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How Lido Village, Pacific City and Bella Terra redefine the shopping mall

August 13, 2017

Will the likes of Lido Marina Village get us off the couch?

Today you can shop — even dine — to your heart’s content with just a little bit of technology bringing goods, services, and even groceries or hot food to your door. So why would anybody think about creating another shopping center?

Or two? Or three?

Executives at DJM Capital Partners are betting they have one answer to the brick-and-mortar retailing blues tied to the explosion of online shopping. Just ponder what’s up at Lido Marina Village: a swanky-but-thoughtful retooling of a 1970s-vintage tourist-trap relic on the peninsula side of Newport Bay.

For much of the past three years, DJM has pushed the 116,000-square-foot Lido Marina Village into the 21st Century. This has long been an odd collection of bay-front shopping, dining and office property that under previous ownership became badly neglected. The center’s perhaps best memory was the quirky, tiki-themed Warehouse restaurant.

Circa 2017, Lido Marina Village has re-emerged as a new member of retail’s latest survival niche: offering the visitor more focus on the experiences than the transactions. You know, the intersection of unique goods and quirky tastes, with a dollop of fun on top.

And if that name DJM sounds familiar, it should to Orange Countians.

The company from San Jose — named for founder David John Miller — likes a challenge. Its first line of work was squeezing value out of properties jettisoned by failed savings and loans in the 1990s.

These are the real estate developers and operators who helped convert the area on Beach Boulevard around the dying Huntington Beach Mall into the pleasant Bella Terra shopping center. And these same people who turned vacant land near the Huntington Beach Pier into the Pacific City dining-and-shopping hub.

And it’s pretty obvious looking at these three disparate Orange County shopping spots that DJM doesn’t create cookie-cutter centers. In fact, DJM executives see the commonality of shopping options at many retail centers as a key reason why online shopping has succeeded.

Essentially, if every mall is the same, why bother? Just click at home to buy.

As DJM’s CEO Miller told me three years ago: “You must create a retail opportunity that cannot be created on the Internet.”

First impressions

So what is the secret sauce at Lido Marina Village?

Start with enhancing the physical appeal of the Balboa Peninsula site, with its eye-catching views of Newport Bay.

DJM wanted something different to meet this community’s style, even if its just down the road from Pacific City. The restoration back to a look and feel of “old Newport,” says Stenn Parton, DJM’s development chief.

Significant efforts were used to maintain traditional charms and blend it with modern colorings. Like lots of white paint. And black, too. Even the neighboring Elks Lodge got a matching coat, courtesy of DJM.

Red bricks were reused on the reconstruction of the center’s main thoroughfare — Via Oporto — to update utilities and create traditional sidewalks. Building exteriors and interiors were cleaned up and restored, with some items put back to original condition.

Many of the shops are actually former residences from the ’30s and ’40s that were converted to stores four decades ago. Renovations brought out some of the old quirks from exposed ceilings showing pipes and duct work to refurbishing working fireplaces.

Perhaps the most spectacular work was done at an old bank now home to Elyse Walker, the women’s apparel boutique from Pacific Palisades. A gorgeous raw wood roof was discovered above a false ceiling. It’s been now fully exposed for all its glory and the bank’s old vault has been converted to host the store’s jewelry displays.

“It would have been easier if we could have torn it down and build it new from a pure development perspective,” says Lindsay Parton, DJM’s president and Stenn’s father.

To DJM, eye-catching architecture required a name-dropping mix of merchants, many debuting their first Orange County locations at Lido Marina Village: Warby Parker eyewear and Faherty clothing from New York; Sweaty Betty fitness wear from London; and Japanese restaurant icon Nobu.

And in a nice tip of the cap to history, the retail lineup still includes the marina’s long-time Lido Village Books bookstore and newspaper stand.

There’s also a bay-view deck providing a welcome space for chilling or enjoying the frequent musical performances the center provides. And there’s a supervised area for kids – we’ll assume so parents can shop without interruption – which reinforces Lido Marina Village’s nautical theme with a boat-filled play area.

Plus, the boat-slip lineup has been tweaked to allow boaters to pull up and dock and go dine or shop. Significant refurbishment of the boardwalk area and many slips will begin soon.

As Stenn Parton put it, the restoration project allows Lido Marina Village to “pay homage to a golden era of California.”

Pioneering spirit

It’s awfully hard to bet against DJM’s track record in Orange County.

