Retail Revival Brings Major Renovations, New Developments

When developer Avi Lerner rescued the ailing Marina Pacifica shopping center in Long Beach, he did it in a way that serves as a metaphor for what the city is trying to do with all its major retail locations.

The Beverly Hills developer literally turned around the Marina Pacifica shops to face Pacific Coast Highway, instead of the marina they had been facing, a move commercial real estate observers consider one of the primary reasons the once nearly deserted center is now a bustling success. According to Lerner, the center is approaching 90% occupancy, after being close to 80% vacant when he started his rehabilitation project in August 1995.

Long Beach officials say the Marina Pacifica project illustrates what they have been trying to do throughout the city: turn around a retail sector that had been losing its luster for a decade or more.

“Long Beach has been underserved by retail. There’s no question about that,” said Vince Coughlin, property services manager in the city’s community development department.

In Coughlin’s assessment, it’s a classic good news-bad news situation. The good news is that there’s plenty of demand for new retail stores of all kinds in Long Beach. The bad news is that there is demand because existing centers fell into decline, suffered from the recession and didn’t keep up with changing customer tastes.

For the last several years, the city has focused intensely on rehabilitating existing retail centers and planning new ones. Marina Pacifica, Los Altos Marketplace and Shoreline Village all are examples of old centers that have come to life again, Coughlin said.

In addition, a combination retail and entertainment center called Queensway Bay is planned for downtown, and a huge new retail center is being built at a site near Carson Street and the 605 Freeway formerly owned by the Navy.

The freeway-close Long Beach Towne Center is a project of Phoenix-based developer Vestar Development Co. Rick Kuhle, a Vestar senior vice president, said the 900,000-square-foot center will include a host of so-called big-box retailers such as Sam’s Club and Staples, plus one of the new AutoNation USA stores being developed by entrepreneur H. Wayne Huizenga. The center is expected to be completed late next year.

Retail is by far the biggest center of action in Long Beach commercial real estate markets, said Terry Reitz, a senior vice president with the Torrance office of Grubb & Ellis Co. The city’s office market is still suffering from the overbuilding of the 1980s and the recession of the early 1990s, Reitz said, and little or no new industrial space is being built because most industrial land is held in small parcels and “putting together a piece large enough to develop is almost impossible.”

The vacancy rate of nearly 22% in downtown office buildings is one reason Long Beach was cited in The Times on Oct. 15 as one of the region’s best office bargains, but it also indicates weak demand, according to Walter Hahn, an economist with E&Y; Kenneth Leventhal & Co. in Newport Beach.

“It sits there alone at the end of a freeway, and for most companies there’s no compelling reason to be there,” Hahn said.

But Hahn and others looking at Long Beach see a city ripe for retail.

“We think this a great location, primarily because of its visibility along the freeway and the huge customer base,” said Cynthia Lin, a spokeswoman for Sam’s Club.

The other new big project, Queensway Bay, is planned for downtown. The centerpiece of the development is a $110-million aquarium now under construction, said Carole Spignese, manager of the Shoreline Village shopping center and president of Downtown Long Beach Associates, a business group. Spignese said Queensway Bay is planned as a shopping, dining and entertainment center of up to 275,000 square feet that will be built by San Diego-based developer Oliver McMillan. No schedule has been set for the full Queensway Bay project, Spignese said, but the aquarium is to open in June.

According to Spignese, all downtown Long Beach is undergoing a retail revival, following the recession and the decline of centers that failed to keep up with changing retail trends. She said Shoreline Village is among those that have returned to higher occupancy rates after some remodeling and remixing of tenants. Although many, if not most, of the retail centers are recovering, she said, including a “tremendously successful” district along Pine Street, a few big question marks remain. One is Long Beach Plaza, a downtown mall that was foreclosed on by Teachers Insurance and continues to have a high vacancy rate.

According to Ted Lawson, a senior vice president with the Torrance office of CB Commercial Real Estate Group Inc., the downtown area harbors immense potential despite the question of what will become of the mall.

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As evidence of the demand for new and rehabilitated retail centers in the city, Lawson cites the renewed Los Altos Marketplace, a 280,000-square-foot center at Bellflower Boulevard and Stearns Street.

Lawson credits developer Steve Hopkins of Newport Beach-based Hopkins Real Estate Group with doing “a remarkable job” in rehabilitating the 1950s-era mall, most of which was razed. The center now includes a Sears and such ‘90s retailers as Borders Books & Music Cafe, CompUSA, Circuit City and upscale gourmet specialty food market Bristol Farms.

But possibly the most remarkable of all is the turnaround at Marina Pacifica. Spignese said the mall was “a disaster” before Lerner rehabilitated it.

Marina Pacifica’s problem was primarily its design, according to Lerner and the others, who said the original developer built the shops facing the water because who wouldn’t want a view of the water?

But shoppers had to park at the back of the center and then “meander in a very confusing series of passageways” to find the stores, according to Lerner.

Besides reorienting the shops, Lerner razed some buildings, added others, doubled the number of movie theaters to 12 and added a nearly all-new cast of retailers including a joint venture of Good Guys and Tower Records called Wow. According to Spignese, the center is now one of the most popular in the city.

Lawson said the rehabilitation of the sites in Long Beach indicate a fact of life for shopping centers, which he said are more like works in progress than completed projects. Centers that don’t change, he said, “become dinosaurs.”