By Don Jergler and Felix Sanchez
Staff writers
LONG BEACH — Craig Joseph and a team of Big 5 Sporting Goods workers have had their work cut out for them. Putting the final touches on a new Big 5 at the downtown Long Beach CityPlace shopping center, workers have had to stand guard at the front door to shoo away customers who don't know the more than 11,000-square-foot sporting goods emporium won't open until Wednesday.
That's a good thing for a retailer, Joseph and other Big 5 executives say. Customers are already in that holiday spending mood, and Big 5 is ready.
It was similar thinking to capitalize on the Christmas holiday spending spree and publicly jump-start the project by CityPlace developers that led them to push the opening of the $100 million outdoor shopping center to November 2002.
CityPlace had thousands of square feet of retail space sitting vacant at the opening, much like a sister development, The Pike at Rainbow Harbor, when Developers Diversified Realty opened it to much fanfare in November 2003.
But key anchor stores Wal-Mart, Ross Dress for Less and Nordstrom Rack were already open at CityPlace in hopes of drawing holiday traffic.
The word from DDR executives and city of Long Beach officials who helped push the projects as key components to the revitalization of downtown using retail and new housing developments was that The Pike and CityPlace would fill with other retailers as buzz built.
Two years later, CityPlace has nearly 50 tenants and 80 percent occupancy and has become a popular place for diners and shoppers particularly during lunch hours. Down the bluff, The Pike at Rainbow Harbor has eateries such as P.F. Chang's, Bubba Gump Shrimp Co., California Pizza Kitchen, Islands Fine Burgers, Gladstone's and Outback Steakhouse, anchoring a center with far more restaurants than retailers.
The restaurant portion of the Pike project seems to be a resounding success, with weekend wait times often an hour or more.
But storefronts still sit vacant in significant numbers at The Pike and to a smaller degree at CityPlace. And in what some might perceive as a way to "dress up" the vacancies, windows are decorated with colorful ads for the season's newest movies playing at The Pike, or the offerings at CityPlace's live playhouse.
A waiting game
Some tenants at The Pike and CityPlace say they are discouraged by the few number of retailers.
Tenants are quick to point out many of them are successful — particularly those in high-traffic and high-visibility parts of the projects, such as those at The Pike with frontages facing the Long Beach Convention & Entertainment Center.
CityPlace's Wal-Mart is regularly packed with shoppers, many of them riding the Metro and transit systems or walking. And at noon downtown workers often stroll to the project's Ross and Nordstrom Rack.
But there are other, smaller stores in the Pike whose owners say they are simply getting by, waiting for the new retail that will bring them more customers.
They are emphatic, however, that they aren't close to going out of business, as bad publicity about the Pike in particular, might have suggested.
"I think we all feel like we wish it had happened sooner," said Melanie Fallon, the city's community development director.
When Bass Pro Shops, seen as an anchor store for The Pike, scratched plans to open a store there, other retailers wanting to hook the expected foot traffic were put in a holding pattern, Fallon said.
"Some retailers are waiting to see who the big retailer is going to be," she said.
Critical mass
So what is the reason for a lack of new retailers at the centers and downtown?
It may be "critical mass," which refers to having enough residents to build a demographic that will lure retailers to an area.
A massive, ongoing $1 billion investment in downtown is expected to eventually yield 3,637 residential units, 947,400 square feet of retail and 230 hotel rooms, according to a report released last week by Downtown Long Beach Associates (DLBA).
So far, 902 units have been completed and made available.
Good things to those who wait
"There's a number of factors that are playing into development here," said John Kokinchak, DDR's vice president of property management for specialty centers. "It takes time to make sure that you establish the right tenant mix."
Kokinchak acknowledges "the Pike and CityPlace perhaps have't progressed as quickly as we would have liked," but he views the centers as puzzles whose missing pieces will be found soon. "Clearly we are creating critical mass down along that whole area with all of the restaurants" he said. "And clearly the retail portion lies in all the residential projects that are taking place. Once that is completed you're going to see that critical mass grow."
