LOS ANGELES — The ink hadn’t even dried on Beverly Center’s Eataly deal when Westfield swooped in. They had a sweeter offer, and that’s how Mario Batali ended up leading two groups of wide-eyed press for previews through the Disneyland for Italian foodies at Westfield Century City late last month.
“It weighted the scale; it tilted it,” said Jay Luchs, vice chairman in Newmark Knight Frank’s Los Angeles office and one of the leasing agents on the Eataly deal, of the decision to go to Century City.
But as anyone in real estate will tell you, the job of filling out a mall is never really done, nor is anything ever set in stone, especially in today’s dynamic state of retail. In Los Angeles commercial real estate, industry shifts are playing out in a region where the sheer density and diversity of consumers (hipsters, families, artists, luxury buyers, tourists and more) collide with Southern Californians’ love of cars to create the gridlock on streets that’s not only allowed for malls and retail streets to survive, but actually thrive in close quarters.
Century City’s $1 billion makeover and expansion, which Westfield U.S. operations chief marketing officer Heather Vandenberghe said is intended “to reimagine what a mall could be,” along with Beverly Center’s $500 million redevelopment nearing its own completion, poses the question of whether a new pecking order will be established for retail on the Westside.
Westfield cochief executive officer Peter Lowy seemed to think so when he told WWD in October at the time of Century City’s grand opening that the mall would alter retail on Los Angeles’ Westside, never mind the competitive set. “We’re not concerned at all,” Lowy said of the competition. “I suppose, to put it bluntly, they’re all playing catch-up.”
The tides are indeed turning in some cases. Gabe Kadosh, vice president of retail services in the downtown Los Angeles office of Colliers International, said he was working with a Rodeo Drive men’s wear client that pondered Century City. (The client ultimately opted not to go into the mall.)
“That kind of group never looked at Century City before,” Kadosh said. “You’re seeing these high-end boutique tenants that may have looked at Beverly [Drive] in Beverly Hills or may have looked at parts of Santa Monica in the past say they want to be at Century City.”
Other market watchers say to each their own, with plenty of room on the Westside for all retail — whether Century City, Beverly Center, or Caruso’s oft-buzzed about The Grove all within a roughly 5-mile radius of each other. There’s also the Westside Pavilion, discount center Beverly Connection or pedestrian-friendly West 3rd Street also within that trade area.
“It’s all about the unique experience, right? How do you get people out of their homes? How do you get people off the Internet and off the online e-commerce stores?” said Zach Card, a vice president in the Century City/Beverly Hills office of CBRE.
A look at Westfield Century City, Beverly Center and The Grove — with the core of that radius being the intersection of South Robertson Boulevard and West Olympic Boulevard — shows the 2017 population to be 881,542 with a median household income of $58,719, according to research from CBRE. That population is projected to grow to 910,660 with a median household income of $70,080 by 2022, according to CBRE.
The Grove has long been hailed as a study in successfully creating an environment unto itself, with the experience starting from the drive into the parking structure and down to the quaint electric trolley running up and down First Street.
“I think we have a competitive advantage in that we don’t have 2 million square feet of [gross leasable area], so we’re not a box of shops for lack of a better term,” said Caruso executive vice president of operations Jackie Levy. “We have the ability to be very curated.”
And The Grove seems to be doing just fine, boasting $2,400 in sales per square foot. An apples-to-apples comparison with its immediate peers is difficult to come by. Taubman doesn’t break out sales-per-square-foot data for each of its centers, although a report from activist investor Land and Buildings pegged it at $990 and $3,160 for Westfield Century City. Westfield said it expects Century City to eventually reach over $1 billion a year in sales, although has not given a timeframe on when it expects to hit that target. Given both of the centers’ construction over the past few years, figures based off operations under normal conditions technically aren’t available.
One of The Grove’s strengths, Levy continued, is in the big names not common at most other centers. He pointed to American Girl Place and Elizabeth and James. There’s also a glass pod dedicated to temporary shops, such as Charlotte Tilbury’s first U.S. pop-up coming next month. Dedicated pop-up space is something other shopping centers are now toying with, Westfield Century City included.
The fact that others have picked up on the success of such spaces doesn’t appear to have impacted demand for short-term deals at The Grove, where the pop-up shop space is nearly booked through 2018, Levy said.
Where does that leave Beverly Center, now in its final year of construction?
In a position to continue taking advantage of its central location, larger mix of luxury tenants and a push that will make the center more diverse for the foodie set, said Beverly Center marketing and sponsorship director Susan Vance.
“It’s a very hard thing to say if they [Century City] have [had an impact]. I think we all know our place in the market and we all take a piece of the market share,” Vance said, adding Beverly Center is positioned as a draw for the stylists and other creatives in town, in addition to tourists, who account for 35 to 40 percent of the mall’s traffic.
Beverly Center announced an incoming 28,291-square-foot Zara in addition to renovations and expansions for tenants such as Michael Kors and Traffic. On the food side, Cal Mare opened, with more on the way, including Eggslut, Yardbird, Farmhouse, Easy’s and a food hall called The Street: A Michael Mina Social House, curated by the chef himself.
“Retail follows retail if you’re able to merchandise things that reach out to a lot of different categories,” Kadosh said.
The traffic congestion and density of that retail could work in favor of those malls that have broad appeal, he added, saying, “I think ultimately there’s almost too much retail in Los Angeles and so people are going to venture to clusters where they can go with their family and there are different things for everyone.”
Does one shopping center ultimately unseat the other once all the redevelopment dust settles? More than likely not, market watchers would tend to agree, with Luchs holding fast to an “all boats rise” belief.
“In short, yes, [Westfield’s opening] probably affects other malls and other streets somewhat, but the bigger picture is it’s an L.A. story,” Luchs said. “The more one mall gets, the better it is for everyone.”