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Friday, Jun 14, 2024

Horton Hears a Cha-Ching!

Postwar folks and baby boomers remember the old days of cruising over to Main Street, where you could take in a movie, grab a bite to eat, shop for a new dress, and deal with a dozen other chores.

Then came the suburban malls, which spirited a lot of these small businesses away, while those that held on often had an uphill battle finding enough foot traffic to keep going.

Today, Downtown San Diego seems to have gone full circle, with retailers clamoring to get a piece of this hip, happening place, revitalized since the advent of Petco Park in 2004, and repopulated with shoppers. Meanwhile, Horton Plaza, now known as Westfield Horton Plaza, continues to be a major player on the Downtown retail stage after 20 years, creating a kind of synergy with the now-sizzling shops on the street , especially Fifth Avenue.

“Ten years ago, when we were trying to lease retail space in Downtown, virtually all the tenants coming Downtown would talk to me and Horton Plaza, or Fashion Valley, and would make a deal with either of them,” said William R. Shrader, senior vice president of Burnham Real Estate’s Urban Retail Group. “Now, tenants are coming into Fifth Avenue, where there are like-minded retailers.”

It’s all part of a “continuing evolution,” said Bob Champion, the president and founder of the Champion Development Group in West Los Angeles, whose Downtown San Diego portfolio includes the Gaslamp Quarter’s CitySquare, 65,000 square feet of planned retail, restaurants, condos and apartments.

“Fifth Avenue is becoming a retail pedestrian district,” he observed. “As it succeeds in its new identity, retailers can achieve volume to compete for space on Fifth Avenue that has had restaurant tenants, and they can pay more rent than the restaurants can.”

The trendy Quiksilver Boardriders Club became a magnet to attract other hip retailers to CitySquare, said Champion, including Puma and Pink Zone, and letters of intent have been signed with Soho Lab in New York, a flagship of Sketchers, and Oakley Sunglasses, which are expected to open within six months.

In the past 12 months, Downtown has seen the arrival of Hilo Hattie, House of Blues and Trophy’s, with adidas and the Palm both scheduled to open after Thanksgiving, said Shrader.

“These are tenants who wouldn’t have considered coming here without co-tenancy,” he said.

Not too long ago, that’s how malls operated, Shrader added.

“Retailers like being next to each other,” he said. “Now, on a smaller scale, this is happening on Fifth Avenue. They all want to be next to each other.”

Noted Champion: “There are retailers that prefer, and do better, in street-front locations, and those who do better in a mall or enclosed format. The fact that Downtown has both formats is good. It provides opportunity for every type of retailer to come Downtown.”

Horton Plaza, measuring some 998,194 square feet, covers 6.5 city blocks, employs 1,325, and pays about $5.8 million in property taxes, according to the Centre City Development Corp., which oversees Downtown redevelopment.

Originally developed by Ernest W. Hahn, with innovative designs by architect Jon Jerde, the venerable mall celebrated its 20th anniversary on Aug. 9.

Named after city pioneer Alonzo E. Horton, the shopping center was acquired in 1998 by the Westfield Group, an Australian-based company with interests in more than 120 shopping centers in Australia, New Zealand, the United Kingdom, as well as the United States, according to its Web site.

Horton Plaza, credited with jump-starting Downtown San Diego some 20 years ago, has seen “the world change around them,” said Shrader.

“When they first built Horton Plaza, they needed to wall it off, because you didn’t want the Gaslamp people getting into the mall,” he said. “It wasn’t a safe area. Now people want to be out in the street, and now they have to reconfigure to get people onto the street. It is a successful mall, but the market is changing, and it’s changing for the good. Now, they have competition. They are the largest single retail project Downtown, but now the competitors are there, and it’s attracting tenants Downtown. It helps. They go into Horton Plaza.”

Horton Plaza and the Gaslamp Quarter have long enjoyed a symbiotic relationship that continues to evolve, said Jimmy Parker, the executive director of the Gaslamp Quarter Association, which has about 400 members.

