Mall Alone District Holds Own, Awaits Rest of Tustin Base Redevelopment SHERRI CRUZ Monday, February 1, 2010

The District at Tustin Legacy shopping center is getting used to the idea that the homes and offices it was built to serve are a no-show. The outdoor mall opened in 2007 at the former Tustin Marine base off Jamboree Road. Many of the projects that were expected to surround and feed the mallhomes, apartments, offices, hotels and schoolshave been stalled by the downturn. Weve been thrown a few curve balls, said Mike Garner, regional director for Long Beach-based Vestar Properties Inc., owner and manager of the 1 million-square-foot mall. Ultimately, well get to where we originally wanted to be, he said. Plans call for redeveloping the rest of the 1,580-acre base with 2,105 homes and 6.7 million square feet of commercial space, along with about 170 acres of parks and open space. Some homes have been built, and senior apartments are under construction. But the vast majority of development still is in the offing. The makeover of the base, which closed in 1999, is on hold as developers wait out the real estate downturn. Last year, master developers Aliso Viejo-based Shea Properties and Shea Homesboth part of Walnuts J.F. Shea Co.entered talks with the city of Tustin about reworking development plans and avoiding a technical default on the property. A new plan has yet to emerge.

The District is home to Target, Best Buy, Whole Foods Market, Costco and other stores that ring the perimeter of the open air mall. In the interior of the mall are fountains, outdoor seating, fireplaces and giant video walls that play music videos and advertisements for tenants and local businesses. Layout The layout of The District, with a road running through it, was dictated by the redevelopment plan for the former base. I wouldve loved to have more access off Barranca Parkway, but it cant be done, Garner said of the street just south of the mall. It was a master plan that you just couldnt get around. The mall also has Strike Orange County Bowling and the AMC Tustin 14 movie theater along with Peets Coffee & Tea, Borders Books & Music and eateries, such as Native Foods Cafe and Panera Bread. A few restaurants, including The Winery Restaurant & Wine Bar and Marmalade Cafe, stand alone with front row parking. All things considered, the mall seems to be faring well. The District is leased except for a few spaces. Sales for the 12 months through June were about $225 million, ranking it No. 9 on the Business Journals most recent list of OCs largest shopping centers. The goal is $300 million in yearly sales, according to Garner. AMC Entertainment Inc. has seen positive results at its District theaters, spokesman Andy DiOrio said. We have seen consistent growth year-over-year since its opening in June 2007, he said.

The city of Tustin counts the mall as one of its top three revenue producers. Tustin Auto Mall and The Market Place, an Irvine Company mall, are the other two. Half of The Market Place is in Tustin, a few miles from The District. The other half of The Market Place is across the street in Irvine. The mall has double The Districts sales, according to a Business Journal estimate. Theres a lot of vacant land around us, Garner said. Once that gets developed, (the mall) will do extremely well. A project that could help would be the extension of Tustin Ranch Road, which now dead ends at The District. A completion date hasnt yet been set for the road, which was designed to serve the proposed housing. Its tied to development, said Lisa Woolery, a city spokeswoman. Without the bulk of promised homesand the young families that typically go with themThe District is seeing an older customer than originally expected. The upside is that older shoppers typically have higher incomes and drive inland from Pacific Coast Highway, about nine miles away. The mall is planning to tweak its specialty store mix to accommodate older, coastal customers. Originally, the mall signed surf and youth specialty stores, such as Vans, Tillys and Beach Bum Boardshops. We need to cater to the right demographic, Garner said. Were now just trying to narrow down our specialty shops. What do our customers want?

Tough Going Some of the restaurants have had a tough time hanging in. The Cravery, Go Roma and Bistro West opened and closed. Its been a difficult couple of years here, said Maggie Hudson, owner of Valentino Chocolatier. She closed her Irvine Spectrum Center store when her lease was up and moved to The District. But she said she isnt seeing much traffic. The District has worked to retain its struggling tenants by helping them as much as it can, according to Garner. Every landlord has been doing some adjustment to tenant leases to get them through the rough patches, he said. Weve been good with working with our tenants. The mall uses Newport Beach-based Strategic Retail Advisors to help with leases, which Vestars Jeff Axtell oversees. Some of the tenants are grumbling a bit about the lack of promised development. J.C. Clow, one of the four owners of The Winery, said he and his partners looked for a spot for two years before deciding on The District. Clow said he is disappointed the area isnt as built out as he expected when he and his partners signed the lease in 2005. But, in the grand scheme of things, he has no major complaints. Overall, the location has worked really well for us, he said. The Winery, which opened in 2007, beat its sales estimates for its first year in

business and is holding steady. Marmalade Cafe, part of 10-restaurant chain based in Los Angeles, is busy on weekends but slower other times. People just dont know about The District, said John McKinnis, assistant manager for the mid-priced cafe that opened in March. Garner expects it will take a while for things to pick up, but Vestar isnt going anywhere, he said. Its not going to get any worse, Garner said. We need to see more development across the street.