Not a hair out of place beneath his white hard hat, Rick Caruso steps onto the site of his latest development, the Palisades Village shopping complex. On a warm July day in Los Angeles, he wears a crisp gray suit, his custom-made shirt open at the neck. Nearby, his spotless black Lincoln Navigator displays license-plate frames of his alma mater, the University of Southern California. Amid the dusty confusion of rough concrete and jutting rebar, Caruso stands out like Prince Charming at a rodeo.
Caruso is known for his Disney -esque shopping centers with trolleys and green lawns. He is outdoing himself with quaintness at Palisades Village, an attempt to reconceive the shopping center at a time when retail itself is being redefined by digital innovations. The Village is designed to look and function like a small town, albeit one where the sodas are small-batch draft, the bakery is gluten-free, and there’s a space for the annual 60-foot Christmas tree. There are a grocery store, a five-screen movie theater (named Bay Theatre for a local establishment that closed in 1978) and eight luxury apartments. There is even leasable office space. If it weren’t for its obvious newness, the Village might have evolved over the past century much like New York’s Sag Harbor or Nantucket, Massachusetts, both of which served as inspiration.
Located along Sunset Boulevard not far from the Pacific Ocean, the 125,000-square-foot outdoor development, which replaced several run-down blocks of 1950s-era storefronts, lacks the identifying characteristics of most malls: a vast parking lot, department stores, a reliance on retail chains. A centerpiece of Caruso’s projects is a green space for public gathering—the essential ingredient in his malls’ success, he says. People come for pleasure, then make unplanned purchases that are called, in retail lingo, conversions. “We make a fortune—yes, we do,” Caruso says. “We get a 95 percent conversion rate.”
At the sprawling Americana at Brand, which he opened in the middle-class community of Glendale in 2008, Caruso concedes he made the complex too big. “Clankety-clank-clankety-clank, right? Nobody wants to be in an empty space.” He added kiosks and brought in Nordstrom, saying he learned a valuable lesson as he struggled to right the center: The bigger the mall, the more necessary a department store to anchor it.
American malls have been presented with a come-to-Jesus moment as vast numbers of consumers shop online and tastes shift away from once-dominant brands such as J.Crew and the Gap toward trendy pop-up shops and new labels. Many dead or dying malls are being turned into office complexes or medical centers or converted to other uses, while others are being forced to renovate.
When it opens with a gala and performance by John Legend—an event whose host committee includes Charlize Theron and Brian Grazer—the Palisades Village will enter one of the country’s most expensive retail turf wars. Westfield Corp. spent $1 billion revamping the Century City mall, a mere 25-minute drive from the Village, with a concept intended to make the center more of a destination for “experience”—an industry buzzword for offering more to do than shop and eat. Ten minutes farther, Taubman Centers is just finishing a controversial $500 million makeover of its Beverly Center, which happens to sit near Caruso’s The Grove. (Some Taubman shareholders were so perturbed by the company’s spending that they replaced family scion and chief operating officer Billy Taubman with an activist shareholder on the company’s board.) Popular shopping centers such as the Malibu Country Mart have entered the fray with yoga, barre classes and acupuncture in addition to shopping and dining—and its Brentwood counterpart has attracted celebrity moments like appearances from Gwyneth Paltrow at a pop-up store for her platform, Goop.
To stand out from all this, besides the trademark lush plantings, Caruso carefully curates everything from the mix of shops—the developer prefers stores whose customers are likely to browse a bit rather than complete an errand and depart—to the background music. Success depends on not making people feel inundated with marketing messages even as they’re surrounded by them.
“We have a formula for how we don’t over-program it. We don’t want to have everything tied to a cash register,” Caruso says. “You go to Century City, there is a break in the music and there is a commercial. That is annoying.” Caruso is the final decider on the playlists in his elevators and public areas. Having tested more modern beats, he found that customers preferred old crooners and elegant jazz. Shoppers “like hearing a little ‘Blue Bayou,’ ” Caruso says. “Part of what we do is to take people back to a different era without them really knowing it.”
At his Palisades project, there will be a focus on small-scale retail. For example, Sephora, the French cosmetics giant, will install a Sephora Studio, a modest-size shop that offers one-on-one services like mini facials and digital tie-ins. Calvin McDonald, the former Americas president of Sephora, says he bet on Caruso’s untested Village strategy because of his track record. “Of all the different landlords we have, I’d say we probably have the strongest relationship with him,” McDonald says.
