THE $5 MILLION QUESTION : With recession, tight budgets and worries about growth, can two bedroom cities find happiness, and financial relief, in new shopping centers?
In Simi Valley, it’s a matter of gambling on a vacant property. On a 119-acre site near the Simi Valley Freeway, developers are betting that a massive shopping center will flourish. City officials, eager to see as much as $2.7 million in projected annual tax revenues, are backing the project and hoping work begins soon.
In Camarillo, the wagering is on a celery field along Pleasant Valley Road and the politics are more complicated. That 86.5-acre spread, a developer says, will be the ideal home for a factory-outlet shopping center, entertainment center and hotel, which could add up to $2.3 million a year to city tax revenues. Thousands of citizens aren’t so sure, and the City Council will decide the controversy in coming weeks.
The two projects differ widely, but as Ventura County hunkers down beneath a persisting recession, they are the most visible and ambitious retail proposals in the county.
Together, they pose a single $5-million question: With a recession raging, government budgets tightening and residents wary of growth, can a bedroom city find happiness, and financial relief, in a new shopping center?
In the last five years, industry figures show, Ventura County developers have built 99 new shopping malls of 10,000 square feet or more. Since 1986, the retail square footage in the county has swelled to more than 12 million--a 67% increase.
The county population, meanwhile, has grown by just 10% over the same period. Not surprisingly, the retail vacancy rate has tripled, from 3% to 9.4%. In Camarillo, according to the most recent survey by Grubb & Ellis, the rate is more than 14%; in the Simi Valley-Moorpark area, 9.4%.
“There are so many shopping centers. They all have to share the wealth,” says Dirk Kittredge, Grubb & Ellis’ research director in Oxnard.
“In the last five years, because of the incredible building boom, developers really had the attitude that ‘No matter what I build, it’s going to be a success.’ They forgot about market research.”
Even Kevin Kudlo, manager of the Simi Valley mall project for Melvin Simon & Associates, acknowledges research showing 15 square feet of regional mall space per person in Ventura County, compared with 11 square feet per person statewide. However, Kudlo adds, the figure for the Simi Valley area is just six square feet per person--leaving plenty of room for new retail.
The incentive for developers in these projects is obvious enough; taken together, the stores in Southern California’s 50 largest shopping centers took in more than $9.3 billion last year. But as state and federal money has grown harder to come by, shopping center income has become increasingly crucial to municipal governments as well, in the form of tax revenues.
“There’s greater competition between cities to attract retail uses for that very reason,” says Matthew Boden, Camarillo’s director of planning and community development.
Simi Valley and Camarillo aren’t the only local cities mulling major shopping centers. Oxnard City Council members, who eliminated 70 city positions in July due to a budget squeeze, attended a shopping center developers’ convention early this year in search of a second big mall to complement The Esplanade.
They came up with Rothbart Development Corp. of Sherman Oaks, which has tentatively proposed a 550,000-square-foot center on the northwest corner of Rose Avenue and Gonzales Road. Negotiations between Rothbart and the city, still in early stages, began in September.
In Simi Valley, city officials have been mall-hunting for at least six years.
Their city, lying at the county’s southeast corner, may send more commuters to Los Angeles County than any other city in Ventura County. Surveys show that an unusually large number of Simi’s 100,217 residents do their shopping elsewhere too--leaving their city lacking tax dollars.
In the mid-1980s, the Simi Valley City Council made a policy decision to seek out a shopping center. Soon city officials were courting Melvin Simon, developer of more than 200 malls in 40 states.
It was a long wooing process, with some hesitation on both sides. Just two months ago--as workers put finishing touches on the nearby Ronald Reagan library--Simon’s mall plans won tentative approval from City Council members. The vote came despite opposition from some residents, who warned of increased crime and pollution, but with the backing of Simi Valley’s Chamber of Commerce.
The chamber group includes many of the merchants who may be competing with the new mall, but leaders say the mall could help them by luring more shoppers to all stores in the area.
“The council didn’t rush into this, and the developer didn’t rush into it,” Simi Valley Assistant City Manager Bob Hunt says.
The project is expected to include five major department stores, restaurants and a cinema. Supporters say it will employ 1,500 people and draw shoppers from Simi Valley, Moorpark, Fillmore and Thousand Oaks, an area now largely claimed by The Oaks mall in Thousand Oaks.
Kudlo, the Simi Valley mall’s project manager, who is now most concerned with finding retail tenants and financing, says it could be five years or more until the first stores open.
“The banks are real tight on money right now,” Kudlo says. “Those things would have to sort themselves out before we’d go into construction.”
In Camarillo, city officials serve 52,303 residents and a retail base of downtown stores and strip malls that hasn’t been enough to keep most residents buying in town.
But among rank-and-file Camarillo residents, sentiment against urbanization runs strong. Those sentiments were clear one night late last month, at a city Planning Commission meeting devoted entirely to the Sammis Co.’s mall proposal.
More than 200 people had turned out--some supportive, but most suspicious or downright hostile. The latter group brandished picket signs with slogans like “What’s more important--our money or our health?”
Two meetings later, on Tuesday, the Planning Commission voted 4-0 to recommend denial of the proposed project, substantially dimming its prospects. A City Council vote, which could support, amend or reverse the commission recommendation, is expected in December.
