General Growth Grows West

The two new projects will include an 867,000-sf center near here called Otay Ranch and a 1-million-sf development near Sacramento called Elk Grove Promenade. When ground is broken later this year on Otay Ranch, says General Growth's John Bergstrom, it will mark the first project in recent history that the company has developed as an open air center from the ground up.

"We have created open air concepts that have been integrated into bigger developments that included an enclosed mall, but as far as a project that is fully open air, Otay Ranch will be our first in recent history," says Bergstrom, who is SVP of development for General Growth. To find another example of the company building an open air center from the ground up, he says, "You probably have to go back to our roots in the 50s and 60s."

Otay Ranch will be the first of the two new California centers to be completed and is due to open its doors in the fall of 2006. It will feature three anchor tenants, specialty shops, six full service restaurants, a large bookstore, a sporting goods retailer and a cinema. The Elk Grove Promenade, south of Sacramento, will include three anchors, a bookstore, a sporting goods store, a host of other retailers and a theater. It is scheduled to open in 2007.

Although the two centers are far apart geographically, one in the heart of Northern California and the other near San Diego at the southern tip of the state, Bergstrom says the demographics of the two areas are quite similar and both places are poised for considerable growth. The population of the Otay Ranch market area is approximately 370,000 and is projected to grow to 415,000 by the time the project opens. In Elk Grove, where the population of the market area is 425,000 today, the population is expected to grow to 490,000 by 2007.

Both sites appealed to General Growth because of rapidly rising numbers of rooftops, but also because both have significant potential to sustain that growth, thanks to new highways and freeway interchanges that are creating greater access. The Elk Grove area probably has more potential for long term growth because the Chula Vista area has some boundaries and geographic restraints that will limit it at some point in the future, Bergstrom points out.

Both of the new centers are being developed on vacant land, the Elk Grove Promenade on property that General Growth acquired in 2003 and the Otay Ranch project on a site that the company expects to close escrow on in March. Architects for the centers are Altoon + Porter of Los Angeles for the Sacramento site and Field Paoli Architects of San Francisco for the Chula Vista project. The San Diego site is entitled and General Growth is undergoing the entitlement process in Sacramento. Except for some differences in weather between San Diego and Sacramento, most notably the greater extremes of heat and cold in Sacramento, the two development sites are similar enough that both are well-suited to the open air concept, Bergstrom says.

While it's customary for developers to say that retailers are showing strong interest in their projects, Bergstrom emphasizes that it truly is the case for both of the new General Growth centers. "Both projects will represent what are fresh concepts in the retail world today," Bergstrom says. Besides being open air venues, both will incorporate anchors, specialty shops and entertainment elements that shoppers have come to expect. In the two new California centers, "We're building on the success we've had in our other projects by making them multidimensional, not being just a fashion project or just an entertainment project, but in blending a number of facets together," the General Growth SVP says.