Valley Malls Upgrading as Economy Grows

In another sign that the San Fernando Valley economy is on the rebound, retailers are scrambling to upgrade aging malls in hopes of capturing shoppers’ newfound pocket change.

Just last week the operators of Topanga Plaza confirmed they are planning a major expansion that would increase the mall’s size by more than 40%.

The announcement comes in the wake of a series of renovations at Valley malls, including the enclosure of Sherman Oaks Fashion Square, the remodeling and addition of movie theaters at The Promenade in Woodland Hills and plans for new restaurants and movie screens at Northridge Fashion Center.

“Our economy is coming back. . . . In the depths of the recession in the early ‘90s, you would have never seen this kind of activity,” said Seth Dudley, senior vice president of the commercial real estate firm Julien J. Studley Inc.

“I think it’s in large part due to the entertainment industry. A lot of people who work in that industry live in the Valley. They’re doing better and have money to spend.”

A burgeoning health-care industry based in the western San Fernando Valley also is fueling the mall renovations, as is the building of new homes in west county communities such as West Hills, Calabasas and Agoura Hills, Dudley said.

The big question is whether the long troubled Sherman Oaks Galleria, which is currently in escrow, will follow the trend or jump ship. Plans were drawn last year for a $30-million renovation and expansion of the Galleria, but rumors abound that under new ownership the mall will either be converted into a sound stage or demolished, to be replaced by an office building with a movie theater and a few retail shops. Now, shops dominate the Galleria, while offices and movie theaters occupy relatively little space.

The Galleria’s original renovation plan followed a national trend of mingling shopping, entertainment and food in response to department store mergers and an increasing number of mega-discount stores that have been siphoning profits away from malls. The theory goes that if foot traffic can be increased and consumers are enticed to spend more time in malls, then sales are bound to rise.

Shopping venues such as The Promenade, the Media City Center in Burbank and Universal CityWalk have charted that course, with Northridge Fashion Center following suit with plans to add a 10-screen movie theater along with trendy restaurants set to open next summer.

The national trend appears to be having a domino effect in the San Fernando Valley, with one renovation triggering another.

A case in point is the rivalry between the long dominant Topanga Plaza and the newly hip Promenade, which began drawing big crowds last spring when it opened a 16-theater AMC movie complex along with a Wolfgang Puck restaurant and, most recently, a snazzy new food court.

“For years The Promenade was considered the loser mall of the two, but with recent renovations it has really turned into a kind of hub,” Dudley said. “It’s clearly Topanga’s plan to move ahead and do something.”

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Indeed, the operators of Topanga Plaza have proposed adding a third floor of shops, a new department store, a pair of multilevel parking structures and a 75,000-square-foot expansion of the Valley’s lone Nordstrom department store.

“The reason Topanga Plaza has always been more popular is because it has better tenants such as Nordstrom, which is probably Topanga’s key tenant,” said Michael Schiff, senior associate with Grubb & Ellis’ retail properties division. “So why not capitalize on your best tenant? It’s very smart of them to do.”

An expanded Nordstrom along with a renovated mall, Schiff added, could attract shoppers from as far as Thousand Oaks.

News of Topanga Plaza’s proposed expansion and the pending sale of the Sherman Oaks Galleria have prompted speculation of a shake-up in the Valley’s competitive department store scene.

Under Topanga’s proposed expansion, for example, an existing department store would be torn down and a new one built--although which store would be torn down and which one would replace it remain undisclosed. At the Galleria, the fate of the Robinsons-May department store also remains unclear, with rumors circulating that the chain may move the store to the nearby Sherman Oaks Fashion Square, which just last year became home to the Valley’s lone Bloomingdale’s.

More details regarding both plans are expected to surface in coming weeks, beginning Wednesday when representatives of Topanga Plaza’s operators--Westfield Corp.--are scheduled to outline the proposed expansion during a community meeting in Woodland Hills.

The potential buyer of the Galleria is expected to be identified in about two months, when escrow is expected to close, said Sharon Mayer, an aide to Los Angeles Councilman Michael Feuer.

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The potential buyer of the mall has not been identified due to a confidentiality agreement between the party and the mall’s current owners, Dai-Ichi Life Insurance Co. and Prudential Insurance Co., Mayer said. The secrecy surrounding the sale has angered homeowner activist Gerald Silver, president of Homeowners of Encino.

“They’re in the position of having vital information on a project and not sharing it with their constituents,” Silver said of Feuer’s staff. “If the new buyer is going to seek a change in entitlements, then we need to be able to fight that early on, and we can’t do that if the deal is closed. The developer needs to know where the community stands.”

Richard Close, president of the Sherman Oaks Homeowners Assn., said his group has contacted Feuer’s office and requested a meeting between the potential buyer of the Galleria and members of the homeowners association.

“We’re hoping that this private information involving the public becomes public very soon because the public has the right to know,” Close said.

Close said the possibility of the mall being converted into a sound stage would be “very exciting” because putting the location to such a use would attract high-paying jobs to the area.