New ownership arrangement announced at Pacific City in Huntington Beach
Eight months after opening its doors, Pacific City has a new ownership arrangement.
DJM Capital Partners, which announced its ownership in 2012 — three years before the retail and dining center opened — will now partner with TIAA Global Asset Management.
TIAA has acquired a 70% stake in the 190,900-square-foot, $135-million center at First Street and Pacific Coast Highway, which was first discussed more than a decade ago.
DJM, which also operates the Bella Terra center in Huntington Beach, will continue to own 30% of Pacific City and be in charge of property management, marketing, events programming, leasing, tenant improvements and construction at Pacific City.
“The joint venture is designed to successfully own, operate and evolve Pacific City for many years to come,” said Linda Berman, chief marketing officer for DJM.
While the partnership might raise questions about the financial stability of Pacific City, Berman said the center is “exceeding expectations and projections in sales performance to date.”
“We are very happy with the trajectory of Pacific City, and our visitors and customers seem thrilled with each new store that opens,” she said. “Things will only get better as we add new tenants and enrich the overall Pacific City experience as we mature.”
Paséa, a luxury hotel, opened earlier this year at the center. A 516-unit residential complex is expected to open in January at Pacific City, with one-bedroom units starting at $3,360 a month.
“It is common with this type of development to have different investors on board during various phases of the project,” said Eric Sahn, senior vice president and chief financial officer for DJM. TIAA referred questions to DJM representatives.
DJM is the fourth of six developers to be involved with the Pacific City project. The company came onboard in December 2012 after it bought 11 of the 31 acres owned by developer Crescent Heights.
The project initially was in the hands of Makar Properties and was later transferred to Farallon Capital Management, which sold the site to Crescent Heights in September 2011.
In July 2013, DJM partnered with developer R.D. Olson on the Paséa Hotel project.
Crescent Heights sold its remaining portion of the site to apartment developer UDR in February 2014.
Many patrons attest to the popularity of Pacific City. On most summer days or any weekend, it’s hard to get a table at one of its many restaurants without waiting at least an hour, said resident Kim Kramer, the founder of the Facebook group HB Citizens for a Better Downtown. He said he’ll visit the center at least once or twice a week to eat.
Since opening in November, Pacific City has brought in 27 retailers including Lush, Free People, Irene’s Story, Sephora and H&M, as well as eight full-service restaurants. These include Saint Marc, Lemonade and Ola Mexican Kitchen.
Lot 579 opened this summer. It’s a fast-food establishment that features a dozen eateries like Pie-Not, Popbar and Hans’ Homemade Ice Cream.
Susan Welfringer, manager of the Huntington Beach Downtown Business Improvement District, said she doesn’t see the center as a threat to the downtown area businesses, since it brings in more tourists and customers, who also spend their money on Main Street.
She said one negative might be the businesses on Main Street and at Pacific City competing for “the best employees.”
“Pacific City brings so many more jobs to downtown, and I still see ‘help wanted’ signs on some stores,” Welfringer said.
Resident Jonathan Johnson said he sees Pacific City as a good alternative to Main Street, which he described as “riddled with rough element.”
“I think Pacific City is a nice alternative for families and people of a decent social conscience to go to,” said Johnson, who moved to the Brookhurst Street and Pacific Coast Highway area three years ago from Chicago.
“The downtown area has become increasingly prohibitive for a local to want to frequent. I don’t mind homeless or even tourists, but there seem to be a lot of people down there looking for trouble. Pacific City seems to be targeted to a more middle- to upper-middle-class clientele that seem to be law-abiding citizens.”
Indeed, downtown Huntington Beach has seen more homeless people in recent years, but Police Chief Robert Handy does not attribute that to Pacific City. He said the only issues Pacific City brings to the area are “minor,” like parking and occasional calls for service.
But others aren’t so keen on the new center.
Many have complained about high parking costs and prices at shops that seem to cater to tourists.
“It seems odd to me building giant commercial mall on prime ocean view land with no advantage made of the views or beach location,” said resident John Briscoe in an email. “Mall business models take a geometry protractor and draw circles radiating from the mall to estimate potential business. NEWS FLASH the fishes in the sea do not buy much, and HALF of the radius circle is filled with non-shopping ocean water. The only way Pacific City will make a successful go of it is if they attract DOUBLE the consumers from the other half of the shopping radius map.”
Amber McConnell, who recently moved to Huntington Beach, said she finds the amenities to be more upscale than what she is used to seeing downtown.
Regarding the residential complex being built, city resident Kyle Cook said, “I have been to the leasing offices and viewed what they have to offer. It will be interesting to see if they can fill the units. If they do, will it be with families or will they be renting to corporations?”
