They’re cuter. Smaller. And generally more fun.
And for years, traditional malls have been trying to evolve to keep up with them.
As more open-air lifestyle centers, such as City Place in Santa Ana, pop up around Orange County,often close to an enclosed regional mall,they bump up the standard for traditional malls to meet.
City Place is bringing that bar to a new level. The 18-acre mixed-use project, which is across from Westfield Group’s MainPlace, includes 60,000 square feet of restaurants and stores along with 242 lofts for people to live in and run their businesses out of.
The lofts are attracting boutique retailers who like the flexibility and the financial savings of the set up.
Dana Harvey recently opened Harveys boutique with his wife, Melanie, in a live and work loft at City Place. He said he priced leasing at the malls and it’s five times what he’s paying at City Place.
The Harveys had been doing well with their online store for their Harveys Industries Inc., selling stylish and sturdy handbags made out of seatbelts. But they wanted to open an actual store, he said.
With different rules at a live-work space, they have advantages over mall stores, such as flexible business hours, he said.
“We can create our own hours for the convenience of our customers,” he said.
Harveys held a couple of events that have lasted until midnight, not something it could’ve done at the mall.
Hannah Bean, another boutique that sells women’s designer brands, opened last month in a loft. Owner Nicole Dale lives there and operates her business on the first floor. People who are buying the lofts at City Place tend to be creative and brand savvy, Dale said.
So far, business has increased 80% each week since the store opened on Sept. 1, she said.
City Place, still in the works, is expected to be finished next spring. Mother’s Market & Kitchen and Coffee Bean & Tea Leaf are being built and early tenant McCormick & Schmick’s restaurant is doing well. Pinkberry is set to open any day.
David Hosbein, general manager at Westfield MainPlace, thinks the development is good for the mall.
“It’s a nice upward spiral,” Hosbein said.
It’s making the area an upscale shopping hub, he said.
And, Hosbein said, the fact that Nordstrom, MainPlace’s anchor, is right across the street from City Place will help developer Bisno Development Co. sell its lofts.
Nordstrom is indeed a selling point for sales agent Christy Doorbetakis, who is marketing the three-story, $700,000 lofts and townhomes for Bisno. She said the mall drives traffic to City Place, which started selling homes in May.
While MainPlace and City Place can identify some shared benefits of being located so close to each other, other OC malls see lifestyle centers as pure competition.
The Laguna Hills Mall could go head-to-head with nearby developments at The Arbor on El Toro in Lake Forest.
The Arbor shopping district has two major retail developments: The Orchard at Saddleback, a 275,000-square-foot shopping center, and the Home Depot Center, a 163,500-square-foot center. The Orchard will feature a Main Street with lots of areas for meeting and gathering. The Home Depot Center is redeveloping a K-Mart to include restaurants and shops.
Indianapolis-based Simon Property Group Inc. declined to comment if it will remodel its Laguna Hills Mall to keep up with the new developments.
Patsy Sandquist, area director of marketing for the Shops at Mission Viejo and the Laguna Hills Mall, downplayed The Arbor as competition. It offers more choices for the local shopper, she said.
“The evolution of small retail centers is definitely a trend we’re seeing more of. Orange County is a very mature retail market so it’s not surprising that new options are popping up,” she said.
Nationwide, regional malls are looking to stay relevant by adding condominiums, even hotels, said Malachy Kavanagh, spokesman for the New York-based International Council of Shopping Centers.
The consolidation of department stores has opened up space at malls to make these types of changes. Owners are converting those chunks of space into upscale restaurants and entertainment venues, condos and offices, Kavanagh said.
Bella Terra in Huntington Beach is an example of an old-style mall that has transformed itself. Formerly Huntington Beach Mall, owner DJM Capital Partners Inc. literally removed the mall’s roof and remodeled to attract boutiques and anchors such as Bed Bath & Beyond, Cost Plus World Market, and favored eateries, The Cheesecake Factory, The Cravery and Pinkberry.
Phase two of Bella Terra, under way soon, plans to add condos, apartments and townhomes above stores in the area where Montgomery Wards used to be. But some market watchers doubt that Bella Terra and other retailers will add housing until the market recovers.
Robert Cohen, executive vice president of Robert K. Futterman & Associates, said the nature of retail has changed. Clothing designers and other vendors used to sell their wares mainly in department stores at the mall, he said.
But now, designers are opening their stores in lifestyle centers, which are being built nearby malls to feed off the traffic accustomed to going to the mall, Cohen said.
But that doesn’t mean traditional malls will disappear, he said.
“I don’t think we’ll ever see the end of the regional mall,” Cohen said.
