Irvine Co., the giant landlord, plans to turn a soon-to-be-shuttered Macy?s store at its Irvine Spectrum Center into Orange County?s newest collection of smaller shops.
Macy?s announced Wednesday it would close 40 stores nationwide, including its Irvine Spectrum location, as part of a $400-million-a-year cost savings plan.
The Irvine store opened in 2002 as a Robinsons-May, a chain Macy?s bought in 2005. The 140,000-square-foot, two-story store ? smaller than a typical Macy?s ? would need a significant overhaul if it remained open.
With four stores nearby in Mission Viejo, Laguna Hills, South Coast Plaza and Irvine Co.?s Fashion Island, Macy?s chose to close the Spectrum location rather than renovate. The store will close by the end of March. Macy?s said it will offer jobs at nearby Macy?s, or severance packages, to the store?s 112 employees.
Irvine Co. said it will turn big into small as part of a $150 million overhaul of the open-air mall.
Billionaire Donald Bren?s company will buy the Macy?s building ? built on land the real estate giant still owns ? for an undisclosed sum and demolish it. On that space will be built a new row of stores with a wide walkway concourse, or paseo, dividing as many as 20 new shopping options. The new shops should be open by early 2018.
?Online shopping is changing everything,? says Easther Liu, Irvine Co.?s chief retail marketing officer. ?The customer is clearly dictating what we are doing.?
Turning a retail ?big box? into smaller shops will become commonplace as online shopping continues to challenge the core profitability of brick-and-mortar stores. But in some ways, teardowns aren?t new either. The Bella Terra outdoor shopping center in Huntington Beach, for example, is on the site of the formerly enclosed Huntington Center mall.
The Irvine Spectrum retooling started roughly a year ago, when Irvine Co. officials began planning the next phase of work on the 20-year-old center. Already, $40 million has been spent adding new shopping and dining spaces, relocating a comedy hall and improving the open-air mall?s street access and parking.
There?s little doubt Irvine Spectrum?s quirky 130-merchant portfolio draws a crowd, which is estimated at 17 million visitors a year. The mall?s become the dining and entertainment hub of South County. Irvine Co. says Spectrum?s food and movie spending share of total sales is three or four times what is typically seen at a regional mall.
But Irvine Co. officials admit the Spectrum?s retailing options needed a boost. As Dave Moore, president of the company?s retail property division put it: ?The numbers are good, but people weren?t leaving with shopping bags as often as we?d like.?
It?s far too early for the landlord to talk names of new tenants replacing Macy?s, but they?re hopeful they will serve a ?multicultural, multigenerational audience,? as Liu put it, aligning with trendy stores such as Lululemon Athletica, H&M, Brandy Melville, Hurley|Nike SB and Anthropologie.
Merchant choices aside, the business logic to the move is simple.
First, Macy?s was paying only a small lease fee for the land on which the store sits. Irvine Co. soon will collect significant rents from merchants filling its new shopping structures.
That collection of the new stores could produce sales volumes as much as five times greater than Macy?s did, Moore estimated.
A variety of new merchants will allow the mall to appeal to a broader spectrum of shoppers. Plus, down the road, this also gives the landlord more flexibility in tweaking the center?s tenant mix.
Irvine Co. officials added that the Macy?s replacement isn?t the only eye-catching improvements ahead for the Spectrum. For example, two digital highway signs hawking the mall?s retail choices will be constructed, overlooking the 5 and 405, which border the mall.
Nobody likes seeing a retail stalwart like Macy?s depart, but retailing has become a change-or-die business. The growing pressures on the biggest brick-and-mortar retailers meant that mall landlord Irvine Co. had little choice but to ?go small? at Irvine Spectrum.
Contact the writer: jlansner@ocregister.com