“When I took this job a year ago, I viewed the Gaslamp as the intermediary zone, with Petco, the Convention Center and Horton Plaza,” he said. “What made the Gaslamp successful were those three anchors, each speaking to a different segment of what people want.

“People wonder if our retail is in competition with Horton Plaza,” he said. “No, we complement what they offer. We don’t offer the same. Their food court is wonderful in how it’s laid out. You can have a quick bite. For people who want a slower pace, a more urban feel, we’re right next door. Horton Plaza’s success has been our success, and vice versa. The city cherishes us both.”

A longtime denizen of Downtown San Diego, Parker mused, “I’m sitting here today, looking down at Fifth Avenue, vibrant, people having breakfast, and in an area where my parents wouldn’t let me come until I was in college.”

But nowadays, Parker said his sons frequent the sports-related shops in the Gaslamp Quarter, his nieces love the clothing stores, while his sister-in-law likes to scope out the mall.

“You get both Downtown,” he said. “There is only 80 feet between us and Horton Plaza officially.”

Mervyns, one of the shopping center’s original anchors, announced this year that it would be closing its store at Horton Plaza. The news prompted some talk that maybe the venerable mall wasn’t doing so well. Shrader doesn’t see it that way.

“Horton Plaza has gotten to be more and more of a tourist component, and tourists don’t go to Mervyns,” he said. “They can go to Mervyns anywhere.”

Mervyns may be on its way out, but the Coach store recently moved in, and the Sweet Factory, “America’s Candy Store,” celebrated its grand opening there in October. Horton Plaza’s roster lists quite a mix, with about 140 tenants, ranging from Abercrombie & Fitch to Zales Jewelers.

George Whalin, founder of Retail Management Consultants in San Marcos, considers Horton Plaza “a well-conceived shopping center.”

“They do well, and there’s no reason they won’t continue to. They have more competition, but they also have way more opportunity. The population is higher than it was 10 years ago,” Whalin said.

While malls aren’t being built much in this country anymore, he added, “any smart retailer looks at all the opportunities.”

“If you have enough foot traffic, being on the street is probably a good thing. But there have been stores on the street in Downtown that have gone out of business.

“It’s an evolutionary process,” he added. “Horton Plaza is no different. They always have an ongoing mix of stores to reflect the needs of the community, and the changing nature of retail. The mix will probably go upscale, rather than midlevel or downscale. Look at the community, who comes to shop there. They are fairly affluent, or travelers.”

Aubie Goldenberg, a partner in the retail group of Ernst & Young in Los Angeles, predicts that Horton Plaza will continue to produce a viable mix of shops, from midlevel to high-end.

“But you aren’t going to be all things to all people,” he said. “Dollar stores are probably not the right real estate for them.”

Ask visionary Downtown developer Sherm Harmer if he considers Horton Plaza a viable retail center these days, and he responds, “Absolutely. A million square feet of space provides intensity of retail, not just retail. You can go there and shop for multiple things pretty easily, and it’s also an entertainment center for Downtown, with a food court and 18-screen theater. It’s a great magnet for tourists. I get people stopping me on the street and asking, ‘Where is Horton Plaza?’ ”

Creative Layer Cake

Roger Brazil, Westfield’s San Diego regional marketing director, said that Horton Plaza has repeatedly proven itself during the last two decades.

“Horton Plaza was the right decision at the right time for redevelopment of Downtown, and we’re proud to be one of the first businesses to come down here and believe in the revitalization of Downtown.

“People keep coming back to Horton Plaza, year after year,” he added. “It’s very fulfilling. The center continues to exceed our sales expectations and, with the success of what’s going on Downtown, we continue to reap the benefits. We always like to bring in other elements, keep it fresh for our customers. We are trying to be the best and the brightest. There is nowhere in San Diego where you can get this international flavor. It’s a very unique blend of customers , Downtown residents, European visitors. It’s a melting pot.

“It’s a creative layer cake of stores and visuals and architectural elements,” he said. “It’s an urban adventure, and you never know what your experience is going to be like. Every time is different, depending on where you come in at the center and what stores will be here.”

