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Dueling Venues

In a little more than a year, three new venues have cropped up that hope to compete with the Third Street Promenade by offering entertainment and a "pedestrian shopping experience." This special report looks at how they are faring and what the future might hold.

By Jorge Casuso

Dec. 8 -- It is Saturday night, and the Grove -- the new outdoor shopping mall on Fairfax -- is packed. Fashionably dressed visitors stroll past the faux European facades. Shoppers poke in and out of tony chain stores totting bags, while diners at some of the half dozen restaurants wait for seats.

In the "town square," families enjoy ice cream cones to piped music as a trolley rolls by. There are no homeless asking for change or street performers to break the well-laid mood with spontaneous song. All is safe.

Less than five miles away at the new mall on Hollywood and Highland, the mood is brasher and more urban. Rock music blares as tourists pose for snapshots under the towering white elephants in Babylon Court. Inside the mall, shoppers navigate a maze of tunnels, steps and corridors in search of elusive stores, while on the upper levels sightseers take in a panoramic view of the gritty cityscape, the Hollywood sign glowing in the background.

Across town off the 405 in West LA, moviegoers are settling in for a late show at The Bridge, a 17-screen complex that is part of the Promenade at Howard Hughes Center, a new indoor mall. Personal pizzas, frozen cappuccinos and "funnel cakes" in hand, the customers are personally ushered to their reserved roomy leather seats with a clear view of a giant screen where state-of-the-art images will be projected with surround sound. The show is about to begin.

Cropping up in little more than a year, the three new shopping and entertainment venues -- which bring the number of major malls in the LA area to 15 -- hope to give the Third Street Promenade a run for the hard-earned dollars of discerning visitors in search of a "pedestrian shopping experience."

The Grove is going head-to-head for the local market with its retail stores; Hollywood and Highland is going after tourists with its silver screen-era appeal; while the Bridge is out-MAXing its competition in the quest for amusement-park-sized thrills. And while it still is too early to tell if the venues will make a dent on the Promenade's success, Bayside District officials are keeping a wary eye on the new-found competition for the strip's 10 million annual visitors.

"Most people are checking these venues out," said Kathleen Rawson, the Bayside District's executive director. "We're probably not losing our market share on a regular basis, but we can't rest on our laurels."

"I think any shopping venue is a competitor, and it's just a matter of the level of the competition," said John Warfel, chair of the Bayside District Board, which sets policy for the Downtown (See "Take 5" on page 5).

For now, Downtown officials are focusing their attention on the Grove, the $160 million, 575,000-square-foot retail project that opened next to the historic Farmers Market last spring. If shopping is a visitor's primary focus, then the outdoor mall poses the stiffest competition, boasting some of the same flagship stores that anchor Santa Monica's main shopping strip - Banana Republic, Barnes & Noble, the Gap, Anthropologie and Victoria's Secret.

"I think it took a lot of strong points from the Promenade and went to a very strong location," said Robert O. York, a partner in The Fransen Co. and a consultant to the Bayside District Corp. "They've cherry picked some of our best merchants."

But while the Grove has lured some of the major chains along the Promenade, it has failed to develop the eclectic retail mix that City and Bayside officials are desperately trying to hang on to in an area that boasts some of the highest commercial rents in Southern California.

"It's a different venue," York said. "The tenant mix isn't identical. Ours is more unique. It's very different in some ways, and it's far enough away."

But the Grove also has its advantages. Unlike the Promenade, it is private. As a result, its owner - the Santa Monica-based Caruso Affiliated Holdings - can set the rates for its 3,500-space parking structure and decide who is welcome to the "town" patterned after a European square, which developer Rick Caruso frequented as a boy.

On a recent Saturday night, the rows of benches lining the winding walkways were empty, and security guards patrolled the grounds where the homeless were conspicuously absent. "They have ways to control their environment that we don't," Rawson said.

While both the Promenade and the Grove offer shoppers many of the same venues, the Grove - with its carefully controlled environment - is appealing to a different customer base, said Deborah Belgum, the retail reporter at the "Los Angeles Business Journal."

"They're looking at the family, people with kids," Belgum said. "It's safe for everyone. You're not going to find homeless there. The Promenade appeals to younger, single consumers and tourists who want to go to the beach.

"They might complement each other," Belgum added. "On the other hand, the families that used to stroll down the Promenade may want to go to the Grove, where they won't have to brush with the homeless." Still, Belgum noted, "the Grove isn't quite as much the walking experience. The Grove's shortage is that it's just not big enough."

