The Irvine Spectrum Center is set to surpass 1 million square feet of space with the odd couple of retail: Target and Nordstrom.
Nordstrom opens this week at the center. Target’s due next year. The two stores are adding 260,000 square feet to the Spectrum Center.
Since opening a decade ago, the center has gone from an island amid the sprawling Irvine Spectrum business park to a draw in its own right, attracting more than 11 million visitors a year. The center averages $400 per square foot in sales, according to industry estimates, just above the national average.
The center is the second largest for The Irvine Company, after Fashion Island. Both fall under Keith Eyrich, president of The Irvine Company Retail Properties. He oversees 36 shopping centers in all. He lives in North Tustin with his wife and four daughters. The Business Journal’s Sherri Cruz recently talked with Eyrich about the Spectrum Center.
Did the Spectrum naturally evolve or did a group of people sit down and say “Let’s do this”?
It was more organic. In the mid-1970s, the site was planned for a conventional enclosed regional mall. There were anchor tenant commitments. There were a series of ownership changes with the company (current owner and Chairman Donald Bren bought into The Irvine Company with investors in 1977).
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Nordstrom: set to open this week |
At the same time, the regional mall business pretty much imploded. As Irvine Spectrum (the business park) started to grow, the lack of amenities out there became pretty apparent. There was no place to get a cup of coffee, go have lunch or dinner, take a walk for a little diversion from business. There was certainly no place to shop. We started focusing on how we could address that.
About the same time we were doing that, Mr. Edwards Sr. (of Edwards Theatres Circuit Inc., now part of Regal Entertainment Group) was in talks with the company. It became apparent that he really had this idea of doing a grand theater, so we took those cues. About the same time you started to see entertainment-oriented centers.
We went and visited those and came up with this concept that we thought would work there. It was really all about entertainment. Before we opened, Edwards made their deal with Imax.
We were impressed with the success of the project and we were encouraged to expand it. We started studying how to expand. I don’t frankly know where the idea came from to start injecting some retail. It was still themed retail, kind of edgy retail. The second phase opened after Labor Day in 1998.
Visitors were asking for more stores?
Yes, they were. So we figured we’d go further along in retail and expand the project again. We were approached by Robinsons-May about a freestanding department store, which is kind of an odd twist because that wasn’t the direction we were going in.
But it did mesh well with the concept of more mainstream retail in the center. Of course with our latest additions Nordstrom and Target coming in July, we’ll be at 1,150,000 square feet.
How did the pairing of Nordstrom and Target happen? Which came first?
We were talking to them about the same time. I guess Nordstrom got to the table a little later. But Nordstrom is opening first as a function of the geography of the site. You have to do first what you can without disrupting the operation of the center. Nordstrom will open (this week).
At the far end of the site, we’re doing the utility work for Target. They’ll go under construction after Nordstrom opens. We wanted to do something different and unique, consistent with the spirit of the Irvine Spectrum Center. One of the predicates for that project was the concept of universality,something for everybody,and we wanted to make it a town center. To do that, you have to cover,and I promise I won’t say the full spectrum,the whole shopping experience from strata of merchandise to types of shopping trips.
A big deal has been made of the pairing of Target and Nordstrom. Is it a big deal?
We were observing Target. They signed up Mossimo, Isaac Mizrahi, Cynthia Rowley.
They were bringing in great designers and style to popularly priced merchandise for the home and fashion. It really became something unique. You’re starting to see stirrings now in WWD (Women’s Wear Daily) articles that Wal-Mart wants to go in that same direction. Of course, they ought to. The other thing that Target brings is value. If you look at Nordstrom, it’s more on the luxury side.
Was there anyone who rejected putting the two together?
From day one, Nordstrom was a strong supporter.
There wouldn’t be a Nordstrom and Wal-Mart pairing, would there?
It would make less sense to me because I wouldn’t have found that fashion (at Wal-Mart). I’m not sure that we would’ve put Wal-Mart where we put Target because of that. I love the Target advertisements. They’re so creative and so right on the money that I’m so comfortable it’s going to be a huge hit. The correlation of Nordstrom shoppers and Target shoppers is pretty astounding.
Some people say malls are dinosaurs and will fade away?
Yes, but there are a lot of other people who say those fortress malls are the salvation of the retail business and will continue to evolve and get better and different. My personal opinion is there are a lot of formats out there. Some are executed well. Some are executed poorly.
