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Mace’s place

For Macerich chairman, Lakewood expansion has special meaning

By Debra Hazel

Macerich’s 349,000-square-foot expansion of Lakewood (Calif.) Center entails moving one anchor and adding another.

Lakewood (Calif.) Center will get the region’s first Macy’s built from scratch.

Ask anyone at The Macerich Co. about the expansion and renovation of Lakewood (Calif.) Center, and the response is always the same: “That’s Mace’s baby.”

This is true in more ways than one: The center was company Chairman Mace Siegel’s first project in California and, like most babies, it’s provided some unexpected challenges.
Originally opened in 1952 as an open-air “town square” for the city of Lakewood, the 600,000-square-foot project had one anchor, a 350,000-square-foot May Co. store; when its latest expansion, including the first built-from-scratch Macy’s in Southern California, is completed next spring, Lakewood Center will total 2 million square feet in both enclosed mall space and open-air outparcels.
“It had been developed by a group of four guys that had developed housing in Lakewood,” including Joe Eichenbaum (now deceased), Siegel recalled. Some 160 acres had been set aside for a shopping center at Lakewood Boulevard and Del Amo Boulevard in Lakewood, Calif.

But what had been a relatively straightforward ownership situation became steadily more complicated. Over more than 20 years, Eichenbaum and partners had sold interests in the center to developer William Zeckendorf, Prudential and U.S. Realty Trust, a now-defunct REIT. Multiple ownership got in the way of progress.
By the mid-1970s, keeping the center up-to-date became crucial. Los Cerritos Center had opened just three miles away, draining sales away from Lakewood: Sales at mall stores had dropped 50%, he said. Meanwhile, native New Yorker Siegel was looking to relocate to Southern California, eventually establishing an office in Santa Monica.

“We came in and analyzed the center: They had $3,300,000 in cash flow. Eichenbaum didn’t care because he was a broker at heart. He was only interested in commissions,” Siegel said, laughing.

With partner Provident Life & Accident, Macerich bought a controlling interest in the mall for $3.5 million in 1975. At the time, the total complex consisted of 2 million square feet, about half of that located in the mall area, which was dominated by anchors May Co. and J.C. Penney (opened in the 1960s). May, located in the center of the project, had no stores opposite it, and there was no continuity in the mall stores.

“The first thing we wanted to do was enclose the mall, which we did in 1977-78. Within a couple of years, sales doubled,” giving a 20% return on the firm’s $6 million investment, Siegel said.
But the process was slow, with Macerich first approaching tenants with experience in enclosed centers, then following through with others.
“We had to go back and redo every lease on the property. They hadn’t contemplated being enclosed. We got the tenants to pay for their own sprinklers; we got them to raise rents,” Siegel said.

Yet the center was ahead of its time in other respects: Long before other malls opened up their fronts and ceilings to glass, Lakewood used more than 52,000 square feet of glass, soft wood and greenery to provide an outdoor feel.
“We knew [the plants] would grow, and it created an atmosphere,” he said. “It was like daytime in there, and people loved it.”

The next expansion, in 1982, added 60,000 square feet and a two-story Mervyn’s to the project. It was at that time that Macerich was able to buy out Prudential at extremely favorable rates. Later, Macerich was able to buy out U.S. Realty as well.
“We literally owned the whole thing for $48 million,” Siegel said.

That has given Macerich the freedom to act. Lakewood was renovated in 1995, while the current, 349,000-square-foot expansion, which began in summer 1999, has entailed moving one anchor while adding another. The entire project will total 2.05 million square feet, 1.5 million square feet in the enclosed mall.

Mervyn’s has relocated northward from its original home to a newly built, single-level 80,000-square-foot facility featuring state-of-the-art technology, a more modern decor and designated “shop” areas. Construction has now begun on converting its old location into nearly 30,000 square feet of small-shop space on the first level, and a 10-unit food court (the first in the project’s history) and retail on the second level.

“As a mall, Lakewood has always had weaker food sales. Restaurant sales outside the mall totaled more than $40 million, so to a certain degree, traffic was hurt by not having food inside. We had an ideal site with the second level of Mervyn’s,” Siegel said.

An additional 23,000 square feet of shop space is under construction to connect Macy’s with the former Mervyn’s building. Mervyn’s debuted in late August; at press time, Macy’s was to open Nov. 10.

“It’s a fantastic community, and we’re happy to be here. There’s a big demand for a fine department store here, and we plan to draw from Lakewood and surrounding areas,” said Scott Walter, Macy’s store manager. The 210,000-square-foot unit is in Macy’s new format, also employed in its recently opened Roseville, Calif., and Plano, Texas, stores. The prototype features a more open floor plan for ease of customer use.

Other factors also brought outparcels unusual for a regional mall. A Lucky Stores supermarket was already on site when Macerich acquired the center. While it departed for a period, replaced by a fabric store and Lenscrafters, another Lucky eventually was built on the property, paying a higher rent than before. A huge Bullocks store, closed during the Federated bankruptcy, was razed and the site leased to The Home Depot. Lakewood also contains a Pacific Theater on an outparcel. The company later acquired adjacent land, and added Best Buy to the complex.

That has resulted in a healthy center, even without the expansion. Mall store sales through June averaged $345 per square foot, up nearly 9% from a year earlier, according to the developer. Estimated sales including outparcels totaled more than $400 million in 1999, and are projected to exceed $500 million this year.
And another anchor is still a possibility.
“We’ve had so much patience. We’ve been waiting for a department store; we have room for another,” Siegel said.
With 160 acres, the center doesn’t even require deck parking, so there certainly is room for more work.
“We still have lots of things to do out there, ” Siegel said. “Interestingly enough, the first move we made had to be the right move. Everyone was looking at it as a mall in decline. So with enclosing it, the first move was the best move, and we did it right.”

“Interestingly enough, the first move we made had to be the right move. Everyone was looking at it as a mall in decline. So with enclosing it, the first move was the best move, and we did it right.”

Anchors aweigh

At first glance, it may seem odd that the 210,000-square-foot Lakewood (Calif.) Center unit is Macy’s first built from scratch in Southern California, but its units in the region are former Bullocks or Broadway stores, brought to the chain by a series of acquisitions, either by the then-independent R.H. Macy or through its later acquisition by Federated Department Stores.

In fact, The Macerich Co.’s chairman, Mace Siegel, had been in talks to bring Macy’s to Lakewood years earlier, but rightly fearing that the chain was soon to enter bankruptcy, he called off negotiations.

“Macy’s had had no strength in Southern California until it bought Bullocks out of the Federated bankruptcy. They were very strong in Northern California, but they had nothing in the south. While Lakewood is a great center, it always had a weakness in its department stores,” Siegel said.

The center was then anchored by Robinsons-May, J.C. Penney, Wards and Mervyn’s. An attempt to add Nordstrom ended when the retailer signed a multicenter deal with The Hahn Co., owner of competitor Los Cerritos Center, leaving Lakewood short one major fashion store.
“We had May Co., they had Robinson’s. Then Broadway went away and Macy’s came in. That made Cerritos stronger, and Lakewood weaker,” he said. At the same time, Wards and Penney also weakened.
As of last month, Siegel got his extra anchor. And ironically, Macerich now owns Los Cerritos, acquiring it from Westfield America last year.