The list of successful restaurants at the Pike continue to grow. Buca di Beppo has finalized a contract to go into the Pike and construction on a Chili's is underway.
"We are very close to completing negotiations on what I would consider to be two major openings," Kokinchak said.
He described the two retailers as big-box operations that will take "well over 5,000 square feet each."
His definition of a box-box store includes "a big sporting goods store, a Circuit City, a Marshall's, Ross Dress 4 Less," he said, declining to say who DDR is in talks with.
The Pike is 67 percent leased, and when the two deals close that will take the center to 80 percent.
"In a year's time, 80 percent occupancy is a respectable number," he said.
CityPlace is 80 percent occupied, but that figure, too, may be about to change.
"We have three deals that we are negotiating along Pine," Kokinchak said, adding all that all three are retailers.
Environmental hurdles
Project delays and loss of potential retailers at the Pike also are being chalked up to environmental hurdles because of its location in a Tidelands area.
Any use of Tidelands properties must be related to water, or a project that draws visitors to the shoreline. That could include gift shops, restaurants and hotels, according to the State Lands Commission, which regulates the Tidelands. General uses are restricted on the public-trust terrain, such as supermarkets, offices, schools, libraries and residential units.
"There are retailers who have been interested, who would love to go (in The Pike) but do not meet this test," said Fallon, declining to name those retailers. "There have been a couple that have been pretty big."
A T-Mobile store in The Pike, for example, was required to relocate within the center because it did not fit the designated Tidelands usage.
Under the original development plan, not all prospective tenants qualified under the restrictions, so the city negotiated with the Lands Commission to allow non-tidelands uses in five of the parcels.
Frustrated by repeated delays, those tenants pulled out of the project and the developer has been left to refill the parcels with others, Fallon said.
The cold shoulder
Local design experts say another problem with the Pike is it isn't pedestrian-friendly.
"I think you really need a talented design team to look at (The Pike) comprehensively," says Jonathan Glasgow, an architect with Interstices, designer of the Walker and Kress lofts on Pine Avenue. "I think DDR has proved not to have visioning design capabilities. Between CityPlace and that place, it's just not top-caliber work."
The Pike's design is criticized in a new book on city architecture.
"The way (the Pike) sits, it almost turns its back on the city," said Cara Mullio, co-author with Jennifer Volland of "Long Beach Architecture: The Unexpected Metropolis," released earlier this month.
"Not linking the Pike to Pine Avenue was a big problem in terms of pedestrian traffic and attention," Mullio said. "You're confronted with two large parking structures and a roller coaster bridge."
More green space and environmental elements would draw more visitors to what is now an uninviting design, Glasgow and Mullio said. Only a Ferris wheel and carousel, both still unopened, are welcoming, Glasgow said.
"There's not really any activity except those couple elements facing Shoreline Drive," he said.
Blame the economy, too
The economy could be partially to blame for the lack of progress at the developments — the last few years have not been a great for retail expansion, experts say — but other similar developers have fared much better, said Richard Giss, with accounting firm Deloitte & Touche LLP, which tracks retail trends.
"It's a tough time for retail investors right now, but there are still retailers that are expanding," Giss said. "I would suspect it would be with that center."
For example, Paseo Colorado in Pasadena, also operated by DDR, is "doing really well," Giss said.
The difference is that "Paseo Colorado is located in the middle of a land mass, and Rainbow Harbor is at the end of a land mass, so you're drawing from 180 degrees instead of 360 degrees," he said. "You have to get retailers in there that get somebody to drive there."
One retailer won't make the difference, either. Centers like the Pike need several working together, Giss said.
"You need a package of retailers, and that package has to be a compelling argument for the consumer to go visit that location."
The formula is simple: anchor tenants, such as department stores or big-box retailers, are surrounded with specialty retailers that feed off consumers heading to the anchors. The specialty stores create repeat customers, generating more business for the anchors.
