As malls adapt to online shopping disruption, Playa Vista’s retail center is removing vehicle traffic to emphasize experience-driven amenities

By Gary Walker

The roadway that divides Runway at Playa Vista will be reactivated as open space

Less than four years after it first opened for business, Runway at Playa Vista officially breaks ground this Thursday on a $9.1-million makeover designed to reorient the 14-acre retail, dining and entertainment hub as a pedestrian-centric public space.

The 1,000-foot segment of Runway Road that cuts east-west through the center of the complex and perpendicular connector Town Center Drive are both being closed to vehicle traffic and will be reactivated as walkable public space, similar to Santa Monica’s Third Street Promenade.

“We’re taking the existing space right in the middle of the retail area and transforming it into something that will be able to activate that space,” explained Stenn Parton, Chief Retail Officer of DJM Capital Partners, the real estate development firm hired by Runway owners Invesco Real Estate to plan and oversee its transformation.

There are several empty storefronts going into the renovation, including the recent closures of Hal’s Bar & Grill and 800 Degrees Pizza. But the renewed focus on open space and walkability, said Parton, has already attracted a variety of incoming tenants expected to fill several ground-level vacancies. These include the creative home décor boutique Alchemy Works, active wear brand Lole Apparel, and Lemonade founder Alan Jackson’s steakhouse concept Bull & Butterfly. Also coming soon is Brella, a hybrid co-working space and on-demand childcare center with a natural customer base in Playa Vista’s many young families.

“With the repositioning of Runway, the project is now nearly fully committed to the remaining spaces we had to lease,” added Parton, who declines to discuss lease rates.

The biggest addition coming to Runway is Free Market, a 24,000-square-foot space housing an eclectic mix of pop-up retail and restaurant concepts. The first Free Market opened in Denver on April 15, featuring cosmetics, chocolates, clothing, home goods and a barbershop, according to The Denver Post.

“Retail is evolving quickly. Having an opportunity to work with startup brands in short-term pop-up locations will be a key component of Free Market, which we see as an incubator for different concepts including best-in-class L.A.-based restaurateurs, events and community space,” said Parton, whose brother and sister-in-law own and operate Free Market.

Other changes coming to Runway include a dedicated rideshare drop-off location, and a different circulation plan for the parking structure facing Jefferson Boulevard, and lots of new common area seating and landscaping.

“We’re big believers that the human experience is more important than ever before. We need more experiences to share,” Parton said. “We believe that if you facilitate these personal experiences by creating great retail and dining reflective of where they live … your customer becomes your best salesperson for what you’re doing.”

Colin Wellman, a principal at Venice-based commercial real estate agency Campbell -Wellman, thinks that creating temporary spaces for innovative concepts will be attractive to entrepreneurs and shoppers alike.

“It takes the pressure off of landlords and tenants from having long-term leases, and it makes sense to try something untested in today’s retail world,” Wellman said.

That retail world is one experiencing unprecedented upheaval due to changing customer preferences and disruption from the increasing popularity of online shopping.

The Westside Pavilion, one of the area’s last traditional malls, was sold last year and will soon be converted to creative office space for Google.

Santa Monica Place was redeveloped in 2010 into an open-air mall with more upscale retail and dining, and it now draws a good deal of its customer base from neighboring Third Street Promenade.

HHLA in Westchester, formerly the Promenade at Howard Hughes Center, was designed with an open-air concept but will reopen this year as a more pedestrian-oriented destination with a greater focus on restaurants and higher-end shops.

“The type of retail that people want to be engaged with has changed across the country. When people do go to a traditional shopping mall, typically their focus is on things that we think that HHLA should evolve into — which is more entertainment-driven, more food and beverage, and more lifestyle,” Austin Kahn, chief investment officer for HHLA owners the Laurus Corp., told The Argonaut two years ago.

Loyola Marymount University Associate Professor of Marketing Velitchka Kaltcheva, who specializes in retail trends and consumer motivation, said pedestrian-driven shopping centers live or die on their ability to make customers feel like they’re somewhere special.

“Pedestrian retail areas work better if they offer an extraordinary environment — a space different from everyday spaces that people typically inhabit. Because people now do a lot of shopping online, shoppers need a reason other than just buying merchandise to visit pedestrian shopping areas,” Kaltcheva explained.

“My research shows that people’s self-concepts change when in extraordinary environments, which leads to lowered price sensitivity, meaning people are willing to pay higher prices,” she continued. “Pedestrian shopping areas should include other forms of entertainment, such as restaurants to draw traffic to the area. Stores in such areas should create experiences, not just sell merchandise.”

The shifting emphasis of retail centers from goods to experiences appears to be driven by younger consumers — particularly Millennials, born in the 1980s and first half of the ’90s, who will soon be the largest population demographic in the U.S.

Alex Lecross, 24, who works near Runway and often visits for lunch, likes the idea of limiting vehicle traffic: “So many people come here on a daily basis, so why not? I think it’ll probably attract more people,” she said.

“I think walkability is super important here because you can see that a lot of people bring their kids,” said Spencer Sheehan, 28, who was also enthusiastic about a dedicated rideshare drop-off. He likes the idea of “creating a space where people don’t just shop, because sometimes people just want to hang out. I wouldn’t have to buy a beer at a bar anymore. I could just hang out in a public space.”

But not everyone who lives in Playa Vista is optimistic about the changes, including retirees and Baby Boomers.

“I think it’s a big mistake. The parking is so bad over there. To me it’s not a very lively place. They have some shops that have been there quite a while and don’t seem to have a lot of customers. I don’t think that it’s a place that people are going to go to shop,” said Lori Gage, a Playa Vista resident who frequents Cinemark Playa Vista and XD and occasionally shops at Whole Foods.

“I think making it pedestrian-friendly is a horrid decision. There is not the kind or amount of retail to warrant the closure,” said Anita Eisenschiml, who has lived in Playa Vista for more than a decade.

Wellman, however, echoed Sheehan’s sentiments about what motivates Millennial customers to visit retail centers: “People like to be outside and have an easygoing experience,” he said.

But if Runway is banking on catering primarily to Millennials with high disposable income, that might not be such a good idea, said Rafael Padilla, a principal at PAR Commercial Brokerage in Santa Monica.

“I think you have a problem when you’re targeting a specific demographic. When you’re relying mainly on one group of people you’re alienating another group,” said Padilla, who lives in Westchester. “In my opinion, you have to have a balance of customers in order to be successful.”

Padilla believes that amenities, proximity and feeling safe are the key components of drawing customers to retail and entertainment destinations.

“I go where I feel comfortable. Sometimes it just might depend on a person’s mood. I’m a Gen Xer and I like Millennials, but sometimes I might want to go somewhere else for a different experience,” he said.

But he agreed that Runway needs a creative new approach, given its relatively small footprint.

“They don’t have the retail mass to create their own gravity, like The Grove or a larger shopping center. They’re a little center among apartments and offices. So I think any sort of change is welcome, but whether it’s going to be successful has yet to be seen,” Padilla said.

Parton said Runway is trying to attract both Playa Vista locals and visitors. He said Brella, the 7,000 square-foot co-working space that includes child care services, dovetails well with a community that is already home to many young families.

“Brella is a perfect example of listening to the community and hearing what they want. We have a lot of dual-income families with children, and we feel that this is a perfect use of space for them,” Parton said.

“We always like to create projects that the community is proud of. Our hope is that all the surrounding communities would see this as an extension of their neighborhood.”