Rick Caruso spent $160 million on The Grove — and $5 million of it on land he never bought

The Grove opened on 15 March 2002 at a total development cost of $160 million, on 17.5 acres beside the Original Farmers Market in Los Angeles that Rick Caruso did not buy and still does not own.¹ The land came on a long-term ground lease from the A.F. Gilmore Company, the family that has held the Farmers Market block for more than a century, and the entire land cost in the project budget is a single line: $5 million of ground rent.^1,2

That is the first thing the popular telling gets wrong, and it is not the biggest. The Grove is remembered as a contrarian bet against a market that wanted enclosed malls and department stores. What the record shows is a developer arriving at a site that had already been fought over for fifteen years, already entitled for more than a million square feet, and already undevelopable because nobody could get the neighbours past it.¹ Caruso’s move was not to build something bolder. It was to build something roughly half the size, keep the Farmers Market intact, and get approved.

The famous number — sales per square foot — turns out to have five published versions. The Urban Land Institute recorded $605 in 2003. An International Council of Shopping Centers publication put it at $1,400 in 2012. Green Street Advisors told Forbes about $2,100 in 2016, Forbes printed $2,200 in 2018, and Caruso’s own site now claims $2,460.^{1,13,14,15,31} All five may be true of their own moment. None of them has ever been audited, because the company that owns The Grove is private, has never taken an outside investor, and has never published a rent roll.¹⁴

The land, and who keeps it

Start with the land, because the land is the whole trade.

The Original Farmers Market at Third and Fairfax, photographed by Carol M. Highsmith in 2012. The A.F. Gilmore Company has held this block since the nineteenth century and still holds the freehold under The Grove next door.Carol M. Highsmith · Library of Congress · public domain

The fight was already lost before he arrived

Start with the land, because the land is the whole trade.

The A.F. Gilmore Company has owned the block at Third and Fairfax since the nineteenth century, when it was a dairy farm, and has run the Original Farmers Market on part of it since the 1930s. By the mid-1980s the family wanted to develop the rest. It teamed with a Chicago-based real estate company on a two-million-square-foot complex of offices, retail and a hotel. The neighbourhood fought it for five years. Councilman John Ferraro eventually brokered a compromise: a 700,000-square-foot shopping centre with two department stores, one of them Nordstrom. The city approved that in 1991, and then the Southern California recession killed almost all new construction and the approval sat there, unused.²

This is the condition Caruso walked into in July 1997. ULI’s own case study is blunt about what made the site hard: it had been eyed by developers for years and was entitled for more than a million square feet, “though no developer had been able to get past neighborhood opposition to such a large undertaking”.¹

So he offered less. ULI lists the four terms of the bargain: a project about half the size of the existing entitlement; a promise to preserve the Farmers Market and the historic Gilmore Adobe; a neighbourhood-oriented mix of restaurants and a bookstore worked out in meetings with residents; and an outdoor setting in the spirit of the market next door.¹ When the plan was unveiled in May 1998 it was 640,000 square feet at $100 million — about a third smaller than the Beverly Center a mile away.²

The opposition that everyone remembers did not really materialise this time. Jack Kyser of the Los Angeles County Economic Development Corporation predicted “very, very significant community opposition, because the whole Westside of town is very edgy about traffic”.² A year later, Ferraro’s chief planning deputy said she had received only a few calls from opponents; Caruso had agreed to add traffic signals, widen streets and build a garage.³ Approvals came in May 2000 with unanimous support from the planning commission and the city council.¹

Part of that is because the people he had to persuade already knew him, and not fondly. A decade earlier Caruso had taken over a La Cienega Boulevard property housing a rowdy nightclub called the Millionaire’s Club, and the neighbours had spent months petitioning him to end its lease. “He was insufferable at the time,” one of them, Diana Plotkin, told the Los Angeles Business Journal. Harold Hahn of the Burton Way Homeowners Association put it more directly: “We had fights. When Rick said he was going to continue renting to The Millionaire’s Club, we almost keelhauled him.” By 2002 Plotkin was president of the Beverly Wilshire Homes Association, and her verdict on the developer had inverted: “I don’t have a very high opinion of most developers in this city. But I gave Caruso a very, very good recommendation.”⁴

Read that sequence carefully, because the lesson in it is the opposite of the one the story usually carries. The bet was not that shoppers wanted an open-air street. The bet was that a smaller, quieter project on a pre-entitled site would clear a political process that had already destroyed two larger ones. Caruso bought the leftover approval, not the idea.

The parts that were never supposed to pay

Three features get quoted as proof of Caruso’s willingness to burn money. Two are real and one is not.

