COVER STORY, AUGUST 2009

GOLDEN STATE GOALS
Developers and tenants are more reserved in this tough economic climate, but retail riches can still be found in California.
Brian A. Lee

Southern California

Ventura County

In fall 2010, Shea Properties will open the 600,000-square-foot The Collection at RiverPark in Ventura County, California.

Known for its beaches and strawberries, Oxnard appeals to many of the senses. In fall 2010, the city’s retail consumers will be stimulated by fresh new scenery and tastes as Shea Properties opens its 600,000-square-foot The Collection at RiverPark.

“This will be Shea Properties’ largest retail development, a great oasis between the travelers moving between L.A. and Santa Barbara,” says James Williams, company vice president.

Designed by Altoon + Porter Architects, The Collection at RiverPark will be anchored by a Whole Foods Market, REI and a 16-Screen Century Theatre. A LEED Silver applicant, the open-air lifestyle center will incorporate parks, promenades and other gathering spots as well as utilize extensive public art displays. Located just off Highway 101, The Collection at RiverPark will also feature 58,000 square feet of unique office space, located above the development’s main retail street.

Designed by Altoon + Porter Architects, The Collection at RiverPark will be anchored by Whole Foods Marketplace, REI and a 16-Screen Century Theatre.

Los Angeles

Terramar Retail Centers’ 620,000-square-foot The Plaza at Golden Valley in Santa Clarita was completed in March and is still experiencing heavy leasing activity. Located off the 14 freeway, the community center features Target, Kohl’s, Lowe’s Home Improvement Warehouse, Staples, Bed, Bath & Beyond, PetSmart and Panera Bread.

“It’s the largest project of its kind on the east side of the Santa Clarita market, really the dominant project on that side of town,” says Alex Liftis, senior vice president, development, at Terramar Retail Centers. “It’s a market that’s been previously underserved; there’s been quite a bit of population growth in that market for years and there will continue to be.”

The Plaza at Golden Valley is an open-air, Spanish-style shopping center with an amphitheater, promenades and other pedestrian-friendly areas. The community center is the retail portion of the Golden Valley Ranch development project.

Tallen Keshen Holdings knows a good location when it sees one. The developer is working toward a 2011 completion for its Madrone Hollywood development, which will feature 13,700 square feet of prime ground-floor retail space at the beginning of the Hollywood Walk of Fame and within walking distance of the Hollywood Bowl. WL Hollywood Associates is developing 180 residential units over the retail space at the $100 million development, which is located at the intersection of Hollywood Boulevard and La Brea Avenue.

“The urban project is located in a densely residential, office and visitor locale, drawing over 12 million visitors annually,” says Anne Keshen, Tallen Keshen’s co-founder and co-owner. “Madrone is also adjacent to many of the leading entertainment and music businesses based in Hollywood.”

Vintage Real Estate LLC, a wholly owned division of Vintage Capital Group, has purchased SouthBay Pavilion from HREG for $50 million. Located on Avalon Boulevard in Carson, the 1.1 million-square-foot retail center is anchored by Ikea, Target, Sears and JC Penney. Additional stores and restaurants include Old Navy, The Children’s Place, Foot Action, Panera Bread, Panda Express, Sansai Grill, Five Guys, Wingstop and Jamba Juice.

In March, Primestor Development broke ground on Phase III of Plaza Del Sol, a 168,291-square-foot shopping center in South El Monte that will be anchored by Marshall’s. Quick-serve food uses, shops and soft-goods retailers will also populate the Santa Barbara-styled property, which is slated to open this winter.

Inland Empire

Lewis Retail Centers is developing the 568,000-square-foot High Desert Gateway, which is anchored by a 188,000-square-foot Super Target.

In Hesperia, in California’s High Desert, Lewis Retail Centers is developing the 568,000-square-foot High Desert Gateway. A 188,000-square-foot Super Target and several shops have already opened at Phase I of the community center, which is slated for completion in 2010. Phase II of High Desert Gateway will comprise 214,000 square feet.

