Retail Developers Look Ahead to Growth of State's Population, but Asbestos Looms as Potential Threat to Prosperity for Some : Future Looks Bright for Malls

Retail Developers Look Ahead to Growth of State’s Population, but Asbestos Looms as Potential Threat to Prosperity for Some : Future Looks Bright for Malls

By MARY ANN GALANTE

Feb. 25, 1989 12 AM PT

Times Staff Writer

For the shopping center industry, the good news is that California will need lots more malls. And those hunting for low-interest loans probably will be able to find them--although not anytime soon.

The bad news is, if you happen to own a building with asbestos, it could cost a fortune to clean it up.

Those were some of the predictions--and concerns--voiced Friday when more than 1,200 retail developers, tenants and lenders attended an “idea exchange” of the International Council of Shopping Centers.

For the most part, the outlook was upbeat.

“I expect interest rates will be a lot lower. The question is when and how high they’re going to go before they get there,” Jeremiah W. O’Connor, Jr., council president and head of New York’s J.W. O’Connor & Co. Inc., told the group. “At some point, the economy is going to turn down. When it does, interest rates will too.”

For those with the financing, California will be an ideal place to build shopping centers, several panelists predicted. That’s because over the next 12 years the state’s growing population will need an estimated 3 million new housing units--a good number of them in Southern California.

“And that’s 400 to 500 more shopping centers,” said Ranney Draper, a general partner with Costa Mesa-based Diversified Shopping Centers.

Another plus for developers here is the projected growth in the numbers of ethnic shoppers.

As a group, the nation’s 22 million Latinos have purchasing power of $140 billion a year, said Stephen Levin, vice president and general manager of KVEA, Channel 52, a Spanish language TV station. And by 2015, there will be an estimated 40 million Latinos in this country.

That translates to retail opportunity, the panelists agreed, for downtown areas such as Santa Ana’s 4th and Main Street district, as well as for smaller neighborhood stores and for malls.

“The Mexican customer is good for grocery stores. They buy a lot more produce,” said Pat Barber, vice president with the Boys Markets.

At the Boys chain’s Viva stores, which are aimed toward Latinos, customers buy twice as much produce as shoppers in the company’s conventional supermarkets, he said.

“There’s a terrific opportunity for us and anybody . . . because there are that many more (ethnic) shoppers out there,” Barber said.

When the subject turned to asbestos, there was much less to cheer about.

Thirty years ago, it cost 25 cents per square foot to insulate buildings with the fire retardant, panelists said. Today, it costs an average of $25 a square foot to remove it.

And even with unlimited funds, “there aren’t enough companies in the U.S. today that could adequately perform all the asbestos removal,” said John Pentz, associate partner with Hughes Investments in Newport Beach. “And if they did, the asbestos in the air would be worse than it is today.”