More than a dozen new stores and eateries sprouted in the north section of the Irvine Shopping Center that not too long ago housed Macy’s department store. New tenants are national and local favorites—Sephora, 85°C Bakery Cafe, Stance, Afters Ice Cream—that complement the rest of the 150 shops at the outdoor center.
“Department stores were much more relevant years ago than they are today,” said Butch Knerr, president of Irvine Company Retail Properties. “What’s more relevant today are the local and regional tenants that make you unique and exclusive… So three and a half years ago when [Macy’s lease] was coming up, we thought do we want to keep Macy’s there and be like any other mall in the country or do we want to be leaders like the Irvine Spectrum Center has always been? So we took a bold move by saying we’re not going to keep Macy’s in the shopping center … Retail is changing very fast, and to have the forethought and a willingness to sit there and walk away from 130,000-square-foot tenant, and to go out and build 135,000 square feet of new retail space is pretty gutsy.”
The renovation, announced in 2016 and officially completed last weekend, totaled $200 million—about four times the amount it cost to build the entire shopping center back in 1995, according to data collected by the Urban Land Institute in Washington, D.C. The Irvine Co. invested about $25 million to build a one-story center featuring a Moroccan village design theme, while the owners of the Edwards Theater chain pitched in another $27 million to construct the 21-screen complex with a 3D IMAX theater. Both parties ended up making shrewd investments—Irvine Spectrum is a top three in the company’s retail portfolio with $455 million in taxable sales for the 12-month period that ended June 30, 2017, placing fourth on the Business Journal’s list of the biggest shopping centers in Orange County, while the cinema is “one of the highest-grossing theaters in the country,” according to Knerr.
The jump in the mall’s popularity and valuation over the last 23 years can be chalked up to Orange County’s growth, especially in South County, but the change in tenant mix at Spectrum over the same period of time runs contrary to trends at other local and national malls.
“When Spectrum Center opened 20 some years ago, it was a dining and entertainment venue, and had a little bit of retail,” Knerr said. “Over the years that’s changed to the point where there’s almost equal the amount of dining and entertainment and apparel. What [other mall owners] and public REITs are doing is they’re trying to emulate what Spectrum is—they’re trying to add food and beverage and entertainment to their shopping centers. Because I think it’s real easy to look at the Spectrum and say, ‘Oh, 18 million visitors a year. That’s a pretty dynamic shopping center.’ And with less and less apparel retailers out there today, you really want to have the best in class, which is what we’ve done.”
Back in the 1990s, Irvine Spectrum’s tenants included the Wolfgang Puck cafe, Diedrich’s coffee shop, a Blockbuster Music store with a “state-of-the-art CD-listening bar,” and Sega City, a 15,000-square-foot virtual reality center.
The latest renovation, meanwhile, brings to the center more parking (yes!), a Luckey Climber, a structure that’s part jungle gym and part work of art, and Ra Yoga, a “one-stop shop for all yogic needs, including a wide range of group classes, private yoga instruction, yoga therapy, Ayurvedic or whole-body wellness treatments and childcare.” Also coming late this year is Drybar, “an Irvine-headquartered group of premier salons specializing in blowouts, professional hair care products and styling tools,” and Falasophy, a “modern Lebanese street-food kitchen that traces its roots to 2014 as a Southern California food truck.”
The tenant selection appears to be a sign of consumers’ preference to consider Irvine Spectrum not only a shopping and entertainment destination but more of a lifestyle center, where one can catch a movie, drop into a yoga class or meet a friend for coffee—an extension of their living and working environments in the greater Irvine area.
“[Irvine Co. Chairman Donald Bren] is a master planner,” Knerr said. “He’s not just thinking about Spectrum—he’s thinking about the whole community. Reinvesting $200 million is confidence that we can go out and lease it in a very difficult retail time, and it really says what he believes about this community and how special it is.”
