If you're thinking of developing in, you'd better know Rick Caruso.
The trailblazing president of Caruso Affiliated Holdings recently announced six major projects totaling a combined $1 billion investment in the Golden State. Renowned for developing The Grove, a 575,000-square-foot open-air shopping and entertainment center in the heart of Los Angeles, Caruso hopes to sprinkle that same retail magic from the Golden Gate Fields to the Lakes at Thousand Oaks.
Although he's built an empire of more than 35 successful retail centers, Caruso didn't always aspire to a career in development. It wasn't until he became a lawyer and witnessed the forging of real estate contracts that he realized his true calling. “I did corporate sector work and I found that I enjoyed puttingtogether much more than the legal side,” says Caruso, of his early days. “I got started doing deals with rent-a-car companies, buying land they needed near airports and then leasing it back to them.”
Slowly, he built momentum, and a trip overseas inspired his architectural vision for comfortable, outdoor shopping plazas. “I never had any background in development — and certainly not retail development — but I went to Europe and saw all these cafés spilling out onto the street and that's what I wanted to bring to the U.S.”
In the beginning Caruso had some problems convincing investors. “Everybody thought I was crazy spending all this money on fountains and things, but I had a hunch people would go to places that are nicer to shop. They go for the environment. And we built them up, one at a time.”
The “environment” to which he refers is such a marvel of, the term “Caruso” is now synonymous with retail radiance. Majestic fountains and lush greenery soothe shoppers into spending submission: of the 16 million visitors to The Grove last year, 92 percent of them made a purchase. And at $126, the average expenditure per shopper was twice the industry standard.
“If you're talking quality, nobody builds them like Rick,” says Mitch Klipper, president of Barnes & Noble. “He delivers on his promises. His centers always have strong sales, and he attracts the best tenants. We've put one of our stores in every single one of his centers, without exception.”
Although Caruso admits his centers have proven themselves beyond his wildest estimations, he explains the psychology behind his success is simple. “If you've got a great, and great tenants, it just works. We built The Grove in a neighborhood where people were starving for a place to go. Our mission was not to build a shopping center, but to build a destination. Our visitors come to relax and feel a sense of community. In turn, they spend a lot more time on our property.”
Not only does Caruso bring a successful development model to the table, he also brings political savvy. In an effort to keep the market competitive he will build anywhere, as General Growth recently found when they learned Caruso planned to build his Americana at Grand adjacent to their Glendale Galleria. General Growth fought to stop the project, but the city council ultimately sided with Caruso. “It was a huge victory. Most small developers don't have the financial wherewithal to fight the malls. Hopefully it sends a message to these guys that they can't just control retail developmen,” says Caruso.
Does he plan to develop outside California? He explains, “If I find the right project, I would do it. But I really think you have to know all the dynamics of the local area or you can get hurt.”
Caruso may be skeptical about national expansion, but Klipper is confident in his man. “I'm the president of Barnes & Noble and I would follow Rick anywhere.”
Read on to learn more about the rest of our players…