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Up Against the Mall

An L.A. developer fights the Glendale Galleria to get his shopping center built. The clash between old and new retail carries national implications.

August 29, 2004|Julie Tamaki | Times Staff Writer

A mall brawl of epic proportions is nearing a climax in Glendale.

Voters in Los Angeles County's third-most-populous city will decide next month whether developer Rick Caruso can build one of his open-air shopping centers smack-dab next to the enclosed Glendale Galleria, whose owners are leading the opposition.

The battle between Caruso and the Galleria has all the features of a heated political campaign, including a flood of dueling newspaper ads, direct-mail appeals, cable television commercials and signs on lawns and in storefront windows. The police chief weighed in and unleashed a mini-squall of outrage for publicly supporting Caruso's shopping center concept.

The clash between old and new retail in Glendale carries national implications as so-called lifestyle centers, the development style favored by Caruso, appear poised to eclipse their covered counterparts.

Only two of the three large shopping centers scheduled to open this year around the country are enclosed, according to the International Council of Shopping Centers. But plans are underway for about two dozen lifestyle centers, which typically combine dining, entertainment, specialty stores -- and sometimes housing -- in relatively small, outdoor settings.

Events unfolding in Glendale could help dictate whether open-air is the future of retail development.

"It's one of the key battles in determining how U.S. shopping centers" evolve, said Burt P. Flickinger III, who runs Strategic Resource Group, a New York retail consulting firm.

Glendale voters will consider Caruso's proposed $264-million retail and residential development in a special election Sept. 14. They will cast ballots on three ordinances -- known as A-B-C -- that concern the project's planning and zoning and the development agreement between Caruso and the city. Both sides say they expect the vote to be close.

The project bears the name Americana at Brand but is more casually referred to by friends and foes as the Town Center.

The Town Center plan was approved by City Hall; the referendum was forced by opponents led by the Galleria's owners, General Growth Properties Inc., the second-largest U.S. shopping mall proprietor.

General Growth, a publicly traded company based in Chicago, has spent more than $1 million trying to block the Town Center, portraying it as a multimillion-dollar public giveaway and conjuring images of traffic nightmares.

For his part, Caruso, president of privately held Caruso Affiliated of Los Angeles, has written checks for more than $940,000 to defend his proposal as an opportunity to create nearly 4,300 permanent and temporary jobs and transform a blighted section of downtown Glendale into a community gathering spot.

To promote his message, Caruso tapped Don Sipple, a political advisor to Gov. Arnold Schwarzenegger, and Joe Zago, who managed the successful 2000 campaign of Assemblyman Dario Frommer, a Los Angeles Democrat whose district includes Glendale.

General Growth signed up Paul Arney, who this year resigned as a field representative from Frommer's office, and longtime Los Angeles political strategist Harvey Englander.

"This is not about competition, it's about compatibility," Englander said during an interview at his office in the downtown financial district of Los Angeles. General Growth's concerns about the Town Center, he said, include parking for special events, the complex's layout and the closure of portions of two nearby streets.

Caruso brushed aside Englander's contentions, suggesting that what General Growth executives really feared was that Galleria rents may drop if tenants have a competing landlord with whom to negotiate. He insisted that adequate parking existed in nearby lots to handle special events at the Town Center and that the street closures were necessary to avoid a catastrophe similar to the fatal July 2003 crash at the Santa Monica Farmers' Market.

"You don't go to the great piazzas of the world and fight traffic," Caruso said in an interview at his offices at the Grove, the outdoor shopping center he developed in Los Angeles' Fairfax District. "They're all about pedestrians."

For General Growth, the prospect of a new shopping center rising next door is all about business, said Aubie Goldenberg, a retail analyst at Ernst & Young in Los Angeles.

"They have very little to gain by having a new development that's going to take traffic out of their mall and place it elsewhere," he said.

The 1.5-million-square-foot Galleria, according to its representatives, is one of the top five malls in Southern California, based on gross sales of more than $500 million annually, and generates about $6.3 million a year in sales and property tax revenue for Glendale.

As envisioned by Caruso, the 15.5-acre Town Center would consist of 100 condominiums, 238 rental units, a 16-screen movie theater and 407,000 square feet of retail and restaurant space surrounding a 2-acre park flanked by water fountains.

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