Some shops are first-time brick-and-mortar outlets for the likes of fashion designer and stylist Rachel Zoe and jewelry designer Jennifer Meyer, whom Caruso has entertained at his Brentwood home, a short drive away. “Rick is a friend,” says Zoe, who agreed to open a boutique, with Zoe-trained stylists, after he invited her over for breakfast. Meyer says Caruso easily convinced her to open a 500-square-foot “sparkly jewel box” at the Village. “He looks good, he smells good,” says Meyer. “I love his wife and family. He’s just so tan and so nice, and I want to be in business with him.”
Caruso, 59, is worth by his own account about $5 billion—mainly the value of the 14 real estate projects he has built since 1992, including the open-air The Grove, whose $2,200-per-square-foot sales are more than four times the national average, according to the International Council of Shopping Centers. He is a staunchly local guy, L.A.-born, raised and educated, who reveres Walt Disney and has never sold a project he’s built, nor has he developed real estate outside of Southern California. In 1987, he married his wife, Tina, with whom he has four children, the youngest of whom is just entering USC. He misses carpool, in which he drove his four children to different schools each day: “I loved it because it was an opportunity to torture kids by singing,” he says. These days, he wakes up at 6:30 a.m., reads several newspapers, takes conference calls, then plays a game of tennis with his pro and walks Dodge, his golden retriever.
Every Caruso project has an anonymous family tribute. The sculpture of four kids at a lemonade stand at The Grove is of his four children, Alex, Gregory, Justin and Gianna. The Commons at Calabasas, which opened in 1998, has a statue of Tina holding a baby. Now grown, the kids have requested no more statues. Instead, atop the Amazon bookstore at Palisades Village, a copper weather vane has a sailboat inscribed with the name of Caruso’s 216-foot yacht, Invictus. In place of N-S-E-W are the kids’ initials: A-G-J-G.
Caruso is the spitting image of his father, Henry, the son of working-class Italian immigrants who founded Dollar Rent A Car and is the namesake of Hank’s, an eatery at the Village. Rick Caruso has been an overachiever since high school, says Bill Allen, a former TV executive and now chief executive of the L.A. County Economic Development Corporation. Allen attended high school at what is now Harvard-Westlake School with Caruso and later recruited him into USC’s Sigma Alpha Epsilon fraternity, where Caruso became president.
Caruso has joined a profoundly unsexy array of civic boards since taking a turn on the Los Angeles Department of Water and Power board at the age of 26. There was a stint on the L.A. Police Commission—where he recruited William Bratton as police chief—and the L.A. Memorial Coliseum Commission. He currently sits on 10 boards, including the Ronald Reagan Presidential Foundation and Institute. “A lot of people are day traders,” says Fred Ryan, publisher of the Washington Post and another SAE brother, who recruited him to the foundation. “Rick has patience. That’s what has made him successful.”
Caruso’s social agility has also been important in winning approvals for developments. When his 2014 purchase of several parcels of downtown Pacific Palisades alarmed locals, Caruso spent five hours at a podium listening to 900 residents’ concerns. He says it altered his approach. “There is a desire to remain local,” he says. “The arc of retail was really coming full circle to people wanting something of their own.”
Now Caruso is circling back to his first development, a hulking shopping center with two levels of parking over the now-defunct Loehmann’s store near Beverly Hills. He plans to replace the 1992 structure with a controversial luxury apartment building called 333 La Cienega. He is also working on his first hotel, the Rosewood Miramar Beach, in Montecito, which he plans to open this winter, despite a mudslide in January that delayed construction. Recently, a series of administrative scandals at his beloved USC culminated in Caruso being elected to serve as chairman of the board of trustees as the university recovers.
As a result of this workload, Caruso kept Invictus on the West Coast rather than tooling around the Mediterranean with the rest of the billionaire class. The family vacation was five August days on board in British Columbia.
Caruso concedes he has reached the age of the bucket list. There are his political ambitions—he dropped a mayoral bid in 2012 due to family angst but says his children now support a run for local office. “He could be president of the United States,” says Bill McMorrow, chairman and chief executive of the real estate investment company Kennedy Wilson .
That said, Caruso hasn’t managed to relinquish responsibilities at the company he hopes to pass on to his children and future grandchildren. “It’s not about the money anymore,” he says. His priest recently gave a sermon about a hedge-fund manager who retired at the top of his game because he realized he had accomplished enough. “I have transitioned into a search for ‘enough,’ ” Caruso says. “I don’t know when that will be.”
by: Christina Binkley