search

The Real Deal Logo

Trending

Lawmakers reach sweeping housing deal with “good cause eviction,” new 421aLawmakers reach sweeping housing deal with “good cause eviction,” new 421aCharles Cohen’s 750 Lex value slashed by 83%, foreclosure loomsCharles Cohen’s 750 Lex value slashed by 83%, foreclosure loomsMeridian’s Ralph Herzka gives rallying call, despite strugglesMeridian’s Ralph Herzka gives rallying call, despite strugglesViceroy reborn: Related launches sales of branded Brickell condo tower Viceroy reborn: Related launches sales of branded Brickell condo tower 
Los Angeles

The Nostradamus of retail?

In Los Angeles, Rick Caruso pioneered open-air shopping and entertainment centers filled with park-like spaces where visitors could spend the day.

The strategy has paid off at a time when brick-and-mortar retail is suffering nationwide, with department store chains like Macy’s and retailers like Bebe shuttering shops, leaving mall developers with empty storefronts.

Caruso said his company’s sales across all of its properties grew more than 7 percent last year with little sign of a slowdown.

“The indoor mall business — I said it two years ago, and I’ll say it again — if it’s not dead, it’s on its way,” Caruso said. “People don’t want to go inside a mall and spend the afternoon. You go to a certain store, and then you leave.”

Caruso, formerly Caruso Affiliated Holdings, has set out to create experiences for its shoppers, from hosting monthly pop-up shops with fashion bloggers to organizing community events in its manicured outdoor spaces.

The company also brought some of the hottest retail and restaurant concepts to its properties this year, including Snap Inc.’s vending machine Snapbot at the Grove.

Kloe Colacarro, head of leasing at Caruso, said the key is tapping into consumer data and remembering that each property must serve a different community.

Sign Up for the undefined Newsletter

“We look at every center through a different lens,” Colacarro said. “And really try to tap into each community that each [center] is located in and find what they’re looking for, but also bring in new and innovative concepts.”

Eric Sussman, professor at the UCLA Ziman Center for Real Estate, said part of the company’s success can be attributed to its focus on the Los Angeles market.

“The saying is always location, location, location,” Sussman said. “But I would say local knowledge, local knowledge, local knowledge. You have to really understand the dynamics of the local market supply and demand.”

Colacarro said the firm pulls consumer data from a number of different sources, from the users of its mobile app and Caruso Rewards program to the social media mentions of the labels and restaurants by its shoppers.

For example, The Grove launched the first U.S. pop-up shop for social media influencer and shoe designer Chiara Ferragni in November 2016. It also landed the first-ever U.S store of Mary-Kate and Ashley Olsen’s contemporary label, Elizabeth and James, which opened at the Grove in July 2016.

Caruso’s company also opened a slew of popular eateries directly across the street from its Americana at Brand center in Glendale this year, including Greenleaf Gourmet Chopshop, Eggslut, Philz Coffee and Mainland Poke.
James Dion, founder of Chicago retail consulting firm Dionco, said it takes more than just a few stores to make a property successful and that developers must now find a way to create experiences.

“If it’s just a thing or a product, a customer is going to buy that on the web,” Dion said. “Today, when they get in their car and go out, it’s not just to go out and buy stuff. It’s to do things, and shopping centers that have a lot of different things to do are the ones being successful.”