COVER STORY, JULY 2005

A CHANGE OF SPACE
Redevelopers’ change-ups strike a revitalization chord.
Brian A. Lee

Western Real Estate Business recently sampled different redevelopment projects in the region to see how fresh, dynamic approaches were transforming older properties and aligning their new offerings with the needs or preferences of the surrounding communities.

TR Produce Project

In the heart of San Diego’s East Village, across from PETCO Park, Cruzan|Monroe is redeveloping the historic TR Produce Warehouse into a mixed-use project that will feature upper-level office suites above a 20,000-square-foot restaurant and retail component. In light of San Diego’s amazing residential growth, the project will address the downtown’s underrepresented office and retail sectors while preserving the unique urban appeal of the original brick warehouse, built in 1933.

In San Diego, Cruzan|Monroe is renovating and restoring the old TR Produce Warehouse while adding 2 stories of steel-framed, loft-style office suites above it.

Upon completion in second quarter 2006, the entire project will stand 65 feet tall and encompass four stories, including a mezzanine level. The new two-story structure above the warehouse will offer 27,000 square feet of loft-style office suites.

“The lower-level preservation brings a unique opportunity to keep the historic integrity and urban feeling of the original brick warehouse, and mix it with a more current steel structure, floating above it, creating a very unique contrast,” says Al deBerardinis of Cruzan|Monroe. “The office condos for sale are located on the upper-level — some look directly into the ballpark — creating a once-in-a-lifetime opportunity to own an amazing piece of property in an area that is going through such a huge evolution.”

Montelucia

Crown Realty & Development will make a big splash in its initial foray into the mixed-use luxury residential business. In 2004, the company purchased the resort formerly known as La Posada in Paradise Valley, Arizona. In August, it will begin the $185 million, 28-acre redevelopment of the property into Montelucia, a super high-end hotel/resort project.

Crown Realty & Development is set to begin the $185 million, 28-acre redevelopment of the former La Posada resort into Montelucia, a super high-end hotel/resort project in Paradise Valley, Arizona.

The mixed-use development will offer a 280-room luxury resort hotel, 31,500-square-foot spa and two restaurants as well as 34 single-family residences exceeding 4,500 square feet each. “The opportunity to live in a resort and receive all of the services of the resort — housekeeping, room service, in-home chefs, security, catering, concierge services — at your fingertips is just a unique lifestyle that is becoming more in vogue,” says Flaxman. “Also, there’s really generous outdoor landscaped areas and an architectural ambience that is superb.” 

Crown Realty & Development has been mixing retail and office uses for some time now. This first residential effort, which will include hotel-condo offerings, comes in a high-end market — it has some of the highest home values in the Southwest outside of Southern California, says Flaxman — that has significant barriers to entry.

Lakewood Towne Center

Lakewood Mall in Lakewood, Washington, 35 miles south of Seattle, had fallen on hard times after it opened in 1989. Unable to compete with Tacoma Mall, the strongest retail performer in that part of the Puget Sound market, the property became a liability for the city and the community.

“It was a combination of it being too large of an enclosed mall for that particular market, it did not have the right anchor tenants, there was too much strip retail, there was no freeway visibility and there were seven entrances to the project,” says Dave Moore, senior vice president of Portland, Oregon-based MBK Northwest.

Specializing in redevelopment and revitalization of sagging retail properties, Moore and his MBK Northwest colleagues knew Lakewood Mall had to come down. “We saw the positives in terms of it being 100 acres of retail-zoned land in the Puget Sound area,” says Moore. “We designed a site where everything feels like a front door. We worked with the city of Lakewood and created two public streets through the 100 acres.”

MBK Northwest redeveloped the property into an open-air center with four distinct components. The civic center part, which includes Lakewood’s city hall, meant having a constant stream of daily traffic and commerce coming into the project. The developer relocated a successful Safeway store to a 64,000-square-foot location to anchor the 150,000-square-foot neighborhood center or convenience component of the redevelopment. A complete remodeling of a Loews Theatres constituted the anchor of the entertainment portion of the project. Lastly, MBK Northwest brought in 500,000 square feet of power tenants around anchor Target. These included Michaels, Old Navy, Bed Bath & Beyond, GI Joe, Barnes & Noble, Burlington Coat Factory, Pier One Imports, Office Depot and PetsMart.

“The concept behind it was to take the 100 acres and give it as many different retail components as possible to attract as many different people as possible and really make it a destination,” says Moore.

The success of Lakewood Towne Center has spurred numerous mixed-use projects, office buildings and redevelopment. “That’s something that 5 years ago I don’t think Lakewood ever envisioned,” says Moore.

Ontario Downtown Civic Center

In Ontario, California, J.H. Snyder Company will be leading the redevelopment of the city’s Downtown Civic Center project. The $200 million revitalization project encompasses a 12-city-block area with 750 units of housing, including lofts, rental and for-sale; 100,000 square feet of ground-floor retail; and 200,000 square feet of office and academic space in conjunction with the University of LaVerne Law School. Interwoven with these new uses will be Ontario’s existing city hall, a new senior center and a state-of-the-art public library currently under construction.

“Ontario’s downtown redevelopment is the first urban smart-growth, mixed-use project in the Inland Empire, which will include for-sale condos above retail with below-grade parking,” says Mary Jane Olhasso, economic development director for the city of Ontario.

Scheduled for completion in 2006, the project will be designed by architect Jon Jerde of The Jerde Partnership, the Venice, California-based firm that designed Bellagio Hotel & Casino in Las Vegas. The Jerde Partnership and J.H. Snyder have collaborated to create multiple retail and mixed-use destinations across Southern California.

Carefree on North Central

Bettering Phoenix real estate as well as the living options for Native American seniors, Native American Connections (NAC) is delivering Carefree On North Central, a $2.67 million, affordable housing project catering to those who earn less than 50 percent of the area median income.

“NAC acquired the property with the intent to perform major rehabilitation and structure the financing for 36 units of senior affordable rental housing,” says Joe Keeper of NAC. “NAC, a non-profit Arizona corporation, is the developer and general partner of Carefree on North Central.”

Formerly a run-down and fire-damaged apartment property, Carefree on North Central will comprise one- and two-bedroom cottage-style units upon its opening in January 2006. Rents will range from $379 to $680 per month.

“The project will serve the Native American elderly population located in the urban community, but the project will have a quaint ambiance of a small community atmosphere,” says Keeper. “The project is a ‘new use’ for a building that may have been perceived as an eye-sore and blight to the neighborhood, but will now be an attractive, safe form of low-cost rental housing that will serve senior adults.”

As a long-term holder of real estate, NAC convinced the residents of North Central Phoenix that it was not only renovating the property, but becoming a committed neighbor as well. The Carefree On North Central rental units must remain affordable for a minimum 15-year period. NAC had varied funding sources for the project, including a construction loan from 1st National Bank of Arizona Community Development Group to finance the demolition and improvements to the site.

Native Americans are one of Phoenix’s fastest-growing population segments. As of the last census, more than 80,000 Native Americans had moved from reservations and tribal lands into the city center, more than double the figure from 10 years ago.

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