“It is the first prominent retail development of any substance along the High Desert’s Interstate 15 freeway in nearly 20 years,” says Steven Lantsberger, the city of Hesperia’s deputy economic development director. “Hesperia, the second largest city in the High Desert, has a considerably sized market and trade area on its own that needs to be served.”

Lewis Retail Centers is developing Apple Valley Commons, a 733,000-square-foot community center in Apple Valley, California.

Approximately 10 miles northeast of Hesperia in Apple Valley, Lewis Retail Centers is developing Apple Valley Commons, a 733,000-square-foot community center that, like High Desert Gateway, will feature “The Courtyard” brand design. In October, Ross Dress for Less will join co-anchors Super Target and Lowe’s Home Improvement Warehouse at the development, of which 375,000 square feet of space has been completed.

Lewis Retail’s third Super Target-anchored center in the High Desert is the planned Adelanto Towne Center, a 301,000-square-foot community shopping center projected to open in 2012 in Adelanto.

“The Victor Valley is one of the areas of the Inland Empire that is still underserved in terms of retail and these [three] new centers will help meet the pent-up customer demand for new shopping options,” says Randall Lewis, Lewis Retail’s executive vice president.

When Forest City and Lewis Retail Centers opened the $285 million Victoria Gardens in Rancho Cucamonga, California, in fall 2004, it was home to more than 120 stores. Now the super-regional, open-air retail center boasts 170 restaurant, retail and retail services businesses, as tenants like H&M, Bare Escentuals and Swarovski joined the tenant lineup in the spring. Elsewhere, Tesco, the British grocery and general merchandise retailer, plans to open three new Fresh and Easy locations in Rancho Cucamonga in 2009.

In a joint venture with Pacific Retail Partners, NewMark Merrill Companies plans to develop the 239,552-square-foot Rialto Town Center in Rialto. The $30 million shopping center will feature a new Wal-Mart Supercenter and seven additional out parcels for retail stores and restaurants.

Ontario continues to bustle with retail development activity. San Diego-based developer Oliver McMillan is transforming the 50-acre Historic Guasti District into an attractive mixed-use area, which will include 250,000 square feet of retail, restaurant and entertainment offerings. The project is located directly between Interstate 10 and the LA/Ontario International Airport. Panattoni Development Company continues to master develop the $900 million Piemonte at The Ontario Center, a 1 million-square-foot mixed-use urban center, approximately half of which will be retail space.

Mary Jane Olhasso, economic development director for the city of Ontario, says the city’s growth strategies “place less emphasis on just one central downtown and focus on multiple sub-centers throughout the city that have housing, jobs and entertainment all in one location, thus encouraging ‘walkability’ and healthy living.”

Sherry Shimshock, economic development coordinator for the city of Riverside, reports that Mission Grove Retail Center just welcomed the city’s first Sprouts Farmers Market. “The neighborhood was so jazzed they were literally lining up around the building the morning of the grand opening waiting to shop,” she adds. At Riverside Plaza, the vacant former Gottschalks space has already been reserved by Forever 21, which is expected to open in the fall.

Orange County

The 144,726-square-foot Old Ranch Towne Center in Seal Beach sold for $45.3 million in late June. Westlake Village, California-based DSB Properties bought the 8-year-old property from a southwestern-based partnership. The 100 percent leased Old Ranch Towne Center is home to Ralph’s, Target, Bed Bath & Beyond and CVS pharmacy.

“As it relates to the sale of core or core-plus retail properties [in Southern California], we are starting to see positive signs that buyers are beginning to submit plausible offers that are closer to seller expectations,” says Dan Riley, senior vice president in CB Richard Ellis’ El Segundo office. “At the same time, these offers are still in line with buyer preferred returns relative to today’s perceived risk as compared to other investment options, including stocks, bonds, etc.”

