Mall Will Alter Economies of 2 Antelope Valley Cities : Revenue: The 750,000-square-foot shopping complex is expected to create 1,500 jobs and generate $200 million in sales by 1995. Palmdale is also anticipating $2 million in sales tax.
With a scheduled opening just in time for the start of next year’s Christmas shopping season, the Antelope Valley’s first regional mall is taking shape on a stretch of once barren land in Palmdale. Yet more than just the local landscape is changing.
The $75-million project, the largest in Antelope Valley history, is expected to sound an economic boom for Palmdale that will bring it economically closer to neighboring Lancaster.
Delighted Palmdale officials say the mall will attract additional jobs, development and tax revenue for the city.
“The new mall is going to become the No. 1 pull for shopping in the entire Lancaster-Palmdale area,” said Chuck Linn, regional operations manager for J. C. Penney Co., one of the major stores coming to the mall. “We wanted to be part of it because of the tremendous growth in the area.”
J.C. Penney and Sears are abandoning longtime locations in downtown Lancaster to move to the mall.
For years, Lancaster, with a population of about 80,000, has been the larger city in the Antelope Valley. But Palmdale, with about 50,000 people, has been catching up and the mall is expected to quicken the pace.
Even without the mall, annual taxable retail sales in Palmdale grew a hefty 115% between 1984 and 1988, from $91 million to $196 million. During that period, Lancaster’s sales increased 66%, from $390 million to $648 million.
The diplomatically named Antelope Valley Mall, scheduled to open in September, is expected to produce an extra $200 million in annual sales for Palmdale by 1995. Construction on the 82-acre site began in May. City officials are already talking of a range of related projects, from shopping centers to hotels, that may follow.
When the Sears and J.C. Penney stores move out of Lancaster they will leave economic gaps, officials of the larger city say. The Sears store is one of the city’s 10 largest sales tax producers and has been in business 32 years. The J.C. Penney store has been in business 37 years at its current site. It will consolidate operations at the mall with Palmdale’s J.C. Penney store, which will be closing after 32 years.
The Sears and J.C. Penney stores will be two of four major department stores that will anchor the 750,000-square-foot mall. Joining them will be a San Bernardino-based Harris department store and a Gottschalks, the Fresno-based department chain’s first outlet in Southern California.
Rounding out the project will be 125 to 130 smaller stores, a 10-screen theater and a food court. Developers also hope to entice restaurants and other businesses with 140,000 square feet ringing the mall.
“We think it’s going to be one of our best. We’re very optimistic,” said Everett Shine, a vice president with Forest City Enterprises Inc., the mall’s major developer.
“The area is growing so fast, and we have such a captive market there,” he said, referring to the Antelope Valley. “It has all the ingredients for a very successful project.”
Forest City has developed about 20 malls nationwide, including The Galleria in Redondo Beach, which opened in 1985, and The Mall of Victor Valley in Victorville, which opened in 1986. The company also owns the Park La Brea apartment community in the Fairfax area of Los Angeles.
Joining Forest City in developing the Palmdale mall are East Coast builder George Zamias and J.C. Penney Realty. The developers plan to add three more major department stores in coming years, for a total project of about 1.5 million square feet.
The economic rivalry between Lancaster and Palmdale notwithstanding, the new mall may be good news for residents of both cities. The Antelope Valley has had no comprehensive shopping area, despite its growth to nearly 200,000 people. When the project is completed, residents will no longer face 40-mile drives to the San Fernando Valley to shop at a mall.
In addition, the new Sears and J.C. Penney stores will be larger and employ more workers than the current stores combined.
The mall’s settling in Palmdale was the outcome of a two-year pitched battle between the two cities. Far more than civic pride was at stake. In addition to its sales tax revenue, the mall will need about 1,500 workers, making it one of Palmdale’s largest employers.
“I have a standing bet with my chairman that in three years the Palmdale store will be the No. 1 in our chain,” said Robert Lawson, executive vice president of Gottschalks, which has most of its 23 stores in central California. Like the mall’s other department stores, Gottschalks caters to middle-income shoppers.
Palmdale also has been gaining on Lancaster in sales tax revenue in recent years. Between 1984 and 1989, sales tax money going to Palmdale increased 123%, compared to 71% for Lancaster.
Sales tax, Lancaster’s top source of revenue, was $9.1 million for the 1988-1989 fiscal year. For Palmdale, 1988-89 tax revenue amounted to nearly $3 million, second only to the fees paid by home builders. The one-story, Mediterranean-style mall is expected to add more than $2 million to that figure, officials say.
But the bounty won’t be forthcoming right away. Because Palmdale had to issue $17.7 million in tax-exempt bonds to woo the project from Lancaster, paying off the bonds over an 18-year period will soak up most of the mall’s sales tax revenue through the 1990s.
Palmdale officials spent $12 million of the bond issue to buy a 102-acre mall site for the developers. In all, mall developers control 128 acres along the west side of the Antelope Valley Freeway north of Avenue P. The city also gave the developers a $2-million interest-free loan for 30 years.
Until this year, the mall site was part of a long stretch of undeveloped land along the freeway covered by scrub brush and Joshua trees. The city is making the mall developers pay for about $10 million in street and public works improvements necessitated by the project.
Eventually, tax revenues to the city will outrun the debt, Palmdale officials say. And Tom Combiths, Palmdale’s deputy city administrator, said the mall will help give the city a more stable economic base.
“One of the reasons for doing this is we’re confident we’ll have satellite development going in around the mall,” Combiths said.
City officials already are planning three nearby shopping centers, he said.
In addition, at least two major hotel operators have inquired about building projects near the mall, said David Aaker, executive vice president of the Palmdale Chamber of Commerce. Aaker declined to name the companies, but added, “They want to be near the mall.”
Although Lancaster lost the mall project to Palmdale, its officials say the city is hardly standing still. Lancaster is trying to interest developers in building the valley’s second regional mall on the 125-acre site.
“That is my No. 1 priority,” said Steve Dukett, Lancaster’s redevelopment director. “We’re not going to let the moss grow under our feet.” He acknowledged, however, that the valley may be three to five years away from being able to support a second mall.
Retail industry experts are pessimistic about Lancaster’s chances of staying well ahead of Palmdale economically. Not only is Palmdale home to the regional mall, but it is 10 miles closer to Los Angeles, an important factor to incoming stores, they say.
“The regional shopping center can really act as a hub,” said an official with a major development company that competes with Forest City.
The new Sears store, at 132,000 square feet, will be the largest in the mall. The J.C. Penney and Gottschalks stores will have about 115,000 square feet each, followed by the Harris store at 113,000 square feet. In contrast, the two current J.C. Penney stores total about 55,000 square feet.
There is some concern that smaller businesses from Lancaster and Palmdale will leave existing shopping centers for the fancy new quarters. But officials in both cities predicted such departures will be minimal because of the mall’s higher rents.
The monthly cost of space in Palmdale’s existing shopping centers ranges from 85 cents to $1.40 per square foot, said Aaker of the Palmdale Chamber of Commerce. Rents at the mall are expected to start at about $1.40 per square foot and range up to several times that price.
Forest City officials declined to provide specific lease rates for the mall, saying the costs will vary greatly depending on the type of store and location. Even so, a Forest City spokesman predicted that about 70% of the mall’s stores will be new to the Antelope Valley.
