Business and beaches: Manhattan Village remodel may produce $500,000 in new Manhattan Beach revenue
by Tony Cordi
By virtually every measure, the beach cities offer retailers compelling reasons to have a presence here. Whether looking at home values or median household incomes, which are two to three times the national average, the beach cities are a sweet spot for retailers.
Manhattan Village owner RREEF clearly recognizes this and, after overcoming legal and other challenges, has launched a wave of enhancements, which include offering more retailers the opportunity to establish a presence here.
The demand for retail space is so strong that the addition over the years of new development projects such as El Segundo Plaza, The Point, and the upcoming Apollo Landing has actually yielded higher lease rates. The benefits to local residents have been several noteworthy restaurants and other shopping options as well as major popular brands such as Whole Foods and Best Buy.
RREEF’s plans to enhance the mall may seem counterintuitive at a time when both the number of retail stores and mall visits across the country have been on the decline. A Cushman and Wakefield study concluded that mall visits dropped by 50 percent between 2010 to 2013. Credit Suisse estimates that 8,600 stores will close nationwide this year, significantly more than the record 6,200 stores that closed in 2008. Additionally, online sales continue to accelerate, but they still only account for about 8 percent of all retail sales.
Nonetheless, the International Center of Shopping Centers emphasizes that the occupancy rate for regional malls stands at a healthy 93 percent. Part of the reason for this is that many malls have been repositioned or have adapted to changing consumer interests. Phil Friedl, Senior Vice President for JLL, the Manhattan Village development manager, said, “In today’s shopping center environment, it’s all about getting the experience right. Today’s premium shopping centers borrow from the hospitality industry to help create the experience”. Restaurants are an example. Restaurant sales are increasing at a much faster pace than retail sales. “Restaurants bring energy and activity to a shopping center,” Friedl said. For a similar reason, malls are adding fitness centers, movie theaters, and other specialty retail outlets.
Manhattan Village enhancements are already underway. The buildings with Ralph’s and the former Coco’s space are being remodeled and updated. The Macy’s expansion has started development of the northeast parking deck. The interior center court of the main mall is also undergoing an impressive transformation. These changes will all be completed within a year.
The biggest changes will come with the addition of the Village Shops, which will add approximately 65,000 square feet. The Mall Plaza area will become an open-air environment with several fountains open spaces. Construction has been started on a new CPK. The first phase will be completed in 2019.
Seven of the top 25 sales tax producers in Manhattan Beach reside in the mall. The enhancement efforts might add upwards of $500,000 in additional annual sales tax revenue for the city.
“We’re working hard to complete the construction as quickly so we can to deliver the premium quality shopping center the community deserves,” Friedl said.
Toni Cordi is a commercial real estate consultant with The Innate Group. He can be reached at firstname.lastname@example.org.