For the first time, the Irvine Co.--owner of Fashion Island in Newport Beach--has admitted that archcompetitor South Coast Plaza and other area shopping centers are siphoning business from the posh Newport Center mall.
Sales at the shopping center last year climbed only 7.3% to about $207 million, Irvine Co. executives said. That compares to a 21% hike to $193 million in 1985 sales.
By contrast, South Coast Plaza met its 1986 target of $500 million in sales--an increase of $50 million, or 11%, from, 1985's sales of $450 million at the Costa Mesa shopping center. Subtracting the two months of sales rung up by stores in South Coast Plaza's new annex--which opened Oct. 31--the sales increase would have been about $45 million, or 10%, a mall spokeswoman said.
But Irvine Co. executives, who in the past have maintained that the growing South Coast Plaza has little attraction for Fashion Island's high-spending clientele, say that their center's sagging performance in 1986 was caused by two unusual events.
The center was disrupted by a $115-million renovation, which temporarily eliminated a number of valuable parking spaces, and South Coast Plaza opened its much-publicized Crystal Court annex on the eve of the Christmas holiday, historically the biggest season of the year for retailers.
"South Coast happens to open 800,000 square feet of retail space in our market. It's common sense that that will absorb sales," said David Mudgett, president of Irvine Retail Property Co.
Bill Pope, vice president of development for the Irvine Co.'s retail division, said that other area malls--including Mission Viejo Mall, Huntington Center and Laguna Hills Mall--also have cut into sales growth at Fashion Island.
In addition to the tougher competition, Fashion Island's own renovation caused problems. Some tenants vacated stores while they were under construction, while other unprofitable retailers were eased out by the Irvine Co., Pope said. The extensive face lift--which began in 1985 and will extend into 1988--also resulted in the loss of two parking lots for several months, Mudgett noted.
Despite the seemingly bleak figures, Mudgett said the 7.3% sales increase this year was remarkable in light of the overall depressed retail industry. "If you look at what happened in retailing in the United States last year, we were more than double the average," according to Mudgett.