FEATURE ARTICLE, MAY 2006

EASY COME, EASY GROW
Economic development teams in California ensure people, businesses appreciate more than just their cities’ natural scenery.
Brian A. Lee

Economic growth and commercial real estate activity are givens in Las Vegas and the high-demand coastal counties of Southern California. But betwixt those bellwethers are some great opportunities for new development and business, not to mention a robust quality of life for residents. Western Real Estate Business took a look at three California cities and their economic development status and objectives in 2006.

Rancho Cucamonga, California

There is no shortage of real estate activity in Rancho Cucamonga. On the heels of the late-2004 opening of the 1.3 million-square-foot mixed-use lifestyle center Victoria Gardens, the city of more than 160,000 residents is seeing continued commercial growth.

“Rancho Cucamonga has been especially attractive to companies specializing in research and development, health care, financial services and high technology,” says Mike Nelson, senior redevelopment analyst for the city. “Currently more than 2.5 million square feet of office space is either available or under construction in Rancho Cucamonga, generating a great deal of interest from companies that are looking to relocate or expand.”

In Rancho Cucamonga, California, HavenPark will feature two 75,000-square-foot office buildings, a Class A business hotel and 30,000 square feet of service retail and restaurants.

At Foothill Boulevard and Milliken Avenue, the new Foothill Gateway development will offer three office buildings, totaling almost 50,000 square feet, and a restaurant pad. Also located on Foothill Boulevard, just off of Haven Avenue at Civic Center Drive, a 120,000-square-foot office building is planned as part of the mixed-use Rancho Cucamonga Town Square. Victoria Gardens contributes two Class A second-floor spaces, totaling more than 40,000 square feet, to Rancho Cucamonga’s overall office availability.

“Our economic development team is currently focusing on Haven Avenue, the city’s primary office corridor, and Foothill Boulevard, the city’s primary retail-commercial corridor, as major areas for development in the city,” says Nelson. “Our goal is to focus on the development of Class A commercial office buildings and the recruitment of major corporate users that are looking for a significant value for their companies, their shareholders and their employees.”

There’s plenty of office activity occurring in Rancho Cucamonga.

“One of the benefits of developing in Rancho Cucamonga is the fact that land and lease rates are lower than in many other areas in Southern California — Los Angeles, Orange and San Diego counties,” he says. “This is clearly an advantage for companies that are looking to relocate or expand. Another benefit is the influx of skilled technicians, professionals, and executives that are migrating to Rancho Cucamonga because it is an upscale community, but still relatively affordable.”

Palm Springs, California

Palm Springs boasts 45,731 permanent residents and almost that many seasonal inhabitants. To know the whole story of this destination resort city’s appeal, one must consider its more than 1 million annual visitors. This influx, of course, has had its effect on Palm Springs’ commercial real estate market.

“With the expansion of the convention center, our hope was to add more hotel rooms to accommodate larger groups,” says John Raymond, director of community & economic development. “That strategy has certainly paid off.”

The 261,000-square-foot Palm Springs Convention Center reopened in September 2005 after a $32 million expansion. Two hotels totaling 450 rooms are planned just across the street from the facility.

“The city is currently in negotiations with the Nexus Corporation to develop a Hard Rock Hotel with 250 hotel rooms and 250 condo units,” says Raymond. “The city is also working with the Oasi Group, another hotel development company, to build an upscale 200-room hotel. The addition of these two hotels will make the Palm Springs Convention Center the most unique and hip meeting location in the country.”

Three major mixed-use redevelopment projects are scheduled to break ground in Palm Springs by late summer or early fall, adding a total of more than 1,200 residential units and 300,000 square feet of retail space in downtown. The Rael project will comprise 108 condo units, 18 live-work units and 25,000 square feet of ground-level retail. The Linneken/Ozell project will offer 125 condo units and 32,420 square feet of ground-level retail. In the center of downtown, Wessman Development plans to redevelop the former Desert Fashion Plaza into Museum Market plaza, adding 1,000 residential units and approximately 250,000 square feet of retail.

”Our primary focus is the downtown ‘Main Street’ corridor, which is the main attraction in Palm Springs,” says Raymond. “Palm Canyon Drive is a pedestrian-friendly, walk-able downtown that offers eclectic shopping, dining and entertainment for visitors and local residents.”

On the new development front, Laurich Properties (Hank Gordon Developer) received approval to develop a 255,250-square foot, Von’s Lifestyle retail center at Sunrise and Tahquitz. Dick Taylor of Dick Taylor Productions recently completed the Palm Springs Pavilion Theatre, a 17,500-square-foot, 1,000-seat facility. Raymond reports that there are currently more than 178 projects in the planning queue in the city of Palm Springs.

Rancho Mirage, California

Rancho Mirage offers a lot of attractive retail and dining options, like The Cheesecake Factory at The River at Rancho Mirage at Highway 111, which is the main commercial corridor in the Coachella Valley.

Investwest Partners III LLC is slated to complete the expansion of Monterey Marketplace in early 2007. The 10-acre, 107,500-square-foot project on Dinah Shore Drive west of Monterey Avenue will feature new retail and restaurants. The 40-acre Monterey Marketplace already features The Home Depot, Regal Cinemas 16, Pacific Sales Kitchen & Bath, Linens ‘N’ Things and Clark’s Nutrition & Natural Foods Market.

“The Monterey Marketplace is fast becoming one of the most visited shopping centers in the Coachella Valley,” says Sean Smith redevelopment analyst for the city of Rancho Mirage. “Its close proximity to Interstate 10 provides easy access to shoppers traveling throughout the valley.”

Immediately south of Monterey Marketplace, Monterey Commons, a Mapleton LLC and Zelman development, has been proposed. It would bring nearly 400,000 more square feet of retail and restaurants to the market. Across from this 33-acre site are new power center retail offerings including a Wal-Mart Supercenter, Sam’s Club and Lowe’s Home Improvement Warehouse. On Highway 111, directly across from The River Lifestyle Center, the Alamo Group is developing One 11 Plaza, a 36,500-square-foot specialty shopping center, which will be anchored by an 8,000-square-foot Bing Crosby’s Restaurant.

“The overall focus for Rancho Mirage’s [economic development team] will be the expansion of retail and hotel offerings, with special attention toward the specialty retail market and reinforcing existing market strengths along Highway 111 and the Dinah Shore/Monterey intersection adjacent to Interstate 10,” says Smith.

Those goals should be quite attainable if the high-profile visitors that this scenic city attracts are taken as any indicator. But there’s more to Rancho Mirage than the hospitality and retail markets. The $400 million expansion of the 130-acre Eisenhower Medical Center campus on Bob Hope Drive continues with an anticipated completion date in 2012.

©2006 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.