A Street Named Desire : Fashion: Gloomy economic news dampens few spirits along Rodeo Drive, where retailers remain confident that wealth and shopping are here to stay.

At first glance, Beverly Hills seems like God’s gift to doomsayers. The town these days is full of morality tales about the perils of easy money and inflated real estate prices. A naive visitor might even wonder why bearded men in robes aren’t parading about with signs proclaiming, “The End Is Nigh.”

For instance, walk (or have your chauffeur drive you) down Rodeo Drive to Wilshire Boulevard. Right there, across the street, stands the building where junk-bond sorcerer Michael Milken plied his trade not all that long ago, making $550 million for himself in one year. Meanwhile, casual talk is filled with references to multimillion-dollar estates being knocked down to half price, say from $12 million to $6 million.

Yes, you say, the chic, supercharged greed of the ‘80s is long dead in Beverly Hills, as it is everywhere else. It is getting very dark in Moneyland.

But turn around, go back up Rodeo.

Watch late autumn tourists flutter down the sidewalks, clearly overawed by what they see.

Check out the emerald tiara in a store window.

Take in the new, $200-million-plus retail development called Two Rodeo Drive/Via Rodeo with its 100,000 hand-set cobblestones. (Yes, that’s right, $200 million. More or less. Probably more. Anyway, it’s the most expensive mini-mall in the universe, wags have noted.)

Look at the other new construction up and down the street as merely lavish stores get upgraded to fabulously lavish.

Above all, talk to the people operating behind the facades and foyers of marble, glass and polished wood, both the new money men and the merchants and landlords who have been here for decades.

In short order, it is clear that the Rodeo Drive of just a few years ago--already more than ritzy enough for more than 99% of Planet Earth--is being transformed by a wave of change. Within the past couple of years, a flood of international investors, developers and big-name fashion houses have staked out major turf here, with designers like Valentino and Christian Dior making the street among their premiere global outlets to the carriage trade.

Thus, as a new and supposedly more restrained decade gathers momentum, this street of material dreams is undergoing a dramatic transformation that promises to make its own world-class standards for conspicuous consumption obsolete.

Whether this latest wave of change proves lasting is, naturally, subject to some doubt. Much of the development and upgrading was planned or launched before the latest economic worries surfaced. Also, Rodeo is as notorious for weeding out stores--like Lanvin and Torie Steele--as it is for making fortunes. Furthermore, the street is filled with mutterings that business is off or not keeping pace--if not for the person you’re talking to, then for the guy down the street. Some insiders will even admit that Rodeo Drive isn’t recession-proof.

The anxiety, however, floats above a bedrock of confidence in the long-term prospects of the street’s two-and-a-half blocks. Which brings us to the core Rodeo ethic: financial disasters come and go, but wealth lasts forever--and shops forever. There is a corollary: A smart merchant is a survivor and always in fashion with the rich, even when they’re grumpy and not spending freely.

At least, those are Carolyn Mahboubi’s convictions as she sits in her second-floor office facing the big, arched window that overlooks Rodeo. She is the proprietor of a shop selling fashions by Italian designer Gianni Versace. Her family owns the Rodeo Collection, a development intended as a showplace for expensive shops when it opened a decade ago, as well as two other properties on the street.

Mahboubi, 25, concedes that the Rodeo Collection has never lived up to the hype that greeted its opening. But the collection will be getting a face-lift, she notes, predicting that it will shine as bright as any other place on the street. Meanwhile, her confidence in the staying power of real money is unshaken.

“Will the money run out? I don’t think so,” she says. “Every time someone gets poor, someone else gets rich. The money doesn’t go anywhere. It just changes hands, and we’re always here for those people who get rich. It’s the first place they come to.”

While Mahboubi is brash and outspoken, Richard Carroll, 69, is cool and reserved. But he is also confident. He has been on Rodeo Drive for 40 years running Carroll & Co., a 15,000-square-foot men’s store that sells conservative, tailored menswear. This latest round of development has been somewhat unexpected, says Carroll, a former head of the city planning commission that made sure Rodeo was kept safe for fashion retailers.

“We’ve been surprised at what our baby turned into,” he says. “We never realized what it was.”

Carroll, who describes Beverly Hills as a “closely held corporation,” believes the street reached a new plateau in the recent past because of the flood of new development and particularly with the opening of Two Rodeo.

Clearly, Two Rodeo is the engine driving the street at the moment, and for obvious reasons. Most notably, it increases the retail space on the street by nearly 60%.

Built on a 1.25-acre site formerly occupied by a savings and loan, a parking lot, an exotic car dealer and a few boutiques, the development contains spaces for 23 stores wrapped around a sloping cobblestoned street called Via Rodeo. Beyond being a cunning use of space, developers hope it will prove irresistible to strollers. Elevators from the 600-space (two hours free) underground parking garage dispense visitors into the heart of the complex. A guarded crosswalk that will funnel pedestrians across perilous Wilshire Boulevard won’t hurt either.

Stores with such famous names as Tiffany, Christian Dior and Valentino are already open (related story on Valentino, E10), and the rest should be ready for business by late spring, according to developer Douglas Stitzel.

Predictably, prices in this fashion gauntlet are steep. A button-down white shirt at Valentino is pegged at $200. And at a fashion shoot at Tiffany’s recently, a model, jealously watched by an armed guard, reportedly wore $5 million in jewels without being overdressed.

All retailers at Two Rodeo will occupy storefronts contrived to look like separate two- and three-story buildings, although they share a steel framework and foundation. The ambience is determinedly faux- European, an American interpretation of the Old World that is, well, Beverly Hills. Building facades are limestone, brick and plaster with such finishing touches as bronze doors and copper roofs.

