Retail Traffic

A Hollywood Classic and Its Sequel

how do you expand one of the original - and most successful - shopper-tainment venues in Southern California? Very carefully if you're Universal Studios, owner and operator of the phenomenally successful CityWalk project in Universal City, Calif.

Opened in 1993, the 300,000 sq. ft. CityWalk blended dining, entertainment, live performers and offbeat retail outlets in an idealized environment - and became an overnight success. Every offering - quirky retail outlets, state-of-the-art theaters, themed restaurants and cutting-edge nightclubs - was within walking distance of each other, no small feat in L.A., where the automobile rules.

Led by Jerde Partnership International Inc. of Los Angeles, the planning team created a pedestrian area that clustered shopping, entertainment, cultural attractions, hotel space, restaurants and recreation in a village center. Located on a hill overlooking Los Angeles and adjacent to one of the world's largest film and television studios, Universal CityWalk sought to unite Universal Studios Hollywood, the 6,200-seat Universal Amphitheater and the 18-screen Universal City Cinemas. A Southern California landmark was born.

"CityWalk provided a niche that had gone otherwise unfilled in Los Angeles - a one-stop, sort of hip entertainment destination that was as cool for local residents as it was for visitors," says Ron Herman, vice president for marketing at CityWalk. "We created a new category in many respects, a location-based entertainment destination adjacent to a heavily attended theme park, an indoor amphitheater and the second-highest-grossing movie theater in America."

A mosaic of Southern California's distinctive culture and its culinary, entertainment, retail and architectural expressions, CityWalk became an upbeat, active city street.

"CityWalk is a terrific project," says Allen Young, senior vice president in the Sherman Oaks, Calif., office of CB Richard Ellis, speaking as an independent observer. "It continues to draw some 10 million visitors to San Fernando Valley each year, and the tenant mix is very strong."

The destination attracts some 4 million visitors - many drop by after a day of touring Universal Studios - as well as an estimated 6 million locals. The average age of visitors, Universal estimates, is 21 to 34 years old. Each stay an average of four hours.

With such demographics, it wasn't long before Universal began planning its next production: CityWalk - The Sequel, which opened in March.

"We wanted to be very careful not to change the flavor of CityWalk," says Herman. "You are what you are, and we needed to stay true to that. What CityWalk is, is a high-energy, eclectic facility."

universal sought to add 93,000 sq. ft. and increase the venues at the development from 40 to 65. Thanks to the original work by Jon Adams Jerde, who prides himself on projects that speak in the language of local culture, the design team focused its efforts on making the boulevard into a collage of the images and traits of the city of Los Angeles without actually duplicating any of its buildings. Jerde and others wanted the street to be entertaining and not an imitation of any other place or time period. Thus CityWalk does not have a dated appearance, and the expansion could be undertaken relatively smoothly.

"What we really tried to do was reinvigorate the street," explains Norm Rich, senior vice president of CityWalk. "It had been here for almost seven years, and we wanted to re-energize it, to offer a lot of new concepts. We also wanted to take some underperforming tenants and replace them with what we believe will be more popular choices. We recognize that in order to stay successful and hot with our local base, we have to be fresh."

Planners sought to "fill the gaps" at the project. Until now, CityWalk had no fast-food outlets; designers felt the mid-priced, sit-down establishment didn't appeal to a younger crowd. Universal set about convincing a number of area eateries to open mini-versions of their successful concepts, says Rich. That was merely a continuation of the original CityWalk concept, which sported the first Wolfgang Puck cafe when it opened in 1993.

"We think L.A. has the best collection of the most ethnic and most diversified restaurants in the world, so we wanted a group of the best L.A. had to offer for quick food service at CityWalk," Rich says. "And we have them."

the new CityFood Court will offer for the first time quick-service renditions of some of Southern California's most popular restaurants, including Jerry's Famous Deli; Versailles Restaurant, serving Cuban cuisine; and Gaucho Grill Rapido, offering Argentinean steak, chicken and fish.