San Diego

Voit Real Estate Services corroborates that recent large sales in Southern California, like SouthBay Pavilion in Carson and Old Ranch Towne Center in Seal Beach, are indications that the gap between ask and bid pricing is diminishing. However, on the development side, retail construction in San Diego’s infill market decreased to less than 340,000 square feet in second quarter 2009 as compared to nearly 835,000 square feet a year earlier. However, there are notable projects in the pre-construction pipeline.

Terramar Retail Centers’ renovation of San Diego’s old police station is known as Old Police Headquarters, a 115,000-square-foot waterfront project.

It won’t be against their will when San Diego visitors and residents spend time at the Old Police Headquarters, Terramar Retail Centers’ retail renovation of the city’s old police station. The 115,000-square-foot waterfront project will feature a vibrant mix of specialty retail, restaurants and entertainment uses, as well as 4.5 acres of open space and a
Pier Walk building with a fish processing facility.

“It’s a tremendous restoration project: we’ll be restoring a number of features of historic buildings built in the 1930s, with their traditional kind of Spanish architecture, including towers, courtyards and public plazas,” says Terramar’s Liftis. “We’ll be replacing an asphalt parking lot in front of our project with a urban park area and creating outdoor seating areas for use by restaurants as well as the general public as a gathering space.”

Old Police Headquarters will be an important link between San Diego’s revitalized downtown and the waterfront.

Having worked on the project since 2003, Terramar Retail Centers anticipates opening in spring/early summer 2011. Located adjacent to Terramar’s Seaport Village development, Old Police Headquarters will be an important link between San Diego’s revitalized downtown and the waterfront.

“It’s going to be really a mix of restaurant, entertainment, gift and apparel tenants that would target the local population of San Diego and tourist/convention business that is certainly abundant in that area,” says Liftis.

In early May, Sudberry Properties’ $26 million The Marketplace at Santee had its grand opening in the San Diego suburbs. The 72,752-square-foot property is anchored by Henry’s Farmers Market and also includes San Diego National Bank, Sleep Train Mattresses, Jack in the Box and Starbucks Coffee. Two other restaurant tenants, Yogurt World and Pasta Moto, will joing the tenant lineup, starting this month.

In early May, Sudberry Properties’ $26 million The Marketplace at Santee had its grand opening in the San Diego suburbs.

“Sudberry Properties, assisted by the city of Santee’s redevelopment agency, transformed a beleaguered retail strip center anchored by a longtime roller-skating rink,” says Pamela White of the city of Santee. “The comparative success of The Marketplace at Santee gives city officials cautious optimism that Santee’s retail market is bearing up fairly well during this economic recession.”

White noted that two new Walgreens have opened in the city this summer and a Sonic, which opened in April, has become the drive-in fast-food chain’s highest grossing outlet.

Central California

Macy’s will open two new stores in California’s Central Valley this fall. The stores, both former Gottschalks locations, are located in River Park in Fresno and Visalia Mall in Visalia. The 107,000-square-foot Fresno store was built in 2004, and the 150,000-square-foot Visalia property was built in 1995.

“With these new locations, Macy’s is expanding its presence and serving new customers in the important Central Valley market,” says Terry Lundgren, chairman, president and chief executive officer of Macy’s Inc.

Donahue Schriber’s planned Orchard Walk West project in Visalia is receiving major tenant interest. The Costa Mesa, California-based developer plans to open the 199,000-square-foot neighborhood center in fall/winter 2012.

Marina Landing, Phase II, follows Tallen Keshen Holdings’ successful 2006 Wal-Mart redevelopment in Marina, located on Monterey Bay and just 40 miles from San Jose. Groundbreaking for the 8-acre, $15 million project is slated for fall 2010.

“Marina Landing is located right off Hwy. 156 leading into Monterey, Pebble Beach, Carmel and the other internationally known coastal communities,” says Keshen. “The Monterey Peninsula is an extension of the mega-region that includes the San Francisco Bay area in Northern California.”

