Opening Gambit

Tough economic times don’t deter some retailers from opening new stores.

There is no better time to open a store. That’s the word from some entrepreneurs—and a few veterans—who are undeterred by the mixed forecasts for holiday retail sales and the painful memory of store closures over the past year.

Retailers—both large and small—are taking advantage of competitive rents and available real estate to open new stores in Southern California.

High-profile retailers such as Swedish giant Hennes & Mauritz (H&M) and businesspeople looking to introduce new boutique concepts have debuted stores when bad economic winds were blowing. Tumbling real estate prices encouraged many to take the gamble, said Nicole Christie, a representative for H&M, which is opening a new location Nov. 12 at the Westfield Century City mall in Los Angeles.

“We have found that there can be business advantages during an economic downturn, such as prime real estate opportunities and improved employee recruitment/retention,” she said.

H&M will open 240 stores around the globe by the end of this year. It opened two stores in Orlando, Fla., on Oct. 15. It opened other stores in Cincinnati and Phoenix.

There are opportunities for high-fashion boutiques, too. Andrea Rossetto will be selling the couture, elegant looks of celebrated California designers Louis Verdad and Valerj Pobega at Code C, the gallery and boutique he opened with his wife, Marzia Rossetto, in August.

Andrea Rossetto helped introduce United Colors of Benetton and Just Cavalli to the West Coast. But he and his wife wanted to roll out their own concept.

The Rossettos wanted to open a Code C store for a while. They chose to debut now because they found the right real estate. It’s a 3,000-square-foot space at Los Angeles’ exclusive Sunset Plaza retail neighborhood. The space formerly housed a boutique for Italian brand D&G. Andrea Rossetto said tough times make it easier to work with the most popular lines. “A couple of years ago, it was easier [for brands] to place product and companies had an easier time selling,” he said. “Now they are more receptive to new concepts.”

Indeed, there are fewer places for fashion lines to sell. Total market retail vacancy has increased in California, according to CoStar Group, a commercial real estate information company. Los Angeles County’s total market retail vacancy climbed to 5 percent in the third quarter of 2009, compared with a 3.3 percent vacancy in the third quarter of 2008. Orange County’s vacancy climbed to 5.7 percent in the third quarter of 2009, compared with a 3.5 percent vacancy in the same period last year. The group forecast commercial vacancies will peak in 2010.

In the past year, commercial real estate prices tumbled 50 percent in some of the top retail streets of West Los Angeles, according to Chuck Dembo, a partner in commercial real estate firm Dembo & Associates. And even with lower prices, many retailers are wary of expanding right now, said Dembo. “People want to hang on to their cash. They are slower to pull the trigger on bigger decisions,” he said, adding that he has seen signs that the market is beginning to pick up.

Alana Lobit is one of those retailers who took a chance. She opened fashion store No. A in Los Angeles’ Little Tokyo section on Oct. 14. She says she hopes her store will be first in line to sell to customers when the economy improves. “If we’re at the bottom of an economic situation, things only will look up and get better,” she said.

For a list of recent retail openings in California, click here.