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IRVINE EXPANDS ORANGE COUNTY RETAIL RESORT

By Debra Hazel

The Corona del Mar Plaza is part of what Irvine has dubbed a ‘coastal’ lifestyle center.

A major open-air regional mall that already neighbors a lifestyle center will soon be joined by still another open-air specialty center. Yet neither the developer nor the residents of Newport Beach, Calif., are worried about overbuilding at all.

Normally, placing these two lifestyle centers — the existing Corona del Mar Plaza and the coming Crystal Cove Promenade — in such close proximity to the dominant Fashion Island, Newport Center, would have raised a few eyebrows. But with the locally based Irvine Co. as developer of all three projects, the Orange County, Calif., area is set to become a shopping resort and not a retail battleground.

“It’s the first time we’ve had a combination of projects that we’re leasing in a coordinated way,” said Keith Eyrich, president of retail at Irvine. The three centers, as well as prototypical entertainment center Irvine Spectrum and other projects, are part of the Irvine Ranch, the largest master-planned community in the United States.

The 105,000-square-foot Corona del Mar is located on Pacific Coast Highway at MacArthur Boulevard. Crystal Cove, with 125,000 square feet under construction, will be situated on the highway about six miles to the south. The 1.2 million-square-foot Fashion Island, meanwhile, is “a stone’s throw” away, slightly farther inland, Eyrich said.

The goal for the three is the creation of a “coastal lifestyle center,” a concept that Eyrich acknowledges is difficult to articulate. Given the projects’ Southern California location, “it’s all about being outside, enjoying the sunshine and having a great attitude. It’s the feeling the ocean creates,” he said.

Fashion Island, the first of the projects, debuted in 1967, and Corona del Mar opened in 1999. Crystal Cove, which is being built in conjunction with a new residential development on the Irvine Ranch property, will open in late summer or early fall.

Leasing is the key to avoiding cannibalization and creating a coordinated resort that will draw residents and visitors to each of the properties, Eyrich said.

“The tenant mix is designed in each center to give a unique experience,” he said. “You won’t find the same store in one of the other projects.”

Fashion Island remains dominated by traditional regional mall tenants, including Anthropologie, Bebe and J. Jill. Among Corona del Mar’s tenants are Chico’s, Peet’s Coffee & Tea, Tommy Bahama and Zany Brainy, as well as local purveyors, including Amadeus Spa and Three Dog Bakery. At Crystal Cove, a Banana Republic and Gap will be joined by Pasadena, Calif.-based garden store Hortus Parterre, casual apparel merchants Millie and UhOh Clothing Boutique, and home furnishings store Santos & Graham. These last three have individual units in other California communities, but are new to the Newport Beach area.

“The customers have gotten to the point where they are demanding something different, and they have the right to demand something different,” Eyrich said.

As with any resort, the main thing is to be discriminating about the merchandising mix, he said, noting, “you have to hold out for the right tenant.” Irvine even contemplated tearing down a building to accommodate a Tommy Hilfiger at Crystal Cove, he explained.

Dining is an important element that will also help customers keep the projects straight. Crystal Cove will feature up to four signature restaurants; Corona del Mar has two: Gulfstream, a seafood restaurant, and Tommy Bahama Tropical Café & Emporium; Fashion Island boasts such major chain restaurants as California Pizza Kitchen, Chimayo Grill, P.F. Chang’s, Fleming’s Prime Steakhouse and Hard Rock Cafe, among others.

Fashion Island offers ocean-side shopping and dining.

The centers are linked visually by their oceanside location. But each has a different style to help shoppers differentiate them. Corona del Mar offers more of an urban mercantile style, with a clean, contemporary look; Crystal Cove will have a Mediterranean/Santa Barbara feel, with clay tile roofs, decorative columns and metal balconies. Fashion Island combines a bit of the two, with multiple anchors (Bloomingdale’s, Macy’s, Neiman Marcus, Robinsons-May) and traditional mall stores.

The affluent community can certainly accommodate two different lifestyle centers, as well as a mall, despite a recent slump in the market. Though the Orange County retail market slowed overall in 2001 as a result of the dot-com and biotech slowdowns and more recent events, housing development remains strong, according to brokerage firm Grubb & Ellis’s most recent market report.

“Even prior to the events of Sept. 11th, the market had begun to soften,” said the firm’s 2002 Real Estate Forecast. “Now activity has slowed even further as tenants hold back to see how things ultimately will work out before they make any significant comments.”

The average household income within a three-mile radius of Corona del Mar Plaza, including Corona del Mar, Harbor View Hills and Irvine Terrace, totaled $146,301, slightly more than Fashion Island’s $145,859 income within the same radius. Crystal Cove Promenade’s market, which includes Crystal Cove, Irvine Cove, Laguna Beach and other communities, is even more affluent, with an average household income of $219,000, Irvine said. Crystal Cove Promenade is also more likely to attract visitors from outside the area; the immediate area includes Four Seasons, Hyatt and Marriott hotels.

All visitors, however, will be drawn to centers that epitomize the California lifestyle of sun, sand and surf. Which project they visit will depend largely on what they feel like buying or eating on any given day. And that’s the point, according to Irvine.

“They really are directed at the same customer,” Eyrich said. “It’s a style of shopping.”

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