Troubled Hollywood & Highland Shopping Center to Get Makeover

Ever since it opened nearly four years ago, the Hollywood & Highland Center has been likened to the two large white elephants that hover over its inner courtyard.

Because the shopping complex opened nearly two months after the Sept. 11 terrorist attacks in 2001, its tourist-oriented retail stores never really seemed to take off. The $640 million venture, developed by Trizec Properties Inc., also has a baffling architectural design, looking like a fortress from Hollywood Boulevard.

In 2004, the CIM Group real estate investment company purchased the floundering center for $201 million and went about analyzing how to change the white elephant into a white knight for retailers.

That change is about to take place. On Sept. 15, CIM will unveil a number of mall redesigns and a tenant change that could help the company realize its dreams.

According to CIM Principal Shaul Kuba, Hollywood & Highland will become the centerpiece of a bustling district where Los Angeles residents, not tourists, will be targeted to shop by day and party at night at the various entertainment outlets. The company will make a $20 million investment to transform the 387,000 square feet of retail into a jewel.

The first major change will be the debut of an $8 million escalator that will bring shoppers from Hollywood Boulevard to a part of the mall that has been very hard to access: the upper levels, where restaurants such as Wolfgang Puck’s Vert, a modern French brasserie, and various nightclubs, such as The Highlands, are located.

Another part of the shopping center revitalization is scheduled for October, when the newest tenant, music retailer Virgin Megastore, will move into a historically isolated section of the mall once occupied by the Duty Free Shopping store. This area, located next to the stairway to the Kodak Theatre, home of the Academy Awards, was nicknamed the “Corridor of Death” because so many retailers closed their stores there.

CIM will add some life to the walkway by placing the entry of the 22,000- square-foot Virgin Megastore right off of Hollywood Boulevard and by knocking down a wall to make another entry off the back of the corridor. The plan is that shoppers will exit the Virgin Megastore and end up in the corridor, bringing more foot traffic to the area.

New look, new retail

Most of Hollywood & Highland’s major retailers—including Lucky Brand Jeans, Victoria’s Secret and BCBG Max Azria—are located in the central courtyard, which is dominated by the two white elephants atop two columns and the Assyrian frieze replicas from D.W. Griffith’s “Intolerance” movie set. The area will also get a makeover this year.

The Assyrian friezes on the store windows will be taken down and replaced with glass this year, Kuba said.

New retailers, such as an 8,000-square-foot American Eagle Outfitters store, already moved to the center this year. But Kuba said he also hopes independent retailers, such as Los Angeles–based Head To Toe, a contemporary women’s store, which will move in by the new escalator in October, will attract local shoppers.

The easier access, new retailers and better design will pave the way to making Hollywood & Highland a favorite with Los Angeles shoppers, according to Kuba.

But shopping center analyst George Whalin said the repositioning of a mall is a tough job, even for places that were community favorites.

“It’s almost like they’re starting from scratch,” said Whalin, president of Retail Management Consultants, based in San Marcos, Calif. “It’s doable. Malls that successfully reposition themselves typically are places that had lost anchors but had good relations with the community. For a shopping center to shift from tourists to locals, that’s a whole different set of circumstances.”

Another hurdle is the surrounding neighborhood and its demographics. Hollywood historically has not been an affluent community. While it borders some wealthy neighborhoods, such as the Hollywood Hills and Hancock Park, Whalin said shoppers with money have preferred to buy clothes at established retail districts such as the fashionable Sunset Plaza in West Hollywood, Calif.

Officials from the office of Los Angeles City Councilmember Eric Garcetti, who represents Hollywood, said that in the past two years wealthier people have been moving into the area.

More than 2,500 apartments and condominiums are scheduled to be built in Hollywood in the next few years, according to the Hollywood Entertainment District, a business improvement district. These new residents could provide the customer that Hollywood & Highland hopes to attract.

Already, Frederick’s of Hollywood announced it was moving its faded flagship store down the street on Hollywood Boulevard to a location across from Hollywood & Highland.

American Apparel opened one of its biggest retail stores in December 2004 across the street in CIM Group’s TV Guide building.

With residential space going for $3.30 a square foot in some parts of Hollywood, Kuba said the new moneyed residents will be looking for local places to relax. The Hollywood & Highland shopping center should be a top choice since it houses a popular restaurant owned by celebrity chef Wolfgang Puck, Grauman’s Chinese Theatre, upscale bowling alley Lucky Strikes Lanes and the Kodak Theatre.

Locals are slowly discovering the place, said Kerry Morrison, executive director of the Hollywood Entertainment District.

“We’re seeing a lot of locals going for entertainment. Retail is an afterthought,” she said. “What is going to happen in the next five years is an amazing, transformative story of boom.”