Reinvesting in Retail at Los Cerritos Center

Cerritos, CA – Los Cerritos Center

More than a mall’s gradual evolution, the expansion and redevelopment of a portion of Los Cerritos Center is a success story involving the City of Cerritos, Macerich and Nordstrom all making and sticking with a big bet in the middle of a recession.

“Los Cerritos Center is one of our community’s economic crown jewels, and we appreciate that Macerich and Nordstrom are adding to what is already a dynamic shopping experience in our city” said Art Gallucci, city manager of the City of Cerritos. “Now, Los Cerritos Center is an even stronger draw for this region.”

After years of anticipation, a new, 138,000-square-foot Nordstrom opened last month at Los Cerritos Center, and officials expect the redevelopment to bring jobs, shoppers and revenue to the city. The expansion also includes a 36,500-square-foot wing with six new retailers – MAC Cosmetics, True Religion Brand Jeans, Carlton Hair International, Vision Shoes, Foreign Exchange clothing, Love Culture clothing in addition to Lazy Dog Café which will open in 2011.

The roughly $90 million retail redevelopment project began in 2005, but plans hit a rough patch when the economy took a nose-dive. “In October 2008, things were not so good. There were times when we considered pulling the plug,” said Ken Kraus, senior property manager for Macerich Co., which owns Los Cerritos Center and more than 70 other malls across the country.

“Nordstrom very much wanted to continue with the project,” Kraus said. “Now, here we are two years later and ready to open. We’re very well-positioned to come out of this recession.”

Cerritos Retail

Los Cerritos Center is located in a robust and established suburban market in Cerritos, CA, south of Los Angeles. While some retailers like Robinsons-May and Mervyns have shuttered due to macro issues, others in Los Cerritos Center and surrounding trade area seem to be thriving.

“Los Cerritos Center is at the hub of an affluent trade area of more than 1.2 million residents, and adding to this property’s appeal makes tremendous sense,” said Randy Brant, executive vice president, real estate, for Macerich. “With Nordstrom and the City of Cerritos, we are committed to meeting the strong demand we see in this region’s shoppers.”

The high-performing, 1.2 million square-foot super-regional shopping center is located in the mid-section of the Los Angeles/Orange County metropolitan area just off the 605 Freeway at South Street and across from the Cerritos Auto Square, one of the country’s most successful regional auto malls. The center features three department stores including Nordstrom, Macy’s, and Sears, plus Forever 21 and more than 180 shops and restaurants.

“Our expansion at Los Cerritos Center is about more – more fashion, more dining, more brands – in response to strong demand from this market. Lazy Dog Cafe will help us offer a more complete experience for shoppers and another great dining option,” said Ken Kraus, property manager for Los Cerritos Center.

The Lazy Dog Cafe at Los Cerritos Center will be the eighth location of the Southern California concept that combines a comfortable, contemporary atmosphere with an internationally-inspired menu.

In addition, this expansion project is just one component of a series of renovations for the mall. In January, burgeoning retail giant Forever 21 opened its massive 86,000-square-foot flagship store in the former Mervyns space.

Nordstrom

Nordstrom continues to grow. Last year, the company saw$441million in net earnings, a nearly 10 percent increase from the previous year. The company reported overall retail sales of $8.26 billion for 2009.

Not bad for what started as a small shoe shop in Seattle founded by Swedish immigrant John Nordstrom in 1901. “It literally reads like an American success story,” said his great-grandson Pete Nordstrom, president of merchandising, in a phone interview. “I think he’d be shocked at what it is today.”

Pete Nordstrom says the company has stayed successful over the years because it knows what its customers want. “We’ve been able to pay close attention to our customers and evolve with their changing dynamic,” he said. “We have a broad range of prices, and as price becomes more of a factor with the economy, we’ve been able to adjust without becoming a highly promotional store.”

Despite the economic recession, plans for a new store in Los Cerritos Center never fell off track, Pete Nordstrom said. “We’ve been doing business in Cerritos for a long time,” he said.

The new 138,000-square-foot Nordstrom replaces a smaller Nordstrom store that has occupied 118,000-square-feet of space on the opposite side of Los Cerritos Center for nearly 30 years. With its flashy designs and concepts, the new space is a change from the mall’s old Nordstrom which was built in 1982 as the third Nordstrom in California. Although the new store is only 13% larger, Nordstrom was able optimize the new layout to obtain 28% more sales space than the previous store. Included in this sales space is Nordstrom’s Café Bistro and many of their latest fashion and retailing concepts.

Now that Nordstrom is open in its new location, the original Nordstrom building at the shopping center also will offer new opportunities for additional retail uses.

City Economics

For years, Los Cerritos Center at the San Gabriel (605) Freeway and South Street has been a major money-maker and life line for the city. The mall generates about $2.7 million in annual sales tax revenue and about $3.1 million property tax. The city expects the expansion to generate an additional $360,000 in annual sales tax and another estimated $1.1 million in property tax.

The city invested $5 million in redevelopment money for the expansion project.

Mayor Joseph Cho said the city has had a long and happy partnership with Los Cerritos Center. The renovations, he said, are a win-win effort, bringing jobs, high-quality development and new options for shoppers. “It’s good news for the local economy,” he said.

You can view enlarged versions of the site plans and other images by clicking on them.

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Los Cerritos Center is (http://www.shoploscerritos.com) is owned by partnership of Macerich and Cadillac Fairview Corporation Limited.

Macerich (http://www.macerich.com) is a fully integrated self-managed and self-administered real estate investment trust, which focuses on the acquisition, leasing, management, development and redevelopment of regional malls throughout the United States. Macerich now owns approximately 74 million square feet of gross leaseable area consisting primarily of interests in 71 regional malls.

The Cadillac Fairview Corporation Limited (http://www.cadillacfairview.com) one of North America’s largest investors, owners and managers of commercial real estate. Cadillac Fairview focuses on developing and managing high quality office properties and regional shopping centers in Canada and the United States, as well as international investments in real estate companies and investment funds.

Architects: Callison was the design architect on the project. Perkowitz + Ruth Architects served as executive architect for the renovation of Los Cerritos Center, providing construction documentation for design development through construction administration.

Perkowitz + Ruth Architects (http://www.prarchitects.com) has been working with client and tenant repositioning efforts for nearly 30 years. Our professionals understand that cost-effective design is essential. In addition to full scope architectural services, P+R offers a number of incremental services to help you find creative solutions, such as sustainable design, disabled access surveying and feasibility studies.

Callison (http://www.callison.com) is an international architecture firm specializing in urban planning, mixed-use, residential, retail, healthcare, corporate, mission critical and hospitality in markets worldwide. With offices in Seattle, New York, Los Angeles, Dallas, Shanghai, London, Dubai, Mexico City and Mumbai, Callison is one of the largest design firms based in the United States with 500 professional staff. Callison creates places that amplify market share for Fortune 500 companies and international leaders with a design approach that drives business goals.