How One Center Is Changing The Way Developers See Retail
As retailers struggle to expand across the country, developers and investors are increasingly turning to revitalizing old commercial centers in existing communities.
A prime example is Los Angeles-based Kornwasser Victory Plaza shopping center. At 133,750 SF of retail, it is a sizable property for its type. The center is notably larger than the average strip mall. Canoga Park-based general contracting business Parker Brown recently finished a complete remodel of an out-of-date building. The team modernized its interior and façade and brought in two new contemporary tenants, Blaze Pizza and Chipotle.
Parker Brown is demolishing an additional 15K SF of storefront space reminiscent of a strip mall. In its place, the crew will build a modernized 18K SF structure with a 50-foot tower, specifically to accommodate a Petco anchor and another tenant. The company also is redoing the façade and an interior remodel of an existing CVS. Existing tenants include a recently renovated LA Fitness and a Vallarta grocery store. These new and revamped installations are reinvigorating a decades-old North Hollywood establishment full of shopping and dining.
Expenses for this type of remodeling job are high, demanding significant upgrades to the DWP electrical service, compliance with ADA requirements and installation of eco drains to harvest site water in accordance with new state regulations.
Serving the demographics of the property location also is important to its success. Victory Plaza is surrounded by a fairly large Hispanic population. The Plaza’s grocery store — part of a specifically Latinx grocery store chain — is a much bigger success than a South Asian grocery store would be.
“We observe the neighborhood demographics for each location, i.e. nearby residents who will be using the center the most,” said Victory Plaza development manager Sue Jagodzinski.
Jagodzinksi speaks anecdotally. The owners have installed Sprouts Farmers Market grocery stores as a tenant in a variety of other centers. Some have flourished in coordination with garden centers and supply shops nearby. It is important to offer a diversity of goods and services when considering which tenants to anchor or join a retail complex. Affordable shopping options are necessary to drive value, but so is a mix of offerings to retain consumer interest and keep property values high.
A retail plaza’s ultimate purpose is servicing the community. Just as important as knowledge of the consumer base is an in-depth knowledge and appreciation for tenants’ relationships with the owner. Nailing down a large anchor tenant can help drive smaller businesses into the center even faster. Owners must brainstorm around the leases of current tenants, the space available versus construction capabilities, compliance to local zoning codes and the physical and psychological needs of the surrounding community.
“I think getting a good variety of uses and retail services into these centers is the key to our success,” Jagodzinski said. “For example, if we bring in a discount variety store like Dollar Tree or 99-cent store, we often limit this type of store within the center so that customers are not faced with an oversupply of similar options. However, it can be quite healthy to have competing or complementary stores across the street."
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