But these are details, picture-framing for the development’s focal point--the shop windows. These are big, starting 18 inches from the ground and stretching higher than a pro basketball center, designed to show off dresses, suits, leather goods, jewelry, accessories and other indispensables.

Developer Stitzel, a 38-year-old San Franciscan, touts Two Rodeo as a prime example of the way luxury fashion goods will be sold in the ‘90s. Namely, stores owned by designers will display their full lines, something not possible in upscale department stores even before the recent financial travails of that brand of retailing.

Streets like Rodeo Drive have evolved from relatively small-time ventures into corporate-style businesses, Stitzel maintains. “There was a lot of turnover on these streets because any doctor’s wife who liked a particular designer . . . would open a store,” he says.

Perhaps the $200-million deal that created Two Rodeo is indicative of how high and complicated the stakes have become. The account by Stitzel’s public relations firm of the deal-making that created Two Rodeo covers eight single-spaced pages. The story of the financing alone takes two pages as partners fall in and out of the picture. In the end, about 90% of the project was bought up by a Japanese investment group that includes the U.S. subsidiary of Sogo Co. Ltd., Japan’s biggest department store.

The fact that Japanese money financed Two Rodeo isn’t startling in 1990. But one of the early players in the project may be surprising. Before it sold its share for a profit of about $14 million earlier this year, an Irish real estate investment firm was a key backer. The Dublin-based Power Group, which specializes in retail properties, still has a Beverly Hills presence, though.

A year ago, Power Group purchased a 15,000-square foot building containing five high-priced shops, including the space formerly occupied by Valentino before it moved to Two Rodeo. The price: $22 million, or about $1,466 per square foot.

The company also has its own man in glitter gulch--Finbar Hill, a large, affable sort who says of his current post: “There is a lot of glitz and glamour and falseness about it, but there are a lot of genuine people.” He adds that in deciding to sink money into Rodeo, “I would hope we were influenced by the investment potential rather than the glitz.”

But it probably would never do to underestimate the power of glitz on the street. For one thing, it’s what keeps the tourists coming. According to some estimates, Rodeo has become the fourth-largest tourist attraction in the state, behind Disneyland, Knott’s Berry Farm and Universal Studios. One of the things that keeps them coming is the street’s propensity for turning up in movies and TV shows. In this year’s hit “Pretty Woman,” Rodeo Drive figured largely in the transformation of a prostitute into a fashion plate.

Visitors from the heartland cause mixed emotions on the street. Don Tronstein, who owns the building that contains the Ralph Lauren Polo and Giorgio Armani stores, estimates that tourists account for 40% to 60% of business on the street. Yet the well-heeled tourists who spend big bucks are apparently outnumbered by those who have come only to gape at this site of novels, TV miniseries and movies.

Mahboubi, for one, isn’t particularly a fan of the star-gazers parade because, she says, they look out of place. “Here (the tourists) are noticeable because they look like they should be in Disneyland but rather they’re on Rodeo Drive. . . . You don’t see the real shoppers.”

Herb Fink, who has operated his store called Theodore for 21 years on the street and is the chairman of the Rodeo Drive Committee, takes a moderate view. “Rodeo is the Disneyland of fashion,” he says. “So, yes, you get people walking down the street and gawking at the fashions and the jewels. They don’t get the opportunity to see those things in their own cities. I mean, who’s got diamonds the size of baseballs in their windows? So I think if people get to see that or get emotional over it, I think that’s a good thing. I think their money is well spent coming out here.”

If the subject of tourists is pursued long enough, a visitor soon finds that the definition of a tourist is somewhat elastic.

“I call a ‘local’ anybody from New York who shops with us constantly, anybody from Chicago,” says Fink. “People are out here maybe six times a year or more and they buy designer clothes but in different colors than they would buy in their rainy cities or in their dismal cities or in their filthy cities.”

While the street exists, men like Tronstein will be taking a long view, seeking to lure one more designer, one more high-priced brand name to the center of their solar system.

“I keep in contact with most of the designer companies in the world, keeping them informed of what’s going on on Rodeo Drive, hoping that they then will come to the street eventually,” says Tronstein. “I was talking to Christian Dior for four or five years before they came to the street. I tried to get them to come here, but they weren’t ready. Now they’re here (at Two Rodeo). I’m not complaining they’re not in my place, but they’re on the street and that’s what’s important.”

In fact, being on the street apparently can mean the difference between survival and bankruptcy. This year, Mr. Guy, a store that thrived on Rodeo, moved off the street when its building was set for renovation. The store filed for bankruptcy about a month ago, even though its new location was a very short walk off Rodeo.

“There’s nowhere else to be,” asserts Mahboubi. “I don’t say that because I’m on this street, because if I could be on another street and pay a lot less rent, I would be. But the clientele that we depend on, the kind that comes in and spends the kind of money that we need--$10,000, $20,000 in one shot--comes to Rodeo. They don’t go to Melrose,” she concludes, referring to the avenue where shops mix the zany, the funky and the pricey in a way that is strictly Los Angeles.

And yet, strange as it may seem, the merchants and owners of Rodeo are wary of becoming too stratospheric. In the past, the street sometimes suffered from too much promotion, too much emphasis on the far-end of upscale. It was a strategy that may have alienated the locals, says Tronstein.

“I think our main thrust today . . . is to bring more of the local people on the street. . . . We promote the parking, (that) there’s plenty of parking, and then promote that we are human, that these are human beings in these stores. They’re not snotty, they’re not sniffy, they won’t walk away from you if you don’t have a foreign accent.”

Refreshingly, Tronstein himself may be sensitive to this issue because he is an almost accidental presence on the street, having bought a gas station there in the 1970s.

“When I started on the first building, I didn’t know one designer from the other,” he recalls. “I didn’t know the difference between Mario Valentino and Rudolph Valentino.”