Other popular quick-food favorites at CityFood Court will include the Mexican-themed Rubio's Baja Grill; Panda, serving Chinese dishes; Pit Fire Pizza Co.; and the venerable Los Angeles favorite, Tommy's Hamburgers.

Other new offerings include Buca di Beppo, offering family-style Southern Italian food; Cafe Tu Tu Tango, reminiscent of an artist's loft in Barcelona complete with brushes on the tables, paintings in progress and spontaneous dancing performances; Rumba Cafe, a Latin music dance club; and NASCAR Silicon Motor Speedway, a virtual race car experience with 12 other drivers.

To continue CityWalk's cutting-edge entertainment trend, Universal imported new outlets such as Jullian's Entertainment Hi-Life Lanes, a state-of-the-art bowling facility with 10 lanes, giant video screens, a video disk jockey, a theatrical light show and a mega-watt sound system.

One of the highlights of the venue is HyperBowl, a virtual bowling experience that combines classic bowling with the latest in computer technology and big-screen graphics. By "rolling" a full-sized bowling ball, which acts as a giant mouse pad, players attempt strikes and spares as they do in a standard bowling alley.

how successful is the expanded CityWalk predicted to be? "We'd be disappointed with revenues under $500 per sq. ft. for the retail," says Rich. "For CityFood's quick-food choices and its collection of seven restaurants, we think there will be grosses of over $1,000 per sq. ft. Some of them could do $1,500 per sq. ft."

Analysts and others agree. Young of CB Richard Ellis says expanding CityWalk was a good move, adding that finding tenants for the expansion was no problem. "It seems like every tenant we talk to would like to be there," says Young. "I think they could have expanded it even further if it weren't for the opposition of some homeowners in the area."

Because CityWalk draws so many local residents, its success was almost assured from the beginning. According to a recent Reis Observer report on the Los Angeles retail market, the area has become the retail mecca of the West.

Los Angeles has more than 9.4 million residents and is expected to continue to grow, thanks to a strong population in-migration. After two consecutive years of 2% annual job growth, non-farm employment was up another 1.9% as of November 1999, according to preliminary data from the U.S. Department of Labor's Bureau of Statistics. Led by entertainment, services, finance, high-tech and telecommunications industries, the five-county Los Angeles area boasts average household incomes above $63,000.

With approximately 100 million sq. ft. of retail inventory, shop-till-you-drop Los Angeles remains a consumer's delight, states the Reis analysis.

"With a compilation of demographic profiles at work, it touts a variety of niche market opportunities as well," says the analysis. "Consequently, the developers and investors who can spot them and respond with well-defined product will be successful."

such favorable demographics explain why CityWalk had little difficulty leasing space. "It was 100% leased several months ago," Herman reports. "We set out with the mission to find the best brands in each of our categories. We had a very good feeling what we wanted, in terms of food and entertainment. We wanted retail that was edgy without being touristy."

The original CityWalk continued to operate during the renovation and new construction. "It was a very smooth operation," says Rich. "Keeping the theater going without a major disruption was our biggest challenge, and we did it. Even during the construction, people still came through the center."

Officials expect that CityWalk will soon enjoy increased visitations and longer stays from current users, as well as a new reputation for being a night spot. One reason: People who visit the L.A. area know what they want to do during the day but are unsure about the evening. That's why CityWalk, whose cineplex is the nation's second-most-attended theater, became so successful in the first place.

In addition, downtown L.A. is coming alive, thanks to the opening of Staples Center and other projects. A new subway is planned from downtown to the Universal City area. Universal plans to run a tram or bus from the subway station to the front gate.

While it may be too early to say, word in the Los Angeles real estate community is that Universal is already considering an additional expansion.

"We would have liked to expand it more, but we were only permitted to expand it 93,000 sq. ft.," says CityWalk's Rich. "So we decided to take the best of what we have and multiply it by brand-new concepts that are going to put more high energy into CityWalk.

"We think it's a huge home run," he continues. "Right now, we want to take our newest assets and make them the crown jewels and then make all the other concepts extraordinarily successful.

"Someday, we may look at other options, if the economics are right."

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