushing to finish The Americana at Brand.

After years of litigation, debate and a voter referendum, the $400 million Americana at Brand lifestyle center in downtown Glendale, Calif., is set to open next month amid another challenge — the economic slowdown.

This story first appeared in the April 2, 2008 issue of WWD.  Subscribe Today.

The 16-acre center in the Los Angeles suburb includes about 475,000 square feet of retail space for 75 shops, an 18-screen multiplex theater, 100 luxury condominiums and 238 apartments renting from $2,200 to $5,500 a month.

The project features a trolley on 2,000 feet of track that will take shoppers through the center, a $6 million fountain with Las Vegas-style lavish water show displays coordinated to music, elevators in an exposed steel setting, cobblestone walkways, bronze sculptures, an Americana logo display atop a parking structure and a more than 150-foot-high steel clock tower.

About 2,500 workers have been toiling for months to get the project ready to launch on May 2, and the center is 94 percent leased, said Todd Russell, executive vice president of Los Angeles-based Caruso Affiliated, which developed The Americana and also built The Grove in Los Angeles’ Fairfax district.

Now that developer Rick Caruso has built it, the question is: Will shoppers open their wallets amid the housing slowdown, job cuts, high fuel prices, falling consumer confidence, a credit crunch and a volatile stock market?

The Americana “is opening in the eye of the storm because there is so much concern over the economy, the rising cost of living and increases in prices of basics like energy and food,” said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp. “It’s really a major challenge, yet I think there’s an opportunity there, because retail has gotten so boring recently that people may turn out to see what’s new and exciting.”

The Americana’s retail lineup includes stores such as Tiffany & Co., which will open the first of its smaller units, as well as Calvin Klein, Stuart Weitzman, Barneys Co-op, Kate Spade, A|X Armani Exchange and U.K.-based Paperchase, as well as Anthropologie, Gilly Hicks and Juicy Couture.

The project has a long and contentious history because of its location across from the 1.5 million-square-foot Glendale Galleria, which is owned by Chicago-based General Growth Properties Inc., the second-biggest U.S. mall operator.

General Growth objected to the closing of Harvard Street leading into the Galleria, which the company argued was not compatible with the more than 30-year-old mall and might cause an estimated $4 million in annual losses for the company. The real estate investment trust waged a petition campaign, forcing a September 2004 referendum. Voters affirmed a decision by the Glendale City Council to approve planning and zoning changes for The Americana. General Growth also filed two lawsuits that challenged the project on environmental grounds.

The referendum battle was marked by charges of dirty tricks among opponents and proponents, and Caruso said a dead fish wrapped in a newspaper ad supporting the zoning changes — a veiled threat out of “The Godfather” — was found outside the door of a group supporting The Americana at Brand.

Caruso Affiliated filed a lawsuit of its own, alleging that General Growth intimidated The Cheesecake Factory when it explored leasing in The Americana at Brand, as well as interfering with Caruso’s business.

A California Superior Court jury awarded $15 million in punitive damages to Caruso Affiliated on Nov. 13, which was in addition to the $74.2 million in compensatory damages that had been awarded previously. General Growth is appealing the decisions. The company declined comment on the litigation.

Along with The Grove, Caruso Affiliated’s portfolio of outdoor retail centers includes the Waterside in Marina del Rey, The Promenade at Westlake, The Lakes at Thousand Oaks and The Commons at Calabasas. The projects feature the developer’s signature simulated village designs. The company is developing The Shops at Santa Anita in Arcadia and the company’s first luxury resort in Montecito, the Miramar Hotel.

The Grove is Caruso’s highest-profile center, attracting 20 million visitors last year. It generates sales volume of more than $800 a square foot, according to the International Council of Shopping Centers.

The competition in Southern California shows no signs of easing. Many of Los Angeles County’s malls have gotten upgrades: General Growth plans to update the Glendale Galleria, which was last remodeled in 1997. The Beverly Center began a renovation in 2006 and Macerich’s overhaul of Santa Monica Place is nearing completion.

“You never can contemplate the severity of the economic downturn, but we will weather it,” Caruso Affiliated’s Russell said. “With the quality of our retailers, we believe we have hundreds of opportunities to overcome.”

It’s probable that The Americana, which is accessible via three freeways, will pull some customer base from The Grove, which is more difficult to get to because it isn’t adjacent to major highways.

Weitzman said he expects The Americana will do well with suburban clientele.

“If you decide you want to pay the money, it’s easy to build a store on Rodeo Drive or Madison Avenue,” he said. “It’s if you have a product you can sell outside of those places that determines where you can go. In the world we cater to we’re not ultraexpensive footwear, and that allows us to go into places where you don’t have 100,000 people a day.”

Glendale has a population of some 207,000. The median family income is about $43,000, according to the Census Bureau.

The Americana will boost “local [vehicle] traffic and has implications for [neighboring] Burbank because it will certainly pull from the crowd that goes to the [Burbank Town Center] mall there and the big-box stores,” Kyser said. “There are also implications for the city of L.A., which has been an underperformer retail-wise, and this could further erode that.”