So if it’s executed well, it can survive no matter what the format?
Sure, a lot depends on the real estate, the locale, the competitive situation and the dynamics of the local market.
Does the Spectrum have exclusive tenants?
I can’t think of anyone that we have on an exclusive basis down at the Spectrum.
What do you think about exclusives?
Reasonable and rational exclusives are fine. They’re a part of our business. Unreasonable exclusives that are too broad or cover too large of a geographical area could be problematic.
What is a typical day like for you?
It’s people. It’s motivating people and trying to move the ball forward. I have a terrific team of executives and a terrific group of employees. My job is to not get in their way.
Are there more boutique-style stores at the Spectrum these days?
We focus our properties very carefully on that. In order to keep a center interesting, you have to have a nice blend of names people recognize plus interesting and new, different, smaller retailers. And you have to keep changing.
How do small retailers afford the leases?
It has to do with sales. The simple formula is you look at the sales the merchant is capable of doing and they can pay a certain percentage of sales as occupancy costs. We look at the merchants and find out if they’re generating good sales. If they are, we have faith in our real estate and have faith that they’ll do that well down here.
How is the Spectrum labeled?
I’m not sure there is one. The industry always struggles to name whatever it is they’re doing. I don’t know if that is productive. I can tell you what we’re trying to create is a town center that really caters to our customer base.
Some would call it a lifestyle mall.
ICSC (the International Council of Shopping Centers) would disqualify the Spectrum from being a lifestyle center. Because we have three anchors, three department stores. Lifestyle centers traditionally are unanchored. They’ve come up with this term,a hybrid center. At a point I say, “What’s the use?”
How important is catering to Gen Y and the younger shopper?
It’s real important because there’s a lot of competition to acquire that customer and maintain that customer. It’s not really Gen Y, but if you look at what Gap, Abercrombie and American Eagle are doing, they’re going to the next age group with Fourth and Town (Gap) and Abercrombie’s Rule concept. They’re all trying to stay with that customer.
Have online sales changed mall retailing?
It has for some of the retailers. More and more people will do some shopping online to look at the variety and decide what digital camera their interested in. And then you go to Best Buy, Circuit City and Good Guys and touch and feel and figure it out.
The retail that we create is very tactile. You gotta feel it, you gotta be there. We pay a lot of attention to environment. It’s partly about shopping. It’s mostly about shopping. But it’s also very much about going somewhere, being in a community, seeing people, talking to people, having that group experience. It’s very important.
Even with the cocooning concept, the centers are very important places. Internet shopping when you net out travel still is a very small percentage. Granted, it’s growing rapidly. But there will always be a big demand for that place for people to go to get out of the house. Great shopping is a part of that.
Since you’re doing more retail, will the Ferris wheel go away?
No, not in the near future. We consciously wanted to do things to bring families into the center. That strategy has not changed. So the giant wheel,there’s a difference you know: a Ferris wheel has benches; a giant wheel has gondolas. I didn’t know that before I went in the amusement business.
What is the annual visitor number and how much has that changed?
It’s gone up. (Well more than 11 million).
What is the parking situation like?
Our second structure is open, 2,500-plus spaces. We reconfigured the valet adjacent to it. So you don’t pull into that U by P.F. Chang’s anymore. There is a valet parking structure by Nordstrom. Not sure that will operate all the time.
Was that part of their deal?
They like to have that. That’s part of their luxury program.
Is there big demand for valet?
There has been at the center. It’s huge. My expectation was that with the structure and convenient parking, valet demand will drop somewhat. But it’s a convenience that people have gotten to use to.
I understand that you do marketing through the valet.
They’re the first Irvine Spectrum employees that come in contact with the customer,everything from making sure it’s a polite and positive experience to informing the customer what’s going on at the center.
Will sales ever surpass Fashion Island?
I couldn’t predict. Because Fashion Island sales aren’t going to remain static. Spectrum still is a bit under Fashion Island. We expect to see very healthy growth at the Spectrum. The trade area surrounding the center is expanding and filling in.
What’s the occupancy at the Spectrum?
It’s in the 80s (percent). Right before the holidays, I think we’ll hit 90%, 92%, something like that.
Would you like to see more luxury at the Spectrum?
No. That’s not our customer. That’s not what we’re about.
