Developer Plans Major Renovation of La Jolla Village Mall : Shopping: $50-million project will shift the center’s emphasis toward discount retailing.

A Los Angeles-based shopping center development team expects to buy ailing La Jolla Village Square shopping mall next week and then launch a $50-million renovation that will dramatically refocus the center’s orientation to more discount retailing.

The plan calls for May Co. and I. Magnin, the mall’s two upscale anchor tenants, to close their stores for good by October and be replaced by a host of specialty and discount retailers, restaurants, movie theaters and a huge supermarket, Dean A. Beck of Gordon/Beck Ventures said Monday.

The renovation, which will take a year, would make La Jolla Village Square one of a growing list of “power centers,� a term gaining currency in the world of retailing to describe malls that cater to highly focused, discount-oriented shoppers. Tenants in such malls are typically specialty discounters such as Circuit City, Toys ‘R’ Us and Dress Barn.

Such tenants are a common target among regional malls now being renovated or remodeled around the country, said Keith Foxe, spokesman for International Council of Shopping Centers, a New York-based trade group.

And, the malls most likely to be undergoing renovations these days are those that have been “losing out competitively,� Foxe said, as is La Jolla Village Square. La Jolla Village Square now has about 25 tenants and is only 40% leased.

If the escrow closes as planned next month, the new owners of La Jolla Village Square will build a 400-car, underground parking garage and add 10% in retail space to the center’s existing 357,324-square feet. Beck declined to identify new tenants but said a “bevy of leases� will be announced shortly after escrow closes.

The shops in the new mall will all have access from the outside, and the indoor mall will be virtually closed off, Beck said.

The sale and renovation would signal the end of the mall’s 12-year losing competitive battle against neighboring University Towne Centre, a highly successful mall a mile away that has more than 150 tenants, including six major department stores.

La Jolla Village Square and owner May Centers of St. Louis spent the better part of the last decade trying to figure out how to become equally successful but never achieved the critical mass of tenants to put the center on an equal footing with University Towne Centre.

That poor competitive stance with University Towne Centre caused Homart Development Co. to “take a pass� recently on an opportunity to buy and renovate La Jolla Village Square, said Rick Moses, vice president for regional mall development at the firm’s Western regional office in Los Angeles.

“It’s in a good population area with high incomes, lots of retail demand, but as a mall it has always been overpowered and overshadowed by UTC and I couldn’t see any way to bring that center out from under the shadow cast by that very large, very powerful and very successful shopping center just down the road,� Homart’s Moses said.

Moses added that he thinks the new owners were right to be “going down� in market focus. “In order to tap a great trade area that’s there, another format is needed, and I think (Gordon/Beck) have correctly assessed that a power center makes sense there.�

For years, the mall also was at a severe disadvantage to University Towne Centre because of poor access, although that problem has been alleviated somewhat with the opening last year of Nobel Drive-Interstate 5 interchange.

May Centers has been trying to sell La Jolla Village Square for years, and, in 1990, T&S; Development of Riverside obtained an option to buy it. The developer received planning approvals for a huge expansion of the mall to 1.2 million square feet to include several free-standing parking garages and development of a vacant 8 acres south of the mall.

But T&S; had difficulty lining up financing for the project and backed out.

The Gordon/Beck Ventures team, by contrast, is recognizing that La Jolla Village Square has lost the regional mall war with University Towne Centre and is taking an entirely different approach. La Jolla Village Square’s future lies in “downscaling,� Beck said, and in attracting what the industry classifies as “power shoppers� in its own back yard who are now underserved.

The prospective owners, however, are trying to persuade current tenants, including Trader Joe’s, to stay.

Mall renovations have become common in the industry as construction of new malls has slowed in response to overbuilding in the 1980s and a poor economy. New mall development nationwide this year is only 20% of what it was in 1988, Foxe of the ICSC said.

Many of the the renovations in progress are conversions to so-called power centers, which average about 400,000 square feet, with about 80 tenants.

“The centers are selling a specific type of merchandise at a discount for shoppers looking for a particular item,� Foxe said. “Contrast that with a large regional mall where a shopper is attracted there for entertainment reasons, the food court, the movies. . . . They are there for the whole experience of shopping as entertainment.�

Homart was trying to reposition a mall that was in decline after buying Chula Vista Center from Carter Hawley Hale in 1986. But, instead of downscaling the mall, the Sears, Roebuck subsidiary decided instead to expand and upgrade the tenant mix. Their decision, in short, was that Chula Vista Center was something that La Jolla Village Square is not: a “viable mall location,� Moses said.

But there were three critical differences in the battle between Chula Vista Center and Plaza Bonita, its main competitor, and La Jolla Village Square and UTC, Homart’s Moses said. Unlike the La Jolla matchup, there was plenty of distance between the two South Bay malls, and thus a more easily divisible market.

Moreover, neither Chula Vista mall dominated the other with an advantage of major anchor tenants as UTC does over La Jolla Village Square. And, access to the Chula Vista mall was excellent, unlike La Jolla Village Square’s.

The prospective buyers have a strong track record in shopping center management and development and seem to relish a challenge.

Sheldon Gordon, 63, for years was half of the Philip Lyon Gordon mall development firm whose credits include the Beverly Center in Los Angeles, Vallco Fashion Park in Cupertino in the San Francisco Bay Area and several malls in Hawaii. Beverly Center is one of the 10 most successful malls in the country in average sales per square foot.

After splitting with Lyon in 1983, Gordon developed San Francisco Centre on his own, a successful project in the tenderloin area of San Francisco made notable by the Nordstrom’s that was situated over six levels of parking.

Beck, 64, held top management positions with Dayton-Hudson and then Carter Hawley Hale, where he was senior vice president in charge of real estate, construction and store planning functions. He left in 1982 to form his own Los Angeles-based company that is consultant to developers and retailers in several Western states.