VENTURA — For years, retailers have coveted the 13-acre tract at the corner of Mills Roads and East Main Street, the busiest surface street intersection in the west county.
Last month's closing of the Montgomery Ward chain unleashed a flurry of interest in which new stores, restaurants or a grocery outlet would replace the Ward store that had been there for four decades.
Macerich Co., the Santa Monica-based owner of the land and the adjacent Pacific View Mall, now faces a tremendous opportunity, as well as a challenge. It can bolster the mall's fortune by replacing Ward with a better store or stores, but it must do so in a retailing climate affected by the faltering economy.
Many retail chains, whether they sold clothes or appliances, had their bottom lines rattled in 2000 by poor sales. That could weaken sales further in 2001, meaning some chains once considered contenders for the Ward tract can't make a move.
Two of Pacific View's anchor tenants, Sears and J.C. Penney, had terrible years in 2000. In December, Sears--the No. 2 retailer in the U.S.--reported a 1.1% sales decline compared with the previous year, and in January announced it would close 89 under-performing stores and eliminate 2,400 jobs after a disappointing holiday season.
J.C. Penney is also taking a sales hit, and in December its stock reached a 52-week low of $8.625 a share. It also cut its stock dividend, rarely a good sign.
Added to that, most of the large retail chains that industry analysts say would typically want the space, from department to electronics stores or even Kmart or Target, already have stores nearby, which may make finding a viable replacement tricky.
While those stores likely wouldn't move to the Ward site, their proximity to Pacific View means the general area is a lure for shoppers.
Macerich officials said their focus for now is on regaining control of the Ward site through the bankruptcy court. But once that is done, Arthur Coppola, president and chief executive officer of Macerich, said he does not foresee a department store or big box--a Best Buy or a Home Depot--going in. Instead, he envisions Ward being torn down to make way for more locally oriented retail outlets, such as a drug store and supermarket.
Even those might be repetitive, however, said Todd Slater, an analyst at New York-based Lazard Freres & Co.
"My sense is that we're more than adequately stored through every use of retail," Slater said. "But if it's a good enough location, that may not matter. Everyone's going to want to locate there."
If any mall company knows how to find a successful tenant, it's Macerich, according to experts.
Ross Nussbaum, a retail real estate analyst for Salomon Smith Barney, described the company, which owns 51 shopping centers, as one of the dominant retail mall owners on the West Coast.
When Macerich centers have vacancies or bankruptcies, Nussbaum said, it typically re-leases the space quickly.
"It's a great company with a solid management team," Nussbaum said.
Macerich specializes in buying successful malls and upgrading them into even hotter retail sites. That happened in Ventura, where the company bought the former Buenaventura Mall in 1997, gave it a $90-million face lift and a stylish new name--Pacific View. The Ward site, which had the same owners as Buenaventura Mall, came as part of a package deal, Coppola said. Now 92% leased, Pacific View has two more anchor stores that were drawn from Oxnard's Esplanade mall, which later went out of business.
The Esplanade's demise cemented Pacific View's importance as the main retail site in west Ventura County, meaning the Ward location may be more valuable to other retailers.
David Kleitsch, the city's economic development manager, said Ventura's strong economy, low unemployment rate and demographics are likely to attract retailers who otherwise might think they already have enough stores in the area.
"But all of that will need to unfold," he said.
All of which is making potential retailers eager for news of what Macerich plans for the site. Paul Loubet, director of real estate for Ralphs grocery store chain, said Ward's closure has opened up prime real estate sites nationwide, and that the supermarket chain would be interested. Ralphs is a division of the Cincinnati-based Kroger Corp.
"Ralphs is very under-stored in Ventura County and we would welcome the opportunity to analyze it," he said.
Representatives of other drugstore and supermarket chains--Vons, Rite Aid and Longs--said they currently do not have plans for that area of Ventura, but they would consider reviewing the site.
"We have not been approached by the owners of the property but if they did approach us we would be interested in taking a look," said Nancy Cockerham, a spokeswoman for Walnut Creek-based Longs Drugstores.