"The developer down at Rainbow Harbor has to put together a package of retailers that are … different from one another but also compatible," Giss said. "It really relies on this symbiotic relationship. They have to feed off one another. And if you don't have a full complement of retailers in there, it makes it difficult for the others to pull their oar. You've got to have restaurants, entertainment and retail."
Tough times Major retailers do not always like to gamble on an unproven location, according to the analyst.
"The problem is that retailers, they want a sure thing," Giss said. "You need to get some more retailers in there, and if you don't do that, you could have the pioneers become the ones with the arrows in their backs."
Such was the fate of two CityPlace tenants.
Merle Norman in CityPlace shut down in February after less than a year.
"If the traffic had been better, I would still be there," owner Shiela Wallace said after closing the store. "I did everything I could there just wasn't enough to sustain it."
KB Toys is closing its CityPlace location along with others as part of bankruptcy reorganization.
"Suffice it to say, these stores under-performed," said John Reilly, a chain spokesman.
Holiday dollars
Pike tenants were recently given a marketing overview of some of the things DDR will do to stimulate visits, including opening the carousel and Ferris wheel — two attractions that evoke the namesake Pike amusement park, which for decades, brought visitors downtown.
Mario Duarte, owner of Kelly's Coffee & Fudge at The Pike, said his business has been steady, but not gotten better since opening.
"I thought we would be doing three or four times as much business as we're doing now," he said. "You need to reach people not only from Long Beach but from other counties and they're not doing that yet."
The problem is lack of shopping, he said.
Why go to The Pike when a 30-minute drive leads to Irvine Spectrum, which has a pedestrian-friendly array of restaurants, arcades, movie theaters and retail stores?
At CityPlace, tenants say business is picking up as the holiday season approaches.
Customers have different ideas about whether CityPlace or The Pike will be a holiday shopping destination outside of stalwart Wal-Mart.
"I'll go holiday shopping to Fashion Island in Newport Beach before coming here," said Long Beach resident Ed Schibig, who was spending a lunch break shopping at Nordstrom Rack last week.
Robert and Dayana Levy, of Long Beach, split on their opinions of CityPlace and the Pike.
"The Pike has a lot of nice people there, and it's nice to go eat and walk around," Dayana Levy said. "CityPlace has its ups and downs. But it's convenient."
Her husband prefers CityPlace because of convenient parking. He called getting to Bubba Gump Shrimp and other popular destinations in The Pike a hassle.
"It's congested," he said.
Not alone The lack of retailers at The Pike and CityPlace is a not a singular phenomena for downtown Long Beach.
"I think that we'd all like to see a nice entertainment-retail mix down there," said Todd Cutts, who recruits businesses for Downtown Long Beach Associates.
The DLBA has launched a multifaceted campaign to market downtown, and is working to get more retailers for downtown's restaurant-and entertainment-rich Pine Avenue.
"Whenever retailers make a decision in the area, it's a function, No. 1, of economics," Cutts said. "They are going to find the safest, easiest investment."
Potential good news came for The Pike earlier this month when the Sierra Suites Hotel chain announced it is applying for permission from the city to build a 140-room hotel.
The Pike may just need a laugh.
The Laugh Factory is set to open in April, a year later than anticipated. Club owners forged ahead with the opening of a Times Square Club in New York because of development delays in opening The Pike, said Joane Bouman, a club spokeswoman.
The original Hollywood club draws large crowds and celebrities. Dave Chappelle reportedly showed up at the back door of the club to perform last month and audience members regularly include the likes of movie stars Chris Tucker and Jamie Foxx.
"We intend to bring that sort of ambience, and that sort of high-end talent to The Pike," said Bouman.
Bouman said her company is unconcerned about retail at the center.
"People come to us," she said. "We're going to be a huge draw for everybody else. We're planning on being a real cornerstone there."
— Staff reporter Joe Segura contributed to this story