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Galleria Doing Well, but Not Its Small Shops

March 16, 1986|DEAN MURPHY and DONNA ST. GEORGE | Times Staff Writers

REDONDO BEACH — Six months after opening its flashy neon-lit doors to shoppers, the Galleria at South Bay is receiving rave reviews from city officials here and in neighboring Lawndale who say the mall is generating tax revenue, providing jobs and sparking new interest in adjacent commercial areas.

But some merchants who have small shops at the $70-million regional shopping mall say the glitzy, three-tiered center has been more of a white elephant than a road to riches.

Three stores are expected to close in the next few months because of poor sales, and several dozen unhappy merchants last month formed a merchants association because they claim business is poor and the mall management has not responded to their complaints.

"This is probably the most contemporary-looking mall in all of Los Angeles, and yet the merchants are hurting," said Larry Abrams, manager of the Backcare Place, whose store helped establish the merchants association. "Traffic flow is down; I've been here some Saturdays and you would be surprised how dead it is."

In a management shake-up precipitated by the complaints, Forest City Enterprises Inc., owner and developer of the mall, several weeks ago brought in William Recknor, a company vice president who had managed the former South Bay Center for 15 years, to replace Dan McNeer as general manager of the mall. McNeer became assistant general manager.

Recknor, who met with several disgruntled tenants last week, said his arrival at the Galleria is an indication that Forest City is recognizing the problems at the mall and is working to resolve them.

"The corporation has sent me back out to help the tenants," Recknor said. "My primary responsibility is to open up the lines of communication and to help them in any way I can." Recknor would not elaborate on specific problems at the mall, saying he would rather meet with the tenants than "air their dirty laundry" in the newspaper.

Forest City executives confirmed last week that at least 3 of the 123 stores now open at the mall plan to close in the coming weeks. In addition, one food concessionaire closed last month.

But while acknowledging that some tenants are unhappy, Forest City executives described the closings as part of a settling-in process that all new shopping centers experience. Randy Brant, vice president of leasing for the company, said some stores have simply misread the market.

Sales Projections Met

"There are a number of tenants that are struggling a little bit for a number of reasons," he said. "It is just part of opening shopping centers. Some retailers think they have just the right product the market is looking for, but they find out they have to modify."

The 950,000-square-foot shopping mall, built as a redevelopment project at the site of the former South Bay Center, has been meeting sales projections set last August, 85% of its retail space is leased and it is expected to bring more than $1 million in sales tax revenue to Redondo Beach this year, city and mall officials said.

"The location, the environment and the reception by area shoppers have turned out to be significantly better than anyone had envisioned," said Redondo Beach City Manager Timothy Casey.

The new mall, at the border of Redondo Beach and Lawndale, has also sparked intense interest in commercial property in Lawndale, City Manager Paul Philips said. The Galleria has already led to the construction of a one-acre neighborhood shopping center across the street, and has substantially increased the value of commercial property in the area, he said.

Jobs for Residents

Lawndale provided $8 million in federal redevelopment funds to help finance conversion of the old center in exchange for a 12.5% share of Forest City's profits from the mall and a pledge by the developers to provide jobs for Lawndale residents, Philips said. About 650 Lawndale residents have found employment at the mall, he said.

Mall officials projected in late August, when the Galleria opened, that sales would be $100 million in its first year. In an interview last week, Brian M. Jones, a Forest City vice president who oversaw construction of the mall, said that projection is on schedule.

Jones said the Galleria is one of the company's biggest earners in terms of sales dollar per square foot. Forest City owns more than 20 shopping malls nationwide, he said.

"We are very happy with the sales," he said. "The acceptability of the Galleria in the marketplace is fantastic."

But many small merchants say their sales are nowhere near their projections. They say that only the mall's large, anchor stores--Nordstrom, May Co. and Mervyn's--appear to be drawing steady business. Many customers, drawn by the established reputation and extensive advertising of the larger stores, are patronizing them and leaving without shopping around in the mall, some small merchants say.

Big Stores Doing Well

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