The trolley is real, and it does go somewhere. A double-decker car runs down the centre of First Street at ten-minute intervals on steel wheels and in-ground rails, powered by a magnetic-induction battery system pioneered in Germany that made its American debut here.¹ Its route is the quarter-mile spine of the site, and Dave Williams, Caruso’s senior vice president of architecture, gave the reason plainly: the distance is short, but “we wanted to make a real physical connection” to the Farmers Market.¹ It is a link, not a ride to nowhere. What no source publishes is what it cost to build or what it costs to run, so the widely repeated claim that it consumes millions and earns nothing is not something the record can confirm either way.

The hotel-grade service is real and specific. There is a concierge station offering store information and restaurant and theatre reservations, a valet drop-off built like a hotel roundabout, and — the detail that carries the point — every employee at The Grove, security staff included, is trained by the same firm that trains Ritz-Carlton staff.¹ The parking garage claims that circulate online, marble floors and classical music, appear in no source we could obtain; ULI describes escalators from the garage descending to an outdoor lobby with an antique-styled table and a chandelier.¹

The spending figure attributed to that service is a claim, not a measurement. ULI records it in Caruso’s own voice: “according to Rick Caruso, the average amount spent per visit is roughly twice the national average”.¹ The conversion rate — the share of visitors who buy something — has been reported three ways: 92 per cent by ULI in 2003, 93 per cent by Forbes in 2018, and 90 per cent by the company today.^1,15,31 All three are drawn from statistics the centre collects about itself.

The number that has five versions

Here is where a good story and a good brief part company.

In the centre’s first full year, Caruso told the Los Angeles Business Journal its 41 retail stores were averaging “well above $500 a square foot”, with five units still vacant. For scale, the same article put Westfield Century City at $515 a foot and Villa Marina at $450 in 2001, on International Council of Shopping Centers data, while the newly opened Hollywood & Highland was averaging $294 on its own developer’s second-quarter numbers.⁵ ULI’s project data table, compiled the following year, records average annual sales of $605 a square foot and annual rents ranging from $20 to $120.¹

Then the figure climbs. A 2012 ICSC publication, reported by California Apparel News in 2014, put The Grove at $1,400 a square foot and the Americana at $1,100.¹³ Green Street Advisors, which tracks more than 90 per cent of American malls, told Forbes in 2016 that The Grove was bringing in around $2,100.¹⁴ Forbes printed $2,200 in October 2018 and $2,460 in August 2020; the company’s own portfolio page carries $2,460 today, alongside a claim to be the second most productive shopping centre in the United States.^15,19,31

None of that is evidence of dishonesty. A centre that opens at $605 and reaches $2,460 over two decades has simply re-tenanted upward, swapping Gap and Banana Republic for Gucci and Apple. But the reader is owed the shape of the series rather than its last point, because the last point is the one the company publishes about itself.

The comparison usually made — against a national mall average — is harder to pin down than it sounds. Green Street’s tiering, as reported by The Robin Report, puts a top-grade A++ mall as high as $1,100 a square foot, a B mall around $425 and a C mall around $250.²⁵ No source we could obtain publishes a single national average, so the honest version of the claim is narrower and still striking: on any published figure since 2012, The Grove trades above the top of Green Street’s own top tier.

The first year was also not uniformly good, which the later telling drops entirely. In December 2002 the Business Journal reported that while the cinema, Nordstrom and the restaurants were doing well, brokers said a number of stores were not making the sales volume to justify the rents and common area charges. “For the retailers that you would find everywhere else, it’s nothing spectacular,” one said.⁵ Two chain restaurants were doing average or below. The Gap units were underperforming. The cinema, meanwhile, was the highest-grossing in Los Angeles County, and Caruso sold it that same month to its operator for about $30 million — roughly $2.1 million a screen, then a record.^1,5

The play, run again

Six years later Caruso ran the play again, across the street from someone who could afford to object.

The Americana at Brand on South Brand Boulevard in Glendale, photographed in August 2008, three months after it opened. The apartments and condominiums stacked over the shops are the residential component The Grove never had.Photo: Fourbyfourblazer, CC BY 3.0, via Wikimedia Commons

Glendale: the same bet, with the fight in the open

Six years later Caruso ran the play again, across the street from someone who could afford to object.

The Americana at Brand rose on 15.5 acres over four city blocks in downtown Glendale, directly opposite the Glendale Galleria, an enclosed mall then owned by General Growth Properties. It opened in May 2008 at a reported cost of $400 million, with 100 condominiums and 238 apartments stacked above the shops — the residential component The Grove never had.¹¹ A contemporaneous account by the Congress for the New Urbanism put the cost at $429 million and described the project as built in partnership with the city.⁷ Where the two figures differ, both are printed here.

