Westfield Exiting Downtown Plaza (Finally !!) (San Diego, Sacramento: mortgages, landlords, deed)

[wburg]

I suppose I don't consider maintaining the mall and adding more tenants via low rent to be "nothing." Still waiting to hear some coherent idea as to what they should be doing with it--note that "blow it up" or "bulldoze it" does not count as coherent. Putting up "White and/or Rich People Only" signs don't count as coherent either.

I walked through today--it was quiet, but it's a quiet time of year for shopping. Security was notably present.

[Malloric]

Originally Posted by shelato

Are you sure that they aren't turning a profit right now?

From what I have read they spent around 25 million to buy downtown plaza and that downtown plaza is half leased. At the price they paid, they may very well be turning a profit even though the mall is only half leased. Remember downtown plaza still has the 24 hour fitness and the Century theater, these are large tenants.

For comparison loopnet lists a location anchored exclusively by a 24 hour fitness in Walnut Creek for 22 million. JMA may have figured that 25 million was a pretty cheap price to get a 24 hour fitness and a movie theater and felt they they got the rest of the mall for free. If they can do something with it great if not, they will still make money. They paid so little for the property they really can afford to do nothing and wait.




GlobeSt.com - JMA Ventures Buys Westfield Downtown Plaza - Daily News Article

LoopNet - New 24 Hour Fitness | Walnut Creek | Core Asset, Free Standing Bldg, 2800 North Main Street, Walnut Creek, CA

$25 million, or around $60 a square foot... less than half of what retail space in Sacramento goes for. Even at 50% vacancy rate, you may be right... although they are carrying a significant amount of dead weight in upkeep. And an interesting comparison to the $5.7 million Redevelopment subsidized the 37,000 sq foot Ed Hardy Pizza/Fish Tank/D30/Vacant Building to remodel... or $154 per square foot. Gives you an idea why Westfield held onto that property for so long, doesn't it. Now that the Redevelopment corporate welfare candy wagon has dried up, it looks like they cut their loses on their "investment."

Hopefully they can do something with it. There's a lot of potential, and if a private developer can make a go of it, it might get some wallets to open up rather than the typical wait until Redevelopment covers all the risk that's become the norm in the downtown area. I'm really not sure what the envisioned experience that can't be found at suburban malls (read: Westfield Galleria at Roseville and Arden Fair) is going to be though. Both are, to me a non-mall person, pleasant enough malls. The only gripe I have with Arden Fair is the parking, something that's definitely not going to be any better at DTP.

[icametodropbombs]

New businesses sprouting along downtown Sacramento's K Street - Business - The Sacramento Bee

[Samoi137]

K Street revives. Again.

[ryuns]

Originally Posted by Malloric

I'm really not sure what the envisioned experience that can't be found at suburban malls (read: Westfield Galleria at Roseville and Arden Fair) is going to be though. Both are, to me a non-mall person, pleasant enough malls. The only gripe I have with Arden Fair is the parking, something that's definitely not going to be any better at DTP.

I'm not sure what they have in mind or if they've even dreamed anything up, but parking is indeed one of the differences and in a good way--it's not a suburban mall surrounded by acres of parking. It has the opportunity to be a completely different experience that's actually integrated to its surrounding. Currently, you probably wouldn't want it to be integrated with its surroundings, except for Old Sac. My guess is still that JMA will be taking its sweet time, hoping that there will be other improvements in the area (more Blackbirds, more Temples, more 800J Lofts, more...Churches of Scientology?*) before they jump in with both feet.

(*Sidenote: It's stupid, I realize, but I actually find myself disliking Scientology slightly less after opening that downtown. I guess I just prefer that to all the mega churches out in the 'burbs. That or they've installed mind-control devices and my office is close enough to be affected.)

[shelato]

Originally Posted by Malloric

$25 million, or around $60 a square foot... less than half of what retail space in Sacramento goes for. Even at 50% vacancy rate, you may be right... although they are carrying a significant amount of dead weight in upkeep. And an interesting comparison to the $5.7 million Redevelopment subsidized the 37,000 sq foot Ed Hardy Pizza/Fish Tank/D30/Vacant Building to remodel... or $154 per square foot. Gives you an idea why Westfield held onto that property for so long, doesn't it. Now that the Redevelopment corporate welfare candy wagon has dried up, it looks like they cut their loses on their "investment."

