After three decades, The Oaks is trying to step out into the sunlight.
The Macerich Co. is spending $250 million on a 135,000-square-foot expansion of The Oaks, a 1.1 million-square-foot indoor mall in Thousand Oaks, Calif., near Los Angeles. The makeover includes an outdoor lifestyle addition, lush landscaping and wrought iron and mosaic tile styling. Most of the work is to be completed by the end of 2008.
The Santa Monica, Calif.-based real estate investment trust wants to raise the profile and reputation of the property, which opened in 1978 and had been upgraded most recently in 1993. Macerich purchased the property from TrizecHahn Corp. for $152.5 million in 2002.
Aside from changing the mall’s concept from a solely indoor center, a new 138,000-square-foot Nordstrom is on track to open on Sept. 5 in a former Robinsons-May store. The mall is also anchored by Macy’s, and Macy’s Men’s and Home Store, and J.C. Penney. It has more than 130 specialty shops and restaurants.
The overhaul has been a long time coming.
The 1993 work “was a minimal upgrade at best, repainting and floor tile replacement,” said John Genovese, Macerich’s executive vice president of development. “We purchased it because we saw the opportunity to upgrade the ambience and merchandise mix, and respond to what the market in that area wanted.”
New retailers on board include aerie, Aéropostale, American Eagle Outfitters, Beachworks, Levi’s, Peet’s Coffee, Zumiez and Michelle D.
Also among the latest tenants are Ruth’s Chris Steak House and Lazy Dog Café, which will join Devon Seafood Grill, planned for the new dining and entertainment piazza that includes a 14-screen luxury Muvico Theater to open late this year. The Devon Seafood restaurant and Muvico are making their West Coast debuts.
Macerich, which has a huge presence in the Southwest, particularly California and Arizona, has embarked on extensive remodels of its other area properties, including Westside Pavilion, an indoor mall in West Los Angeles and the Frank Gehry-designed Santa Monica Place.
The Oaks overhaul is intended to bring the mall’s mix of retailers on par with other area properties. Developer Rick Caruso’s company has three outdoor lifestyle centers nearby: The Promenade at Westlake, The Commons at Calabasas and The Lakes at Thousand Oaks.
The timing, too, could prove challenging, given the widespread economic downturn because of the housing market free fall and high gas and food prices, as well as a string of recent retailer bankruptcies, including The Sharper Image, which has a store in The Oaks.
But Macerich executives said the economic shakeout gives them an opportunity to revamp the mall with higher-end tenants.
“Where things got disconnected is over time, as the market grew, the mall’s merchandising never kept up pace,” Genovese said. “In retail you can’t be stagnant. You have to make sure you’re delivering the right product, the right ambience, and, most importantly, the right retailers, and that wasn’t happening.”
Retail consultant Jeff Green, who has worked with Macerich on the project, said a major hurdle for The Oaks is that consumers may not perceive the center as a destination for top-tier retail because it hadn’t been updated for so long.
“Given the economy, I could see a slowdown in full-price shopping, but I don’t think that will last too long, just a few years or so, so by the time the [revamped] center matures, it won’t be an issue any longer,” Green said. “It’s still under construction now and that probably already has had an initial impact on sales because it’s been so long, but you can’t evaluate success until it’s all completed in the late fall.”
Unlike some retail developments in Los Angeles, Thousand Oaks’ impressive demographics are the kind high-end retailers value. There are almost 400,000 residents in the mall’s primary trade area with an average income of $112,000 a year, according to the latest government statistics.
Based on 2000 census figures, Thousand Oaks has the 11th highest per capita income and the fourth highest median household income in the nation when compared with other cities with a population of 50,000 or more.
Even with the economic downturn factored in, the mall’s primary trade area is projected to grow more than 7.2 percent over the next five years.
The Oaks generated sales of $564 a square foot last year, compared with $549 in 2006.
“Now the challenge will be marketing aggressively to the trade area and addressing perception of the mall,” Green said. “They are finally trying to build something that their market area demographic would like to see.”
While Caruso Affiliated’s area developments are each smaller, they are all newer and more upscale, and Caruso is regarded by many as the gold standard in outdoor lifestyle developments, having successfully rolled out projects like The Grove in Los Angeles as well as the new Americana at Brand in Glendale, Calif.
Caruso executives said they welcome the competition.
“We can respond much more quickly than these large developers. There is a factor of agility there,” said Todd Russell, Caruso’s executive vice president of leasing. “We are always changing tenants up to keep things fresh and new. Larger malls try to make an effort. Macerich tries to do a nice job at merchandising properties, as well. I think they will do a nice job at The Oaks and will complement existing retail in the area.”
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