General Growth fought it three ways. It collected signatures to force the project to a referendum — which then approved the development. It sued over the project’s environmental impact report. And it leaned on The Cheesecake Factory, a tenant in many of its own malls, to keep it from signing at the Americana.⁷

That third one is what cost it. Caruso sued in February 2004. In November and December 2007 a jury awarded $74.2 million in compensatory damages, found that General Growth had acted with “malice, oppression, or fraud”, and added punitive damages, taking the judgment to $89.2 million.^7,8,9 General Growth’s chief executive said the company “emphatically” disagreed and would ask the court to overturn the verdict, while booking the full amount.⁸ On 5 January 2009 it settled for $48 million, paid out of the cash collateral it had posted for the appeal, and reimbursed a further $5.5 million of costs to its joint venture partner.⁹ The settlement reversed expenses General Growth had already booked, adding about $0.19 a share to its fourth-quarter 2008 earnings — a fight it had lost twice over, once in front of a jury and once on its own income statement.⁹

The tenant war ended the way the reel says it did. In September 2013 Nordstrom closed its Glendale Galleria store after thirty years and opened a 135,000-square-foot replacement across the street at the Americana.¹²

The Americana is also the only one of Caruso’s centres whose finances are partly public, because in July 2023 he borrowed against it in the securitised market for the first time. The loan was $450 million over five years at 7.1 per cent, originated by Morgan Stanley and Goldman Sachs, against a June 2023 appraisal of $870 million — roughly double what the centre cost to build. Almost 90 per cent of the proceeds repaid an existing $360 million MetLife loan from 2013, and about $35 million was returned to equity holders. DBRS Morningstar noted that it regards cash-out refinancings as less favourable, because a borrower with less of its own money at risk has less incentive to support a property through stress.²⁴ The same report recorded the centre 99 per cent leased and 94 per cent occupied, with three anchors — Nordstrom, H&M and Amazon Style — running below sales expectations.²⁴

Nothing equivalent exists for The Grove. No loan document, appraisal or rating-agency report on it has ever been public, which is a fact about the company rather than about the asset.

What went wrong, and when

A twenty-four-year record has stress in it, and this one has four episodes worth naming.

Traffic was the objection the neighbours raised in 1998, and by 2006 the Los Angeles Times was reporting that they had been right. “Traffic in this neighborhood is much worse than it was before the Grove,” a Farmers Market regular told the paper, in a story about the centre barring its own workers from the 3,500-space garage to free spaces for shoppers ahead of an American Girl store opening.⁶ The city’s transportation department agreed the area held some of the most congested locations on the Westside.⁶

The credit crisis arrived in the same month the Americana opened. The company’s position is that it came through untouched: its financials page states a compounded annual growth rate of 17 per cent since 1987 and says that “even amidst challenging economic environments, including the Great Recession, we have consistently increased our asset value, revenues, and profits every year”.³² That is the company’s account of itself and there is no filing against which to check it. What is externally verifiable is the shape of the balance sheet: Forbes described the portfolio as lightly mortgaged in 2018, and reported in 2016 that Caruso had kept the company private, taken no outside investments or partners, and sold only one thing he ever built — the condominiums at the Americana.^14,15

The pandemic was the sharpest. Caruso told Forbes that revenue “went from roughly 100% to 25%” when the centres closed. By August 2020 he put net operating income back at 85 per cent of pre-Covid levels and occupancy at 97 per cent.¹⁹ Both figures are his.

Then, on the evening of 30 May 2020, a protest over the killing of George Floyd moved from Pan Pacific Park into the centre. Over about twenty minutes, looters broke into Nordstrom, the Apple Store and Sephora; a police kiosk near the cinema was set on fire; the Grove’s outdoor speakers kept playing.^16,17 Police Chief Michel Moore gave a press statement standing beside the looted Nordstrom.¹⁶ Four weeks later Caruso said “for all lives to matter, Black lives must matter”, while criticising unnamed city officials for failing to prevent the violence.¹⁸ No published source gives a damage figure or an insurance recovery for that night.

The part that is not flattering

The Grove’s design argument is that a privately owned street can do the work of a public one. Caruso has made that claim himself, describing it as “a Main Street for a City that doesn’t have one”.²⁰ In 2022 that claim was tested in court by people who wanted to use the street against him.

