The battle for the prized high-end shopping dollar this holiday season is a three-way fight, with the renovated Shops at Mission Viejo entering the fray in full force for the first time against the tony Fashion Island and South Coast Plaza.
Nearly two years ago, the former Mission Viejo Mall began an expensive renovation and expansion to become a more upscale shopping center, creating new competition for Fashion Island in Newport Beach and South Coast Plaza in Costa Mesa.
The mall’s owner, Simon Property Group, along with anchor tenants such as Macy’s and Robinsons-May, invested some $165 million to give the aging center a makeover and expand it roughly 45% to 1.2 million square feet. With construction lasting for nearly a year, the mall’s sales dropped, according to financial data provided by the city of Mission Viejo, from $109.3 million or $134 per square foot in 1997 to $104.7 million or $90 per square foot in 1998 (based on its new, larger size). Then annual sales rose 61% last year to $168 million or $145 per square foot, getting a boost from the center’s Sept. 10 reopening.
This year with all 135 stores open, including the 100,000-square-foot Saks Fifth Avenue and the 160,000-square-foot Nordstrom, sales are up 200% to $118.7 million in the first half.
A year ago, the center’s second-half sales were $129.2 million. That number is expected to be higher this year because of the changes.
“The shops anticipates very positive year-end sales results vs. last year with its 100% leased position and the addition of three new restaurants,” said Judy Bullockus, marketing director of the Shops at Mission Viejo.
Retail analyst Greg Stoffel of Stoffel & Associates in Irvine projects the center’s sales are on track to reach roughly $300 million,or $260 per square foot,this year, but said most newly renovated malls need about three years to reach their potential.
Arthur W. Spellmeyer, a Simon senior vice president of development, told the Business Journal in 1999 that he anticipated the center’s sales to double after the renovation.
“I think the sales were in the low to mid-$200 (per square foot range) and we feel that it will be in the $400 (per-square-foot) range by the end of the first year of operation,” said Spellmeyer, who added that Simon’s 243 centers average roughly $350 per square foot. “Even if we hadn’t doubled its size, productivity would have gone way up because the product did not match the marketplace and now the product does match the marketplace.”
Indeed, there are signs that The Shops already is putting some heat on Fashion Island and South Coast Plaza. Last year, Fashion Island had sales of $409 million ($408 per square foot) and South Coast Plaza rang up $990.5 million ($335 per square foot). In the first half of this year, while sales at The Shops increase about $80 million year-to-year, South Coast Plaza,then nearing the end of a two-year, $120 million expansion, but with major tenant Macy’s Home yet to open,posted a more modest $20 million increase in sales, to $452.4 million.
A spokeswoman for Fashion Island said its first-half sales were up 6.9%, but would not give dollar figures.
“I think it’s got potential to be the second- or third-strongest mall in sales for the county,equal or better than the Brea Mall (with annual sales of $394 million) based on the residential growth and the phenomenal strength of the income from the surrounding population,” Stoffel said. “I think it looks pretty good for this year but construction has got to finish before it will reach its potential.”
The center’s first and second phases are mostly completed, with Macy’s still finishing up its 60,000-square-foot expansion, but a third phase is in the planning stages, Bullockus said.
The center has replaced most of its tenants, adding some 110 new retailers and restaurants including Crate & Barrel, Pottery Barn, Restoration Hardware, Williams-Sonoma, the Cheesecake Factory and Z Gallerie, all stores once only available to South County shoppers at South Coast Plaza or Fashion Island. Shops at Mission Viejo also added new anchor stores Saks Fifth Avenue and Nordstrom. And the center recently opened its dining veranda, or food court, featuring 10 food outlets and two restaurants.
“I think it’s great. It’s a lot cleaner and there are a lot more stores, but I do see a lot more expensive stores too,” said Kevin Lyons, 25, of San Juan Capistrano, who was out shopping with his 2-year-old son Ethan.
Another shopper armed with several Macy’s packages said she used to shop at South Coast Plaza religiously, but since the renovation has cut down the number of trips to Costa Mesa.
Andrea Alonzo and her daughter Allison of Rancho Santa Margarita also were loaded down with shopping bags.
“We are making fewer trips to South Coast Plaza, because this is closer to where we live,” Andrea Alonzo said.
On the day after Thanksgiving, the eighth busiest shopping day of the year, according to Indianapolis-based International Council of Shopping Centers, the Shops at Mission Viejo was busy. But the busiest stores were discount shops such as Old Navy and department stores advertising big sales such as Macy’s and Robinsons-May.
After spending the day at Fashion Island and Irvine Spectrum Center, Tony Cherbak, a retail analyst at Deloitte & Touche LLC in Costa Mesa forecasts the holiday shopping season will at least match last year’s sales or grow as much as 2%.
Dr. John Konarski, ICSC senior vice president of research, forecasts a 2.4% increase this year for mall specialty stores.
“These first (Thanksgiving weekend) sales results indicate a good beginning to the holiday season,” said Konarski. “Throughout the year there has been concern that the economy had slowed down and consumer spending for the holidays would decrease. An increase over the banner 1999 Thanksgiving weekend indicates that consumers have confidence in the economy and our expectations for overall holiday sales remain positive.” n