Hopefully they can do something with it. There's a lot of potential, and if a private developer can make a go of it, it might get some wallets to open up rather than the typical wait until Redevelopment covers all the risk that's become the norm in the downtown area. I'm really not sure what the envisioned experience that can't be found at suburban malls (read: Westfield Galleria at Roseville and Arden Fair) is going to be though. Both are, to me a non-mall person, pleasant enough malls. The only gripe I have with Arden Fair is the parking, something that's definitely not going to be any better at DTP.

Remember, while the local rate is finally starting to come down, the unemployment in this area is still at 10.3%, which is probably about 4 or 5% higher than it probably should be. A big issue is how long will it take for the unemployment rate to drop back to normal. In the past year it dropped by 1.5%, assuming that it keeps falling at the same rate, that means we will probably have a tepid local economy for another 3 or 4 years. Until then its probably more prudent for JMA to wait it out than try any major remodeling project not connected to a signed lease agreement. If the property is still 50% vacant when the local unemployment rate is below 6% then I think they will look trying to find new uses for the location. But I imagine that there is some dispute inside JMA whether the problems are cyclical or structural (whether the property has a high vacancy rate because the local economy is weak or because there is too much retail space competing for too few customers in their trading radius). I tend to think that the creation and then expansion of the Galleria as well as the addition of the Palladio just means there isn't enough remaining retail dollars in the area to support Downtown Plaza, Arden Fair, Sunrise/Birdcage and Country Club Plaza/Center and that there probably two or three of these malls probably need to be re-purposed into doing something else, but I suspect that the people owning all of these malls right now want to believe that the problem isn't structural, but cyclical and that when the economy recovers so too will all of these malls or perhaps they are just trying to wait out the other mall owners trying to see if a couple of them will exit the market first.

If in 3 or 4 years time, there exists some sort of successor redevelopment agency,(I assume it will happen) and Downtown Plaza is still half vacant, then I think Downtown Plaza is in a prime position to get money from that agency. The site of Downtown Plaza may also have some of the better non-retail options, whether its sticking housing, office, a sports Arena or just something else there. I could also see Sunrise/Birdcage getting Redevelopment money from the City of Citrus Heights in three or 4 years time, but I see that mostly to help pay for remodeling and updating the existing mall and not re-purposing it into something else. I think the county will have more pressing redevelopment issues along auburn and watt avenues, so I doubt that the Country Club Malls will see much government assistance.


http://www.calmis.ca.gov/file/lfmonth/sacr$pds.pdf

[Malloric]

I don't really see how it could be anything but structural. It's not like K Street suddenly dumped when the economy did. It's always been pretty dead. While the idea of a lifestyle center with no parking lots appeals to urbanistas, it's not feasible when you're relying on the people living in the suburbs as you customer base. There's no local customer base for DTP, so they've got to come from somewhere. Maybe they could take light rail in... but why not just go to Midtown where there are more unique businesses that's actually integrated to the neighborhood. Walk along J in Midtown and next to the DTP... not even comparable, and short of a very extensive overall, that's not something that can change. Cold, ugly wall of glass is cold, ugly wall of glass. Opening up the exterior to work as shop entrances could work, but it's still not going to be very pretty. You'd probably have to knock off several feet of building to make a somewhat attractive storefront sidewalk rather than one that just serves to hustle the unwanted pedestrian traffic by and discourage loitering. DTP was built to be pedestrian hostile since pedestrians were all drug addicts and homeless people anyway.

Again, there's potential, but as it is now I'd much rather drive to Arden and walk around the mall and the few other restaurants in the area than drive to DTP and walk around the outside of it.

[wburg]

"Always" is a relative, and highly loaded, term. In the mid-1950s, 75% of Sacramento County's sales tax revenue was generated within two blocks of K Street.

[ryuns]

Interesting thing about the vacancy rate is that it lowers the opportunity cost of kicking out your tenants to do a bunch of construction. That, along with low interest rates and low-ish construction costs, makes a case for doing something sooner than later. I don't think that will outweigh other factors (such as those shelato mentions and a possibility that the area will improve and populate around DTP, first) but it's an outside, but welcome chance.

[Malloric]

Yes, always during DTP's existence would be more correct. K was already declining by the '50s... although I do find the idea that 75% of the sales in the entire county of ~300,000 occurring in the four-block corridor to be more than a little suspect.