A survey of Camarillo Chamber of Commerce members found deep division on the subject, though a chamber committee offered conditional support for a shopping center. Chamber spokesman Wally Beck has asserted that the current celery fields use more water than an 86.5-acre shopping center would, and that because the shopping center would reduce driving distances for consumers, the added traffic wouldn’t necessarily increase air pollution.
Many other residents doubt that last assertion. Hoyt Jones, one of the anti-mall speakers before the Planning Commission, warned that a new shopping center would make Camarillo “just another of those faceless communities that exist to the east and south of us.”
Bill Supri, secretary of the Ventura County League of Homeowners, a community group fighting the Sammis project, argues that “we want to build out from the center . . . not leap out to the agricultural areas and then ‘in-fill.’ ”
He and other critics note that the city already has two other developers in town working on projects that could eventually add scores of stores to the city’s retail base.
“I think our City Council has more sense than to be seduced by a developer,” Supri says. “I’m sure they’ll come to the right decision.”
Sammis President Russell Goodman, the alleged seducer, shrugs off the criticism.
Camarillo’s evolution, he says, will inevitably include growth of retail and commercial uses inside the city’s boundaries. Like the developers in Simi Valley, he suggests that a new mall might boost the business of existing retail establishments. And even though the county may seem crowded with retailers, he argues, a factory-outlet mall would have unique attraction. He notes the success of Oxnard’s Price Club as an encouraging sign.
“People are coming from all over to attend that store,” Goodman says, adding that “there aren’t any IKEA (furniture outlets) here, and there aren’t any factory stores here.”
The uncertainty of the retail climate, meanwhile, reaches far beyond Ventura County. After a decade of runaway development, construction of new shopping centers across the country was down an estimated 35% last year.
At the International Council of Shopping Centers, a New York-based trade association that follows new construction, spokesman Keith Foxe reports shopping center construction starts will fall another 40% in 1991.
In Santa Barbara, the 1990 opening of the Paseo Nuevo shopping center was followed by business closures and vacancies along neighboring State Street. Harvey Moloch, a sociology professor at UC Santa Barbara, calls such chain reactions “the cannibalization factor,” and warns that even after two decades of mall proliferation, many land-use planners underestimate the business new malls will take from existing stores.
In San Luis Obispo, two of the largest shopping center projects in city history never made it to opening. Chamber of Commerce Executive Director David Garth reports that one proposal, a public-private partnership, stalled when city officials developed irreconcilable differences with their private partners. The other, envisioned as a three-story indoor mall on Higuera Street, was doomed when financing fell through after construction work had begun. The result: San Luis Obispo has a hole in the middle of its downtown.
“And that hole is both literal and figurative,” says Richard Foy, a partner in Communication Arts Inc., a mall and resort design firm based in Boulder, Colo.
But that doesn’t mean that industry experts and city officials are frowning on all new ventures.
“You can’t just look at first appearances, or statistical data, to say whether a shopping center is necessary or superfluous,” Foy says. “There are probably select opportunities for people to open a new kind of center, or to renovate existing centers to outpace the competition.”
In an Illinois suburb north of Chicago, Foy notes, his firm recently worked on a sprawling complex of manufacturer outlets called Gurney Mills. Despite opening in late summer, in the depths of the nation’s economic doldrums, the complex has drawn crowds estimated at 80,000 daily and has so far been adjudged successful.
“The shopping center has replaced Main Street as the symbolic center of the city,” Foy says. “And if you don’t have a viable shopping center, then you are at a disadvantage.”
Ventura County’s 3 Busiest Shopping Centers
1989 Taxable 1990 Taxable % Retail Sales Retail Sales Change The Oaks Mall $206.8 million $211.4 million +2.2 Thousand Oaks Buenaventura Plaza $119.7 million $122.7 million +2.5 Ventura The Esplanade $83.1 million $79.1 million -4.9 Oxnard
Source: State Board of Equalization
Proposed Malls
CAMARILLO
Project: A factory-outlet shopping center with hotel, specialty shops and recreational facilities. Originally proposed at 927,000 square feet, including 273,000 feet of discount-outlet space, but could be scaled back to blunt opposition among neighboring residents.
Status: Facing a Camarillo City Council vote in late November or December.
Location: an 86.5-acre celery field, south of the Ventura Freeway and east of Pleasant Valley Road.
Traffic: Up to 40,000 vehicle-trips daily, according to an environmental impact report.
Income: Potentially as much as $2.3 million in annual tax revenues for the City of Camarillo.
Developer: The Sammis Company, based in Irvine.
Timetable: Dependent on local politics and the recession. First stores could open in 1993.
SIMI VALLEY
Project: An office and retail center of 1.5 million square feet, including 980,000 square feet of shopping mall space. The mall would include five major department stores (none named or publicly committed so far), a food court and cinema.
Status: Tentatively approved by the Simi Valley City Council in September.
Location: An idle 119-acre site, which once held citrus orchards, north of the Simi Valley Freeway between 1st Street and Erringer Road.
Traffic: Up to 45,000 vehicle-trips daily, according to an environmental impact report.
Income: Potentially as much as $2.7 million in annual tax revenues for the City of Simi Valley.
Developer: Melvin Simon & Associates, based in Indianapolis, in cooperation with Homart Development Co., the development subsidiary of Sears.
Timetable: Dependent on the length of the recession, among other things. First stores would open no sooner than 1996.
