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Desertions Driving Up Commercial Vacancies : Warner Center: Tenants are leaving and landlords are scrambling to find replacement occupants for the Promenade and an office building.

April 13, 1993|PATRICE APODACA | TIMES STAFF WRITER

As if a 22% office vacancy rate wasn't bad enough, Warner Center also recently lost a department store and a major office tenant has tentatively agreed to move.

The double blow comes at a critical time for the Woodland Hills business center. With several large projects on the table--involving proposals for new office towers, hotels and mall extensions--the losses cast a shadow on Warner Center's prospects for growth.

The Robinson's department store at Warner Center's Promenade mall closed earlier this month, one of 10 Southern California stores shut in the aftermath of last year's merger of Robinson's with May Department Stores. But just a block away at Promenade's rival, Topanga Plaza, a May Co. survived the cuts and was renamed Robinson's-May.

The loss of Robinson's leaves the Promenade with two remaining anchor tenants, Saks Fifth Avenue and I. Magnin. The mall caters to affluent shoppers but has for years lived in the shadow of the bigger and more successful Topanga Plaza. Now it must find another department store at a time when most retailers are scaling back.

"I don't know who on the upscale side has the money to invest there," said Sandra Bane, a partner in the merchandise practice group at accounting firm Peat Marwick in Los Angeles.

Though the mall's owner, New York real estate investment firm O'Connor Group, says it might be close to signing a new department store, a planned expansion of the mall has already been delayed and O'Connor officials won't comment on the status of those plans.

Half a block away, 20th Century Industries, parent of auto insurer 20th Century Insurance, is outgrowing the building it now occupies. The building is owned by developer Tishman West, CenterMark Properties--a Prudential Insurance unit that also owns Topanga Plaza--and other investors.

20th Century's lease expires in November, 1995, and it has signed a letter of intent to move less than a mile away to the proposed Warner Ridge development, a $200-million office and condominium project on De Soto Avenue across the street from the eastern border of Warner Center. That project's developer, Jack Spound, hopes to break ground in June, bringing to an end eight years of legal wrangling over the controversial project.

John Lyda, CenterMark's development director, said he hasn't given up hope of signing a new lease to keep 20th Century. The problem, he said, is that his proposed expansion project has been stalled by delays in the city's adoption of a new master plan for Warner Center.

Following years of vitriolic debate among politicians, homeowners groups and property owners, a final development plan was approved last month by a Los Angeles City Council panel. A vote by the full council is expected this summer.

If the plan is approved, CenterMark hopes to win approval to remodel the Topanga Plaza Robinson's-May store, and eventually hopes to expand the mall. It also wants to add the new office space that 20th Century needs in time to persuade the insurer to stay.

In the meantime, he said, "We're hoping that we don't receive confirmation that 20th Century has finally decided to move."

At the Promenade, O'Connor Group says that the pain caused by the loss of Robinson's might be short-lived. It's negotiating to buy the vacated Robinson's building from its new owner, May Department Stores (O'Connor owns the rest of the mall). And, said Kim Solomon, Promenade general manager, "If everything goes according to plan, we could have a new department store as early as August."

Solomon would not identify the prospective tenant, but several shopkeepers at the mall said it was Bullock's. Officials at Bullock's, a division of R.H. Macy & Co., said, "We are still finalizing details with the lessor," but would not elaborate.

But even with a new anchor tenant, the loss of Robinson's could further delay O'Connor's plans to enlarge the Promenade and add two new department stores.

O'Connor had hoped to begin construction late last year on the $40-million expansion of the 20-year-old mall, but it missed that target. The plans called for adding 410,000 square feet, increasing the Promenade's size by two-thirds.

One former Promenade merchant, who spoke on condition of anonymity, said that the only way to lure new retailers to the sluggish mall is through generous financial incentives. He said he moved his shop out of the mall more than a year ago because "the losses were so monumental."

Solomon wouldn't disclose Promenade sales levels, but the mall has over the years lost some coveted tenants to Topanga Plaza. In 1984, Nordstrom opted for Topanga Plaza over its neighbor. Even after remodeling in 1991, the Promenade failed to land another retailer it wanted, housewares chain Crate & Barrel, which is opening next month at Topanga Plaza.

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