If the Grove can offer the comfort of knowing what to expect, one of the Promenade's strongest points is the sense of spontaneity only a vibrant Downtown can offer. "The faux nature of the Grove is off-putting to some people," York said. "You don't have the social issues, but you don't have the vibrancy. In the end, I think most people want something authentic."

The Grove is an attractive alternative "if the sole purpose is to purchase an article of merchandise," said Jeff Mathieu, who heads the City's Department of Economic Development. "But the experience of the Bayside is much broader. It's a tremendous urban environment; it's organic; and it has the feel of a sophisticated urban streetscape.

"You come to an area for a variety of experiences, and you may not know what those experiences are," said Mathieu, who was the City official charged with revitalizing the slumping Third Street in the mid 1980s.

Still, the Grove isn't all just a Disneyland-style re-creation of an idealized European town square. There's also the 68-year-old Farmers Market that has long attracted locals and also is now luring tourists.

"There is a significant and very authentic element in the Farmers Market, so it does counterbalance some of the from-scratch nature," York said. "It makes an interesting combination."

"I do consider (the Grove) direct competition, but I think there are enough people and enough reasons to go to the Promenade," York said. "It's not something that should knock us off course."

The TrizecHahn Corp.'s $615 million Hollywood and Highland project, which opened one year ago, is going for a part of the Promenade's market the Grove isn't actively catering to -- tourists and young adults out for an urban experience that promises the unexpected.

York believes the 645,000-square-foot project is an "intense and complicated mixed-use development" that has yet to hit its stride and has posed little competition to the Promenade, which offers more retail options. "Part of its problem is it doesn't know who it's targeting," York said. "It's weighted towards tourists, and it's trying to attract more locals."

The project's November 9, 2001 opening -- just two months after 9/11 -- couldn't have come at a worse time for attracting tourists, particularly the visitors from Asia the project was targeting. Couple that with a confusing layout and an initial parking rate of $10, and it comes as no surprise that "Hollywood's comeback" is off to a dismal start.

"It's not doing well," Belgum said. "It's difficult to find a lot of the stores. There are sections you'd never know are there." Merchants have labeled the "Awards Walk," a long stairway that leads to the Kodak Theatre, the "Corridor of Death" because it is difficult for customers to find shops in that area, Belgum said.

Six months after its opening, some of the stores had pulled out, and the Canadian-based real estate firm was offering tenants rents breaks. This year, retail sales for the first six months have averaged $294 per square foot (annualized), Belgum said. According to the International Council of Shopping Centers, the national average for shopping centers is $336.

"They'd like to become a competitor to the Promenade," York said, "but it hasn't worked out that way. It has not come out as powerful as originally intended." But, he added, "It took a long time for Santa Monica."

Like the Promenade, the Grove and Hollywood and Highland are counting on moviegoers for a good chunk of their draw. The Grove has a 14-screen Pacific Theatres cinema to supplement its retail stores, and Hollywood and Highland, which is flanked by the historic Grauman's Chinese Theatre, boasts the new 3,300 seat Kodak Theatre where the Oscars are held.

But if theaters are just part of the mix at the two venues, they are the cornerstone of the Promenade at Howard Hughes Center, which opened in July 2001. Although the indoor mall features a Nordstrom's Rack and other retail outlets, its big draw is the 17 theaters at the 106,000-square-foot Bridge, where reserved tickets on weekend nights go for $14.

The most elaborate of the theaters are the three Director's Halls, but all the theaters feature stadium seating, state-of-the-art projection and Dolby Digital Surround-EX sound. The airport-like "concourses" leading to the Director's Halls feature space-age décor and bathrooms staffed by attendants.

"From a pure film standpoint, that's a very compelling facility," York said. "If you're strictly going to a movie and to eat, then the Bridge" is a competitor.

"The folks that primarily go to the theater, we're not going to get those," Rawson said.

Once a major catalyst for the revitalization of Santa Monica's moribund Third Street shopping strip, the Promenade's theaters are outdated and badly in need of upgrading.

"Our theaters still do extremely well, but there will be a time when they will be obsolete," Rawson said. "As long as we're planning now, we can do it, but it has to be now."

If the other three venues have the lure of the new, the Promenade is cashing in on something they lack -- the diverse experiences many visitors are craving in a vibrant urban setting near a beach at the end of a freeway.

"The Promenade has a very strong sense of place," said Warfel, the Bayside board's chair. "It's because it has been here and has been the main street of Santa Monica for many, many years. It's the primary focus of Downtown, and it will continue to be if the Bayside and the City continue to invest both time and resources in it."

"Our eclectic nature is our best draw," Rawson said. "You don't know what you'll discover until you get here."
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