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Shopping Mall Sales Grow, Outstrip National Gains

Shopping Mall Sales Grow, Outstrip National Gains

By SHERRI CRUZ

Luxury retail sales, store openings and renovations helped fuel gains at Orange County’s largest 25 shopping centers last year.

Outpacing the national trend, sales at OC malls rose 7% to $5.6 billion in 2003, according to this week’s Business Journal list, which ranks the county’s largest shopping centers by taxable sales. OC’s crop of top malls grew sales 3% in 2002.

Data was gathered from city sources and the malls themselves. Estimates were made for five malls, for which the cities were unable to provide sales.

Nationally, shopping center sales grew 4.4% in 2003, according to the New York-based International Council of Shopping Centers.

The county recently earned a nod on the retail front: Encino-based Marcus & Millichap Real Estate Investment Brokerage Co. ranked OC No. 1 in its annual list of retail areas. Washington, D.C. had been the No. 1 area for the past two years, but fell to No. 2 on the latest ranking, with San Diego at No. 3. The brokerage bases its rankings on several indicators, including employment forecasts, household growth, vacancy, construction, personal income and rents.

South Coast Plaza in Costa Mesa retained its No. 1 spot on the Business Journal’s list with a 10% rise in sales to $1.1 billion.

The shopping center is leading OC’s luxury wave.

“The demand for luxury goods in OC is very strong,” said Debra Gunn Downing, executive director of marketing for South Coast Plaza.

South Coast Plaza has about 70 stores that aren’t found elsewhere in OC, including Tiffany, Burberry and Louis Vuitton, she said.

Home furnishings were another sales driver at South Coast Plaza, Gunn Downing said. Minneapolis’ Room & Board, a furniture store that opened last year, has been that retailer’s top performing store, she said.

The home category also has been driving sales at other malls. No. 10 Irvine Home Center, a furniture hub, for example, saw its sales in 2003 increase 13% to $164 million.

South Coast Plaza’s sales were more than double those of No. 2 The Market Place, which straddles the Tustin-Irvine border along Jamboree Road. The Market Place was the only mall in the top 10 that reported a decline in sales, falling 2% to $496 million.

The mall’s results were hurt by the departure of Ikea, which left for Costa Mesa where it had bought property and built a store double the size of the Market Place one. Ikea had been one of Tustin’s top 10 tax generators.

The top five shopping centers held the same rankings as they did last year. No. 3 Fashion Island in Newport Beach had a 5% increase in sales to $481 million. No. 4 Brea Mall had a 5% gain in sales to $459 million and No. 5 The Shops at Mission Viejo saw a 4% increase to $340 million.

Three of the top five malls,South Coast Plaza, Fashion Island and the Brea Mall,beat the national average of $345 per square foot in annual sales as tracked by the International Council of Shopping Centers. South Coast Plaza had 2003 sales of $394 per square foot, with Fashion Island at $365 per square foot and Brea Mall reporting $353 per square foot.

One of the biggest jumpers on the list was No. 19 Buena Park Downtown, up from No. 25 a year earlier with a 116% increase in sales to $105 million. The shopping, dining and entertainment complex got a $90 million overhaul in 2003, which included a name change (formerly Buena Park Mall) and an urban-street theme.

New stores that opened there last year included an 18-screen Krikorian movie theater, Powerhouse high-tech video game venue and Boba Loca, a teahouse and caf & #233;.

Newport Beach-based The Irvine Company nabbed the top spot by one measurement: its five malls on the list were the most of any owner.

The combined sales for its five properties were $1.5 billion. The Irvine Co. recently said it plans to take the management of all its 36 shopping centers in-house by July.

The list’s biggest ranking move was by an Irvine Co. mall. The Irvine Spectrum Center, which bounced from No. 16 to No. 9 this year, reported a 44% sales increase to $168 million.

Spectrum sales jumped, in part, on about 30,000 new square feet of space at the 832,000-square-foot mall. New tenants included Fox Sports Grill, Ritz-Camera and Tilly’s.

The Spectrum also benefited from some big openings in late 2002, such as Robinsons-May. Thanks to those openings, the Spectrum’s 2003 sales included a full year of revenue for Robinsons-May and the others, said Nina Robinson, vice president of marketing, retail properties, at the Irvine Co.

The mall stands to see even bigger gains in a couple of years after Nordstrom opens a store in late 2005 and Target debuts another in 2006. When those stores open, the Spectrum will have 1.1 million square feet of leasable space.

The Irvine Co.’s Crossroads/Westpark mall in Irvine posted a 3% decline in sales to $163 million. Robinson said the decline was a result of the grocery strike, specifically lower sales at Albertsons.

Indianapolis-based Simon Property Group Inc. is the second-biggest mall operator in OC with combined sales at its four properties of $1.2 billion. Simon, which owns 247 malls in North America, saw increases at three of the four OC malls, with No. 7 Westminster Mall being an exception. The Business Journal estimated Westminster Mall sales to be $275 million for 2003.

At No. 4, Simon’s Brea Mall saw a 5% increase in sales to $459 million.

Women and children’s clothes drove sales at Simon’s No. 5 The Shops at Mission Viejo, the company said. Revenue at The Shops grew 4% to $340 million. The mall caters to so-called “stroller moms” and recently remodeled the children’s play area.

Simon’s No. 13 Laguna Hills Mall had a 7% increase in sales to $151 million. It, too, is geared to women’s and children’s apparel stores.

Of the 20 shopping centers that reported sales for 2003, 16 posted increases, three reported decreases and one had no change. Without estimates, the 20 malls posted an 8% sales gain.

A mall to look out for is 700,000-square-foot Bella Terra, formerly known as the Huntington Beach Mall. The once-dated mall is undergoing a two-year, $170 million makeover set to finish in 2005. Tenants include Kohl’s, Barnes & Noble, Starbucks, Circuit City, Staples and a couple of smaller tenants.

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