In August 2022, while Caruso was running for mayor with his campaign headquartered at The Grove, three plaintiffs — Gina Viola, Sim Bilal and Youth Climate Strike Los Angeles — sued Caruso Management Co. and an affiliated entity, alleging that the centre distributed pro-Caruso signs to visitors and allowed them to march with them, while refusing permission for small marches critical of the campaign.^20,21 A Los Angeles Superior Court judge granted a preliminary injunction on 28 September setting terms for a demonstration before the election. A month later, on 28 October, a three-justice panel of the Second District Court of Appeal unanimously reversed it. A Caruso representative said the decision reaffirmed “the importance of upholding standard industry policies for the safety and well-being of our customers, tenants and other visitors”.²¹

He lost the election anyway, and expensively. Figures from the Los Angeles City Ethics Commission through 2 November 2022 put his spending at $104,848,887 against Karen Bass’s $9,060,958 — a ratio of about eleven to one, in a race she won.²³

The design critique is older than the campaign and independent of it. Writing in Metropolis in November 2022, the critic Sam Lubell argued that Caruso’s projects “are simulacra, facades”, that they “are not based in their contexts, and they are not designed as true urban places”, and that the civic value they genuinely create sits on top of “an aspirational, culturally regressive nostalgia”.²² The Congress for the New Urbanism, broadly sympathetic to the form, noted as early as 2007 that The Grove “has been accused by some of being too ‘scripted’ and controlled to be an ‘authentic’ urban environment”.⁷

The most recent entry is the sharpest, because of who is using which tool. In February 2025 The Grove and the A.F. Gilmore Company — landlord and tenant, on the same side — sued Los Angeles over its approval of the $1 billion Television City studio expansion next door, challenging it on environmental review grounds. The Grove’s senior vice president said the project would create “additional traffic, parking problems, pollution and other harmful impacts”. The developer’s response was that the suits were “an unfortunate but predictable abuse of CEQA” against a project that had been unanimously approved at every step.²⁸ Three of the four challenges came from the neighbourhood: Save Beverly Fairfax, the A.F. Gilmore Company, and the Beverly Wilshire Homes Association — the same association whose president had vouched for Caruso in 2002.^4,28 Those are the same arguments, in the same order, that were made about The Grove itself in 1998, with the sides swapped.

In July 2026 that fight resolved itself in a way nobody sued for: a Deutsche Bank-led lender group filed a notice of default alleging Television City’s owner owed more than $357 million, and sources told the Los Angeles Times that Caruso and the Gilmore family could emerge as bidders for the site.³⁰ Six months earlier, in January 2026, Caruso had ruled out running for mayor or governor.²⁹

The ledger, opened

Put the sourced money in one column and the sourced outcomes in the other, and what is missing is as informative as what is there.

Several of those lines cannot honestly be added to each other, and saying so is part of the answer. Caruso is private. There is no fund, no filing, no audited return, and the 17 per cent compounded growth figure is the company’s statement about the company. The ground lease’s term and rent are not public, so the single most important variable in a leasehold asset — how many years of it are left — is unknown outside the two families. The Grove has never carried a public loan, so it has never been independently appraised in a document anyone can read. And the May 2020 damage was never given a number.

What is verifiable is the arithmetic of the entry. A centre that cost $160 million all-in, including only $5 million attributable to land, was still trading at 100 per cent occupancy twenty-two years later and drawing an estimated 20 million visits a year.^26,31 Against that, the enclosed competitor across town in Glendale lost its Nordstrom to Caruso, and the studio lot next door went into default owing more than $357 million — over twice what The Grove cost to build.^12,30

The honest verdict has two halves. The retail thesis was right, and the record supports it on every published figure since 2003. The origin story is wrong: this was not a lone bet against a hostile market, it was a smaller, more negotiable version of a project that two better-known developers had already failed to build on the same dirt, financed conventionally by three banks and an investment bank, on land its developer never bought.

What transfers

The entitlement is the asset. The most valuable thing about this site in 1997 was not its location, which had not moved in a century — it was an unused 1991 approval and fifteen years of exhausted opposition. When a plan looks visionary, check whether the vision is the building or the permission.

Shrinking is a strategy, not a retreat. Two larger schemes died here. The one that got built was roughly half the size of the entitlement it inherited, and it is the one now claimed as the second most productive shopping centre in the country. Capacity you cannot get approved is worth nothing at all.

A ground lease turns the largest line item into a small one, and hides a clock inside the deal. Five million dollars of ground rent against $160 million of total cost is the reason this project pencilled. It is also the reason nobody outside the deal can value it, because the remaining term is the whole story and it is not published. Whenever land cost looks implausibly small, find the lease and read the expiry.

A private company’s best number is a claim until someone lends against it. The single most informative document in this entire file is the 2023 Americana loan, because it forced an outside appraisal, an occupancy figure, and a note that three anchors were selling below expectation. The Grove has generated no such document in twenty-four years. Absence of bad news from an unaudited owner is not evidence; it is absence of evidence.

Finally, the same lever gets pulled from both ends. Neighbourhood objections and environmental review nearly stopped The Grove, and in 2025 The Grove used environmental review to try to stop the project next door. Whoever holds the finished asset acquires an interest in the process that almost prevented it — which is worth remembering before treating any developer’s position on the rules as a principle.