Big Share of La Habra Mall Sold for $14 Million : Newport Beach Developer to Rebuild Into High-Volume Promotional Center

A Newport Beach developer Friday bought a major chunk of La Habra Fashion Square, taking the first step toward transforming the sleepy mall into a high-volume promotional center.

Hopkins Development Co. paid less than $14 million, a comparatively low price, for about 14 acres of the 37-acre mall. The remaining acreage belongs to two companies with ties to the anchor tenants, Bullock’s and Buffums department stores.

City Freeholds USA Inc., a privately owned developer based in Buena Park, has been trying to sell its La Habra interest for at least six months. City Freehold bought the center in late 1985, reportedly for more than $14 million. The mall was part of a larger package deal.

Hopkins’ niche is building retail community centers in urban areas. The company owns about 35 malls in California and in December bought the La Mirada Mall to develop a new project there.

In La Habra, the company envisions gutting the existing mall and replacing it with a new “community center,” said Steve Hopkins, president.

“We’d like a number of major tenants--a supermarket, drugstore, junior department stores, possibly a large home improvement store or large general merchandiser,” Hopkins said.

He added that the company also plans to have smaller satellite stores. He stressed, however, that no negotiations have yet taken place with potential tenants, and none is now lined up.

La Habra Fashion Square has drawn wide interest from developers because of its prime location at the corner of Imperial Highway and Beach Boulevard.

“There aren’t too many large pieces of property in the middle of L.A. or Orange County--which makes (La Habra) a significant property with good retail potential if it’s intelligently planned,” said Jerry Dicker, head of Dicker-Warmington Properties in Fullerton.

At the southeast corner of Imperial Highway and Idaho Street, Pacific Theater is studying redeveloping its corner into a promotional center anchored by Vons Pavilion. That acreage, now a drive-in theater, is diagonally across from Fashion Square.

The 20-year-old mall, which has a retail area of 565,618 square feet, has long suffered from poor freeway access and growing competition from shopping centers in nearby Brea and along Whittier Boulevard.

In 1986, the most recent year for which data is available, La Habra Fashion Square had taxable retail sales of $27.9 million, ranking it 54th out of 61 Southern California shopping centers.

When Fashion Square was built in 1968, it was on the assumption that there would soon be two nearby freeways. But neither was built--leaving La Habra without major access from outside the city.

But a promotional center should do very well, industry experts said.

“A lot of stores you might traditionally find in a mall are now starting to locate in smaller promotional centers,” said Tom Tucker, director of real estate advisory services with Laventhol & Horwath in Costa Mesa. “The idea is to attract two or three mid-priced anchors and create a lot of traffic. Then the other specialty stores feed off them without being a mall.”

Tucker added that La Habra, in particular, would be ideal because “it has great access (from Imperial Highway and Beach Boulevard). And most of the demographics in that area are geared to what would be an off-price center.”

‘Could Be Successful’

“If done right, it could be a very successful center,” La Habra Mayor James Flora said. The mayor said market studies by the city show that there is a “tremendous market” for certain types of stores in that area, such as home decorating and home improvement shops.

“The spending income of families along that 5-mile radius is extremely high,” Flora said.

For the city, the potential new development could mean a major increase in tax revenues.

Up until now, the big stumbling block in developing La Habra Fashion Square has been that the site has had three owners. Freehold owned the largest parcel.

Bullock’s 271,000-square-foot parcel is owned by the chain’s corporate parent, Federated Department Stores. The Buffums site of at least 271,000 square feet is owned by Los Angeles-based Gilbert Investments.

Before any development can begin, Hopkins Development will need to buy at least one--and preferably both--of the other two parcels.

Buffums ‘Most Likely to Sell’

“Buffums would be most likely to sell,” Mayor Flora said. “(And) Bullock’s has been rumored for a long time to be leaving.”

Speculation in the past, however, has been that Bullock’s may not want to abandon its La Habra store until it is ready to move to nearby Brea Mall in about three years.

But even if Bullock’s won’t sell immediately, Hopkins will develop the site eventually, Hopkins said.

He said Hopkins Development has as its joint venture partner the State of Massachusetts Retirement System. “It’s not like a savings and loan, where immediate earnings are very important,” he said. “If we have to wait, we can.

“We have the staying power to continue to manage the property and develop it when the time is right. Our intention is to move immediately with the development of the center and move full speed ahead. . . . But whether something happens now or in two years, it doesn’t create a problem.”