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COSTA MESA, Calif. — Long before it rivaled the most luxurious shopping areas in the world, before the car-jammed San Diego Freeway snaked alongside it, spilling customers to its doors, South Coast Plaza’s address was actually the largest private lima bean field in the U.S.
This story first appeared in the December 4, 2002 issue of WWD. Subscribe Today.
It was 1967 and the Segerstrom family, Swedish immigrants who had been farming the 3,500 acres since 1898, found themselves weighing deals from Sears and May Co. interested in catering to the one million people already living in Orange County, a coastal suburb an hour south of Los Angeles.
“We took a calculated risk and added to the recommended square footage by 100,000 square feet,” recalled Henry Segerstrom, grandson of patriarch C. J. Segerstrom, who has presided over the center for 35 years.
The risk paid off. Six years later, Bullocks followed Sears and May Co. Another 76 retailers moved in and South Coast Plaza became one of the first big single-unit shopping centers in the U.S., stretching across 66 acres.
Cut to 2002. As the shopping Valhalla quietly celebrates its 35th anniversary — no galas planned — proprietors are no doubt clinking their glasses to a complex that has grown to 114 acres, 2.8 million square feet of retail and dining and more than 23 million visitors a year.
Total sales were $1.1 billion in 2001. Some 1.2 million square feet of major department and specialty stores pulled in about $700 per foot last year, or $840 million. The remainder comes from restaurants, entertainment and other businesses.
“It’s a center that has one of the highest-performing sales-per-square-foot averages in the country,” said Malachy Kavanagh, a spokesman for the New York-based International Council of Shopping Centers. “The average mall does $340 a square foot, they’re way above that.”
Retailers’ interest in this land has only intensified in the last three-and-a-half decades. Among its 280 stores are Yves Saint Laurent, Jimmy Choo, Van Cleef & Arpels, Ron Herman and David Yurman established outposts here this year alone. And some, like Donna Karan New York, Miss Sixty, Loro Piana and Roxy, have chosen the center as their only address in California to date.
Ron Herman took a little more convincing before he opened a store here last month, his fourth overall. “I am not a mall person,” he said, noting that he paced the center for years. “But I love what [Segerstrom] does. It’s about being here in a perfect shopping environment.”
South Coast Plaza, though technically a mall, is also known as a community center in this suburban sprawl. It is home to the Orange County Performing Arts Center, soon to include the Segerstrom Center for the Arts, a 2,000-seat concert hall and 500-seat music hall, the South Coast Repertory theater and museum, to open in 2004. Segerstrom personally donated $40 million for its construction. As such, it has received recognition from the Urban Land Institute for “having achieved a sense of place.”
“Without South Coast Plaza, Costa Mesa would flatten considerably,” said Ed Fawcett, president and chief executive officer of the city’s Chamber of Commerce, noting the center accounts for $10 million of the city’s sales tax revenue. Including peripheral businesses that have sprouted up around it in recent years, the figure balloons to a third of the city’s sales tax revenue.
Segerstrom downplays its importance. “The growth of South Coast Plaza is an exact parallel to the population growth of Orange County,” he insisted. “The population has grown 1 1/2 times since South Coast Plaza first opened. That’s the story of South Coast Plaza.”
Mirroring residents’ earning power, the center catered to modest incomes in the early days and still appeals to them with a wide selection of retailers such as Sears, Wet Seal and Gap. A grand carousel decorates the moderate side of the mall, appealing to young mothers and their children. Aside from Sears and Robinsons-May (as May Co. later renamed its store here), the anchors are Nordstrom, Saks Fifth Avenue and Macy’s West.
But Orange County’s population base has not only grown, it has changed. Farming gradually gave way to computer technology creating a gross domestic product here worth $122.1 billion, or roughly equal to the economic power of Turkey, according to Costa Mesa’s Chamber of Commerce.
Some 3 million people live here now, and 29 percent of them earn $75,000 or more a year.
And as Orange County residents became more cosmopolitan, so did the consumer landscape. The mid-Seventies was a pivotal time for South Coast Plaza, which found itself moving into high-end retail at an accelerated pace. In 1975, it introduced Courrèges, the first freestanding designer store in Orange County. A year later, Halston entered.
“In the mid-Seventies, retail here was the kind you’d find in major metropolitan areas like Paris, New York and Chicago,” said Segerstrom. “We started moving toward European-type retailing instead of just department stores or independent boutiques.”
At that time, Beverly Hills was putting up some competition with Giorgio Beverly Hills, Theodore and Gucci ruling Rodeo Drive like disco ruled the airwaves.
It wasn’t until 1987, when Tiffany & Co. concluded Southern California, which was emerging as one of the largest retail markets in the U.S., could successfully handle two stores — one on Rodeo Drive and one in South Coast Plaza — that the floodgates opened. Barneys New York followed (although it has since closed here), as did Prada — both opening units here before Los Angeles or San Francisco.
“They are a place where retailers test new concepts, having the firsts of a lot of new concept stores,” noted ICSC’s Kavanagh.
Now, many of the names on Rodeo — Chanel, Burberry, Louis Vuitton, Gucci, Escada — are here. “It’s a very important place for us to be,” said Patti Cohen, executive vice president of global marketing and communications for Donna Karan, noting a Beverly Hills address is still a way off. “This is our target customer.”
Segerstrom believes “there is considerable retail strength in the massing of great designers and great merchandise. Retailers come because they know they have a customer base here. It takes years and sometimes decades to build that kind of base.”
The plaza now draws 35 percent of its revenues from outside of Orange County, half of that figure coming from within a 100-mile radius. It provides shuttles from many of the area’s attractions, including Disneyland in Anaheim, and some major hotels. “We are probably known in Paris, London and Tokyo better than we are in the U.S.,” Segerstrom said.
Tony Cherbak, partner in the consumer products group at Deloitte & Touche here, concurred. “It attracts people from all over the world as a destination,” he said. “It’s well known internationally, especially with the Japanese. They seek out South Coast Plaza.”
Sales this year are 11 percent ahead of last year, Segerstrom attributing growth to the Bridge of Gardens, an architectural walkway connecting the original center to the Crate & Barrel/Macy’s Home Store wing. The bridge, a “tremendous stimulus,” according to Segerstrom, was built as part of a $100 million overhaul completed in late 2000, and which rechristened the wing once known as Crystal Court.
Turning 80 years old next March, observers speculate Segerstrom is contemplating retirement. Who will take the helm is a hot topic among Orange County’s social scene and business observers.
His son, Anton Segerstrom, 45, a partner in parent company C. J. Segerstrom & Sons, is a logical pick, having been active in the business for 17 years. But cousin Sandy Segerstrom Daniels, who also has sizeable ownership, has become more active in the center this year. Sources say, however, that she prefers more philanthropic duties.
The senior Segerstrom is mum on the issue.
Instead, he wants to talk about retailing, revealing not a hint of regret for having turned the lima beans into concrete and himself into one of the wealthiest and most highly regarded businessmen in Orange County.
“I have a great affinity toward retailing,” he said. “I like the challenges of it. I like the psychological rewards.You have to watch how the world changes, how habits change, and how people want to live. Orange County was a very nice place in the Sixties, but it was a little dull. Now, it’s a lot more fun.”