Apparently, they missed the memo that the shopping center is a dinosaur headed for extinction. Ponder that Lido Village’s shopping and dining spaces are 97 percent leased; Bella Terra is 95 percent full, and Pacific City has topped 90 percent.

“Same-old-same-old won’t work,” says retail expert Geoff Tranchina, executive vice president for the JLL real estate brokerage. “DJM is a perfect example of people who understand that. They’re the poster child for what’s successful.”

In 2004, DJM acquired control of the slow-moving Bella Terra shopping project in Huntington Beach. At the time, the thought of a successful inland retail center on what numerous people saw as the wrong side of the beach-centric city seemed like a long shot.

This was a neighborhood centered by a dying shopping center including the skeleton of a Montgomery Ward store. Who remembers them?

DJM got Bella Terra finished even as a few early warning signs of retailing challenges popped up. The developers had to replace two tenants that flamed out — Mervyn’s and Circuit City, early victims of the shopper’s changing habits. The replacements give you a clue about DJM’s savvy: Whole Foods and Costco.

In fact, this 1 million-square-foot shopping-and-entertainment center has sparked a revival of the neighboring blocks with several new collections of apartments erected nearby, creating a noteworthy mini-urban hub. It’s a success that could spur innovation at some other freeway close locations — off the 405 in Fountain Valley near Euclid or at the Westminster Mall or off the 5 in Santa Ana at Grand, around the old home of The Orange County Register.

Next, DJM took on creating a shopping and dining experience on the coast in Huntington Beach.

Pacific City encompasses nearly 200,000 square feet of shopping, dining, workout spaces and entertainment with a reported price tag of $135 million. It opened two years ago to serve a potential need for more shopping and dining options than nearby Main Street offers Huntington Beach visitors.

This place offers a far different beach vibe vs. the somewhat traditional suburban shopping center feel of Bella Terra. There’s lots of wood and stone and ocean views from decks and outdoor dining patios. There’s a trendy food hall. And outdoor movie nights and music for visitors.

Roughly one-third of Pacific City is spaced leased to food providers — well above the norm for a traditional shopping center. But Stenn Parton says that’s how his industry must change to survive.

“It’s part of the evolution. People don’t need to shop every day. But you need to eat every day,” he says.

While it’s a bit early to judge Pacific City’s true success, it’s worth noting that last year investment giant TIAA was impressed enough to buy 70 percent of the project. That followed Prudential Insurance’s real estate group buying 75 percent of Bella Terra the year before. In both cases, DJM retained a minority stake and control of day-to-day operations.

It’s likely a similar partner will eventually be found for Lido Marina Village, but DJM leaders say those are just financial arrangements. The company is committed to coastal California projects … and would want more if the price was right.

“We’re in this for the long term,” Lindsay Parton says. “They’re not making any more beach.”

Next chapter

Now comes the hard part at Lido Marina Village. DJM has to prove that the $70-million-plus shopping-space-as-communal-hub works on Newport Bay.

For starters, there’s stiff competition at shopping’s high end that DJM is targeting in Newport. It’s only a few minutes drive to Fashion Island, billionaire Don Bren’s complex that has mastered the marriage of fancy retail, trendy dining, high-rise offices and hotels from a perch with a Pacific view.

And just a bit farther away, DJM can’t overlook South Coast Plaza – the Segerstrom family’s luxury mall that basically invented this concept of the ritzy “experiential” shopping center experience.

It’s a good bet the folks who live on the Newport’s peninsula and nearby will enjoy the new dining and shopping options. And the ocean-close location of Lido Marina Village is both a plus – visitors will come, at least for the beach – as well as a minus – that’s politely called “congestion.”

But what of the long-run viability of upscale concepts currently in vogue at Lido Marina Village and at many retailing complexes? For now, these tactics are blunting stiff competition from online, the likes of Amazon or Doordash, that can make “going out” seem tedious.

Is the popularity of “brand-name” shopping and/or “gourmet” eating a serious consumer movement? Or is catering to upper crust tastes — from fine fabrics to hot looks to burgers made of exotic meats — simply this era’s symbols of good economic times?

That’s what will make Lido Marina Village project so fascinating to watch in the coming years. So as you’re having a steak at Lido Bottle Works or quiche at Zinque or picking out shirts at Marine Layer, consider if society has truly and permanently changed how we do leisure time. Especially those hours spent on any shopping excursion.

“We’re going through a generation shift. This is not cyclical,” says property broker Tranchina. “The next generation of retailers have to figure what works for millennial shoppers.”

Because it’s pretty darn easy to spend money from one’s couch.

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