But Brazil, who said Westfield does not disclose sales figures, is closed-mouthed about anything that might be in the Horton Plaza pipeline, including word-on-the-street speculation that Westfield is planning a big expansion of more than 300,000 square feet.

“Westfield is always looking for ways to improve its properties, and that includes discussion about development,” he said. “At this time, there are no firm plans for Westfield Horton Plaza.”

Westfield also isn’t commenting on its so-far stalled plans for a hotel on G Street, between Second and Third avenues. What impact would the addition of a hotel likely have on the mall?

“It depends on the type of traffic they are trying to attract,” said Goldenberg. “Having a hotel, if it’s business-related, might not be quite as strategic as a hotel with a significant percentage of tourist traffic. Many times, people on vacations spend money shopping, and have the luxury time to spend time shopping.”

Horton Plaza will continue to have a run for its money, with the increased competition on the street, according to Tony Villasenor, a retail specialist with the San Diego office of Grubb & Ellis/BRE Commercial. But, he added, the mall has enjoyed a major benefit not shared by the street shops.

“Available parking,” he said of Horton’s 2,200 parking spaces. “It’s a big advantage. When you’re driving along Fifth Avenue, you are hard-pressed to find a parking space. But now, many public/private development groups are building parking structures, and this means that Sixth Avenue will become a major corridor for retail.

“Retailers are now going to have to weigh, ‘Do I want to be in Horton Plaza, where there is available parking and synergy with the big retailers, or in the trendy Gaslamp, with the Urban Outfitters of the world, and hot restaurants?’ If you go Downtown at night, and you look at what’s going on with foot traffic on Fifth, the answer is clear. You want to be on Fifth Avenue.”

Reinventing Themselves

Peter Hall, the outgoing president and chief operating officer of the Centre City Development Corp., which oversees Downtown redevelopment for the city, considers Horton Plaza one of Westfield’s “more successful centers, and they tend to reinvent themselves.”

“Retailing is a very fickle field,” he said. “Nordstrom has been solid, Macys is doing fairly well, but a lot of the big-box stores are going through tough times. Who would have thought Target would be hot and Sears a dead horse? Good centers will continue to reposition themselves.”

Observed Goldenberg, “The challenge for all developers is how to make a center a destination place, as opposed to just a shopping center. In a lot of cases, older, tired properties are getting a face-lift. That might mean changing key tenants, making structural changes to the actual center , anything to try to compete with newer projects or with today’s lifestyle. That’s why there is much more being done with entertainment.”

No matter how they go about it, “Retail on the street will intensify,” predicted Harmer, co-founder of San Diego-based Urban Housing Partners, Inc., a real estate development firm specializing in urban mixed-use projects, including Smartcorner, a $160 million development, and One Library Circle, a 168-unit, 40-story tower, both in Downtown’s East Village.

“I think we are going to see more and more retailers coming Downtown , even bigger ones than we’ve seen before, with spaces getting larger,” he said. “If you are a retailer, you measure the number of rooftops in your community, and the discretionary buying power.”

Consider the huge influx of residential development, along with the business generated by the Convention Center and the cruise ships, he said.

“Retailers are measuring this,” said Harmer. “Soon, you will be getting hospitals providing clinics Downtown, more banks, and a second grocery store with Albertsons next year.”

It’s the services offered, including those funky little coffee shops and gathering places, that are the driving force behind any successful urban neighborhood, he said.

“The availability of services has made the difference between where people live and work,” said Harmer. “It’s ‘the third place,’ where you hang out, not where we work or live, but the neighborhood that lets us hang out.”

The other driving force, he said, is promoting a “live, work, shop, play and learn” lifestyle that doesn’t rely on a car.

“It’s the circle of life,” he explained. “If you can do all that without a car, that is the ultimate Californian dream, and why Downtown San Diego is so successful. It has seats of government, mass transit, a waterfront, an airport, 400 restaurants, a convention center, schools and churches. It’s a very complete urban city.”


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