Santa Monica-based Macerich Co. is currently working with Simon Property Group Inc. on a Carson mall.
The move forward comes after years of litigation with the city over environmental remediation work. Simon has reached an agreement to take over development of the 40-acre site, which was previously a landfill.
The outlet, which was originally scheduled to open in fall 2021, was delayed by Simon and Macerich’s announcement in 2018. They announced plans to collaborate on the 400,000 square foot outlet, located along off Highway 405. Initial plans called for expanding the area by 166,000 feet.
January 2020 was the last day of work on the joint venture project. The companies were involved in financial and contractual disputes with the city. In May 2020, the companies sued the city of Carson for $85 million, claiming the city’s reclamation authority, an entity created to oversee remediation work at the site, wasted funds.
“The defendants not only intentionally concealed their funding shortfall from [Simon and Macerich], but in fact continued on the same doomed path,” the companies’ complaint stated. “Never did the city or the Carson Reclamation Authority share the truth that the estimated cost to complete the remediation was increasing at an alarming rate and they were running out of money.”
A judge dismissed the lawsuit in March 2021. He sided with the city and found the defendants did not act negligently or treat Simon Property Group unfairly.
“[The joint venture] now has a decision to make: perform its duties under contract and develop the mall or market the property jointly with the Carson Reclamation Authority and allow a new developer to step in,” said Carson Mayor Lula Davis-Holmes. in a press release. dismissal of the lawsuit.
The City of Carson and Simon and Macerich have entered into an undisclosed agreement that will allow the outlets to be completed by 2024.
Industry watchers say malls are a prime example of a struggling retail sector.
Richard Rizika, co-founder and president of the El Segundo-based real estate company Beta Agency Inc. Simon Property Group is, in addition to being the largest operator of shopping centers, also a leading retail design company.
“Malls have held up pretty well during the pandemic,” Rizika said. “The type of outdoor product that outlets are offering has definitely resonated with consumers.”
Rizika said major shopping centers nearby include Craig Realty Group’s Citadel Outlets in Commerce, one of the top-performing properties in the country; The Outlets at San Clemente, another Craig Realty Group center; and Camarillo Premium Outlets, owned by Simon Property Group.
He said Carson’s location seems ideal for a mall.
“If you look at it on a map, there seems to be a void in the South Bay in Los Angeles,” Rizika said. “There is a demand from brands to set up there.”
Sean Slater (principal at RDC), a Long Beach-based architecture, planning and design firm, worked on a prototype for Carson in 2016 while working at ELS Architecture and Urban Design. Simon was not there at the time. The project was called Fashion Outlets of Los Angeles (FOLA).
The site was an old dump, which presented some challenges.
“It’s had a lot of iterations and lifetimes,” Slater was referring to previous plans to build an NFL stadium and other malls there.
“The foundation for anything that would be built has to go through the waste from the landfill to get into clean ground to pour the foundation,” Slater explained.
All other plans for this site were dropped before Simon’s exit idea was realized. Macerich was then employed.
The location of the landfill made the construction of the foundations expensive.
“The city of Carson was supposed to pay for the foundation,” Slater said. “From the top of the slab to the top would be the developer.”
The entire outlet was built on the second floor above 2,000 parking spaces.
Slater said the mall would benefit from three things: high visibility, lack of outlets in this area, proximity to LAX.
“The front of the 405 is amazing,” Slater said. “It’s really well placed. There is a real donut hole in the LA market for outlet centers.
It was expected that a large number of Asian tourists would flock to the center.
“He was trying to achieve a higher rating and attract international customers,” Slater said. “It was kind of an urban mall. Something so publicized on the weekend would attract tens of thousands of visitors.
David Hinkle of the Outlet Resource Group said Carson’s exit plan had been simmering for years.
“This project has been running for nearly three decades,” Hinkle said. “It’s a fantastic place.
Hinkle said the land makes the project more expensive.
“The cost to clean this up, especially in the state of California, has been so significant,” Hinkle said.
Yet there is a simple formula for why consumers love malls.
“He has amazing brands, but a great selection of their merchandise at great value prices,” Hinkle said.
Mark McGaughey of the Glendale office of CBRE Group Inc. said the point-of-sale projects are a good bet, especially given the stress that traditional retail has been under since the Covid-19 pandemic.
“The ones that are successful, they’re on the main travel corridors,” McGaughey said. “A lot of people have to travel from point A to point B… For outlet centres, everything is a question of visibility and access to the motorway.”
Macerich and Simon must not be the only ones betting on malls. Craig Realty Group plans to expand the Citadel Outlets in Commerce. The 10-acre expansion would include three new hotels and retail spaces, all connected by a monorail.
The first sector, which will house the Citadel shopping center, will be divided into three zones. An additional 160,000 square feet of area would be added for shopping and dining. There are also reportedly two new hotels in the area: the 174-key Traveller’s Hotel and the 96-suite Loft Hotel. A four-storey garage would be located under the hotels. There would also be a separate six-storey garage. The total number of parking spaces would be 1,618.
A pair on 26 acres of land would yield approximately 70,000 square feet of retail space. The two levels would each be 120,000 square feet and there would be a 35,000 square foot movie theater. A third hotel would have 13 floors and 500 rooms. It would be located above the garage which houses vehicles of 700 vehicles.
The 44-acre Citadel Outlets Complex expansion is set to be completed.
Industry watchers are not surprised at the ambitious plans drawn up for the POS project projects.
“The future of the industry has been very bright,” Hinkle said. “There is interest in more outlets in the Southern California region.”