SOUTH COAST PLAZA TURNS BLOOMINGDALE’S AWAY FROM ITS DOORS
LOS ANGELES — Is the Beast of the East too much for the Best of the West?
Apparently fearful of the competition Bloomingdale’s might provide, retail anchors at Orange County’s glitzy South Coast Plaza have rejected the New York-based chain as a potential tenant.
The move has embarrassed officials of the mega-mall — who had been excited about the prospects of leasing space to one of the most glamorous retailers in the country — and it has forced Michael Gould, Bloomingdale’s chairman and chief executive officer, to look at a smaller, less-prominent location.
“If the South Coast people can’t get us into their center — and it would be a shame, I’ll be blunt about it — we’ll go to Fashion Island,” said Gould, reached in New York. “It’s as simple as that. We’re not going to get frozen out of the market.”
It is unclear which of South Coast’s seven anchors were responsible for freezing Bloomingdale’s out of the center, but sources said some were afraid of the new competition Bloomingdale’s would bring. Executives at Bullock’s, Bullock’s Men’s, Nordstrom, Saks Fifth Avenue, The Broadway, Robinsons-May and Sears, Roebuck & Co. would not comment. Henry Segerstrom, managing partner of C.J. Segerstrom & Sons, South Coast’s owner, met several times with Gould, but last week he declined to discuss specifics of his negotiations. He pointed out, however, that large mall retailers often can reject new tenants seeking to enter their center.
“In every large planned shopping center that I know of, there are rights of review for anchors,” said Segerstrom, who founded the center in 1967 in a Costa Mesa cornfield.
According to Bill Dombrowski, president of the California Retailers Association, the Bloomingdale’s situation at South Coast Plaza is not out of the ordinary.
“It’s very common for anchors to have the right to review the entry of a new anchor into a regional shopping center,” he said. “Site selection is one of the most important and expensive decisions a retailer has to make, and right of review is one of the ways they protect their investment.”
Getting locked out of South Coast Plaza is a big blow to Bloomingdale’s stated intentions to expand to California.
South Coast is a retail behemoth, with more than 2 million square feet of retail space and hundreds of specialty stores. It is the only indoor mall in the country to attract Bulgari, Cartier, Chanel, Tiffany & Co. and Emporio Armani.
South Coast stores rang up $875 million in sales last year, Segerstrom said, comparable to retail sales in Beverly Hills and downtown San Francisco.
Fashion Island is a smaller open-air center several miles from South Coast in Newport Beach. It is operated by The Rouse Co. and owned by The Irvine Co., a real estate development firm owned by Donald Bren, Segerstrom’s arch-rival in Orange County.
During the Eighties, Fashion Island was an upscale powerhouse, home to Amen Wardy, I. Magnin, Neiman Marcus, Robinson’s and Buffums, as well as smaller specialty stores. Neiman Marcus is the sole surviving large upscale specialty store, and most of the others have been replaced by smaller retailers and restaurants. The center is best known for its outdoor ambience and location atop a hill with breathtaking views of the Pacific Ocean.
Fashion Island officials predicted Friday that Bloomingdale’s would have no problem getting approval from its anchors, Neiman Marcus, The Broadway and Robinsons-May.
“I happen to feel that the addition of Bloomingdale’s in Fashion Island is a better match [than South Coast] for the trade area and anchor markets,” said Rick Evans, president of the retail division of The Irvine Co., which developed the mall. “We’re a great choice for them in Orange County.”
While Bloomingdale’s is apparently not welcome at South Coast Plaza, other big stores might be. Segerstrom said he expects the center to add some new anchors in the next few years.
“We believe there will be a major expansion and we have the desire to grow,” he said.
Despite the rejection, Gould maintains his high regard for South Coast Plaza. “I’ve been to a lot of shopping centers, and there are few places as good as South Coast Plaza,” Gould said. “The fact is you can be good, but if you can’t make a deal, you can’t make a deal.”