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Horton Plaza's Sales Booming : But Impact Slight on Downtown San Diego Rebirth

October 04, 1987|DAVID W. MYERS | David W. Myers is a Times real estate writer. and

It was November, 1981, and shopping center magnate Ernest Hahn was on the defensive.

Ground breaking for Horton Plaza, the $140-million mall he had proposed as the centerpiece of San Diego's downtown redevelopment effort, was already two years behind its originalschedule and financing for the project hadn't even been lined up.

Some members of the City Council--which had already sold Hahn the site of the proposed center for $1 million, far below its market value--were clearly upset over the project's delays. So were some voters.

"Everyone knows the whole development is economically impossible," then griped former City Councilman Fred Schnaubelt, one of the project's major critics. "Now the question is, 'How big a loser can it be without politicians getting into trouble?' "

Horton Plaza, now 2-years-old, has become one of the most profitable malls in San Diego-based Ernest I. Hahn Inc.'s nationwide portfolio of 47 shopping centers. Schnaubelt, in the words of one Hahn supporter, "has gone back to selling real estate."

Indeed, the once-numerous naysayers of Horton Plaza have virtually disappeared, and for good reason: Taxable retail sales at the center last year totaled $97 million, about 55% above the company's original projections. So far this year, sales per square foot--an indicator used to measure a shopping center's financial health--are up about 21% from last year's pace.

The commercial success of the plaza has surprised some observers, many of whom said downtown San Diego would never be able to shake its seedy reputation and lure shoppers back from the suburban malls a short freeway drive away.

"I think Horton Plaza's success proves that the gamble paid off," said Craig Pettitt, Horton Plaza's general manager. "All you need to do is look at our numbers."

But despite the center's impressive financial performance, Horton Plaza is not an unmitigated success. Shoppers and store operators alike have complained about problems ranging from parking to the mix of tenants, while others say the project has done little to rejuvenate the rest of downtown.

The shopping center covers about six blocks just south of Broadway between 1st and 4th avenues, land that was a hodge-podge of run-down buildings and parking lots before construction of the shopping center finally got under way in 1983.

The area was the "home" of dozens of homeless people, a hangout for drunks and prostitutes, and a favorite hunting ground for fire-breathing street preachers.

Now, Horton Plaza contains Nordstrom, Robinson's and other upscale retail outlets, as well as a trendy Irvine Ranch Market and dozens of smaller shops. Vendors in small, multicolored carts sprinkled about the mall hawk everything from T-shirts to fortune-telling services.

Praised by Critics

The center's whimsical design--multiangled, multileveled and multicolored--has drawn the praise of some of the nation's leading architectural critics. According to Pettitt, it has also become San Diego's No. 3 tourist attraction, behind the zoo and Seaworld; visitors, loaded down with camera equipment instead of shopping bags, are a common sight in what some have called "the Disneyland of shopping malls."

The road Horton Plaza took to the top of Hahn's $1.5-billion real estate portfolio was never smooth, and it still has some nasty potholes.

Hahn first proposed building the mall in the early 1970s. What ensued was a decade-long battle involving Hahn, politicians, preservationists, cultural groups and others. Delays in lining up financing for the mall were compounded each time a large merchandiser that was expected to sign a lease would back out at a moment's notice.

If Hahn thought his troubles were over when the doors to Horton Plaza finally swung open in August, 1985, he was wrong.

Last year, owners of two restaurants in the mall sued Hahn's company for a total of $24 million, claiming that a series of broken promises, negligence and a lack of evening business promotion had driven them to the brink of financial ruin. The two lawsuits are still working their way through the courts, Pettitt said.

Some of the other higher-end restaurants in the mall have complained that the numerous fast-food outlets in Horton Plaza have cut down on business. Despite the mall's heavy pedestrian traffic, some small retailers have failed. The number of evening shoppers has been reduced by snags that have developed in finding an operator for the mall's proposed nightclub.

The plaza's parking system is being altered because it baffles too many shoppers. Even the mall's hedges, trimmed to look like dancing hippos, have given the plaza's management trouble; too much sun on the top of the hedges made the hippos look as if their heads were rotting away.

"We've got a unique mall here, so we have some unique problems," Pettitt said. However, he added, "everything is under control."

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