Furniture Malls Cozy Up to High-Traffic Concept

The $90 million South Coast Home Furnishings Center in Costa Mesa, Calif. represents the latest version of a growing trend to gather home furnishings dealers into a single center.

The 300,000 sq. ft. center is the largest version to date of the furniture-only concept, which has already succeeded in Furniture Row, an unrelated project in the nearby City of Laguna Hills.

California's perpetually overheated housing market is one of the inspirations, according to developer Birtcher Development and Investments. With both home sales and refinancings strong in this affluent, suburban county north of San Diego, Birtcher officials say they are confident the all-home-furnishings concept has a market. Buoyed by the response from retailers, Birtcher is now looking across the country for sites to build new centers on the same concept.

Unlike traditional furniture marts and showrooms that are open “to the trade” only, and which have fared unevenly in recent years, Birtcher's center is open to the public. In all, Birtcher expects about 30 tenants in the Orange County center.

So far, the firm's bet on home furnishings seems safe: The developer reports the eight-building complex is 73% pre-leased at present. The center is not scheduled to open until early 2007. “At this point in time, we were expecting 60% occupancy,” says Birtcher vice president Shannon Hondl.

After signing several anchors, including Wickes Furniture and La-Z-Boy, “there was a feeding frenzy among other home-furnishings retailers who wanted to be next to them,” Hondl says.

Clustering furniture dealers in a single center borrows a strategy from auto dealers, who have sought out each other's company for decades. Both furniture and car consumers are motivated buyers who want to review many choices before signing a sales draft on a costly purchase.

For Nancy Hsieh, marketing manager for Laguna Hills, Calif.-based EasyLife Furniture, a retailer with 11 outlets in Southern California, pre-leasing in one of the top retail markets in Southern California made sense. Freeway visibility, particularly the impact of signage, and the potential for high foot traffic were also appealing.

“It makes sense for us to get into a center in a highly traveled location,” says Hsieh. The complex is situated just off the San Diego (405) Freeway, one of the most heavily traveled arteries in California.

Herding home-furnishings retailers together has the potential to boost sales numbers as well. In other areas where landlords have clustered furniture retailers together, “we do 20% to 30% better than in our stand-alone locations,” says Hsieh.

Although leasing has been brisk at the furniture center, Hondl notes that the developer has been careful to avoid “overlapping” retail concepts, which he says would dilute rather than strengthen trade among the neighboring retail tenants. “We don't want to be cannibalizing our own concept.”

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