Northern California

Infrastructure design work continues at Thomas Enterprises’ 240-acre, $6 billion Sacramento Railyards project in Sacramento. Photos courtesy of NC3D

Infrastructure design work continues at Thomas Enterprises’ 240-acre, $6 billion Sacramento Railyards project, located just north of downtown and east of the Sacramento River. The massive, multi-phased project will transform a once-forgotten brownfield into a dynamic new commercial and residential area while doubling the size of the city’s central business district. The project will offer 1.4 million square feet of retail, restaurant and entertainment offerings, among many other uses, in a vibrant, urban atmosphere.

“The first phase will include the adaptive reuse of the 140-year-old Central Shops buildings into a cultural entertainment district containing performing arts, restaurants, clubs, museums, grand civic plazas and the unique Marketplace of the Central Valley,” says Leslie Valpey, development coordinator at Thomas Enterprises. “Wrapping the Central Shops will be Camille Lane, a modern 600,000-square-foot mixed-use retail, residential and office urban district.”

The Sacramento Railyards will offer 1.4 million square feet of retail, restaurant and entertainment offerings, among many other uses, in a vibrant, urban atmosphere. Photos courtesy of NC3D

Vertical groundbreaking for 20 million-square-foot The Railyards will take place in 2010 as will leasing for approximately 1 million square feet of urban entertainment, cultural and retail space. The development’s first phase is slated for completion in 2012.

Donahue Schriber has a lot in the retail pipeline in Northern California, including two projects in Rocklin near Sacramento. The 398,000-square-foot Rocklin Commons, a joint venture with Tom Winn, is presently going through entitlements. Scheduled for a fall/winter 2012 opening, the power center is receiving major tenant interest. The 569,000-square-foot Rocklin Crossings power center should start construction in 18 to 24 months, and anchors Wal-Mart and The Home Depot are already signed. In nearby Rancho Cordova, the 99,000-square-foot Sunridge Plaza neighborhood center has a similar construction schedule to that of Rocklin Crossings.

“Although this is a tough economy, Donahue Schriber continues to have strong tenant interest across the board on all of our ongoing California projects,” says Dave Mossman, the company’s executive vice president, acquisitions and development. “In our more than 40 years in the industry, we have increasingly focused on necessity-based retailing, which leaves us well positioned for today’s market. It’s given us a competitive edge and helped us to create successful shopping centers that appeal to the communities they serve.”

CityPlace is a 260,000-square-foot, multi-level retail development that will break ground in early to mid-2010 in San Francisco’s well-known Market Street corridor.

At the intersection of Union Square, San Francisco’s hotel district and SOMA, you can find a blend of residential and commercial offerings as well as entertainment, convention and tourist draws. Soon you’ll also find CityPlace, a 260,000-square-foot, multi-level retail development that will break ground in early to mid-2010 in the City by the Bay’s well-known Market Street corridor.

“Availability of jumbo floor plates is unusual for downtown San Francisco,” says Vikki Johnson of Johnson Hoke Ltd., the project’s development consultant and leasing agent. “It will have 45,000-square-foot floor plates with a light-flooded central atrium housing ascending and descending escalators in criss-cross fashion topped by a domed skylight.”

An equity partner of owner Commonfund, Urban Realty Co. will develop CityPlace, which is slated to take 15 to 18 months to complete.

Located along historic Highway 101 in Ukiah, Tallen Keshen Holdings’ 15-acre Ukiah Promenade is positioned to take advantage of the high barriers to entry of a small market located in a large trade area. The sale of the property to the city’s redevelopment agency is slated to close this month.

“Ukiah’s redevelopment agency is to direct project development strategy, drawing on tenant interest generated by TKH and the predevelopment work completed,” says Keshen. “The entitled project is located approximately 1 hour north of Santa Rosa, the hub of California’s wine country, commerce and retail, and contiguous to a highly successful Wal-Mart, Staples, FoodMaxx and other prominent retailers, as well as hotels and restaurants.”

©2009 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.