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Fashioning a Wholesale Recovery

Merchandise: New tenants and new owners have reawakened the three top clothing and design marts in Los Angeles.


"What they didn't realize was that it took a great deal of marketing and a lot of expense to drive traffic into the building," said Mark Falanga, vice president of business development for Vornado's Merchandise Marts Properties subsidiary. "It's much more complex than writing a 10-year lease with an office tenant."

The new set of merchandise mart owners operate under a more modest set of expectations. None, for example, say there is a need for more merchandise mart space in the Los Angeles area. Owners of the Pacific Design Center are marketing 200,000 square feet in what is known as the Center Green building as office space instead of wholesale showrooms.

"I believe they overestimated the demand," Cohen said of the previous owners, which included real estate giant Catellus Development Corp. The only way to make the project successful, he added, is "by removing the excess capacity of showrooms."

Only 10% of the showroom space is vacant now.

At the CalMart, some of the vacant space left behind by large apparel makers has been leased to a growing number of smaller manufacturers and fledgling design firms. New tenants include firms involved in textile technology and fashion-related Internet companies.

Despite industry and technological change, the owners of merchandise marts remain confident that buyers and sellers will still need a place to meet face to face.

"This business is based on touch and feel," said Judah Hertz, whose company purchased the CalMart in May for an estimated $90 million. "Buyers will not write [an order] without seeing the quality of the merchandise, feeling the fabric."


Mart Mecca

The three largest wholesale merchandise marts in Los Angeles draw thousands of store buyers interested in stocking their shelves with apparel, furniture, home accessories and gifts.

Pacific Design Center

* Size: 1.2 million square feet

* Showrooms: 200

* Owner: Partnership headed by Charles S. Cohen and real estate fund managed by Cheslock Bakker & Associates

* Tenants: High-end furniture makers, fabric and floor-covering dealers, lighting and home accessories

California Mart

* Size: 2 million square feet

* Showrooms: 1,200

* Owner: Hertz Investment Group

* Tenants: Apparel makers, manufacturer representatives, fashion designers and suppliers

L.A. Mart

* Size: 720,000 square feet

* Showrooms: 260

* Owner: Vornado Realty Trust

* Tenants: Gift, home-accessory and furniture manufacturers and representatives

Source: Times research

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