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CARSON, CA-When investors and developers talk about locations that are supply-constrained with high barriers to entry, they are talking about places like the South Bay area of Los Angeles. Cities like Carson and other communities in the South Bay area of Los Angeles have long been infill markets that are built out, with few if any large development parcels available.

No wonder, then, that partners Hopkins Real Estate Group and LNR Property Corp. saw a rare opportunity in a vacant 168-acre development site along the 405 Freeway near an existing retail property called South Bay Pavilion that Hopkins is redeveloping. Hopkins and LNR envisioned a plan to redevelop the former Cal Compact landfill, located along the 405 Freeway between Avalon and Del Amo boulevards, into a mixed-use project called Carson Marketplace that would comprise 1.3 million sf of retail and theater space, restaurants, 1,550 housing units and a 200-room hotel. Such a development would constitute what Dennis Reyling, COO at Hopkins Real Estate Group, calls “a shopping destination for the whole South Bay.”

Such a large project would take years to develop in any case, but the Carson site will take a bit longer because the reason the acreage is vacant is that it once was a landfill and any development there will have to wait for remediation. The joint venture of Hopkins and LNR has now embarked on a development plan that calls for a best-case scenario in which construction begins in mid-2009 at the earliest and the first tenants will be open for business in 2010 or 2011.

The final plans for Carson Marketplace are by no means set in stone, but Hopkins and LNR are both optimistic that the combination of the demand for retail and other uses, the pro-development city administration and retailers’ desire to expand into the market will turn the partners’ vision into reality. “It’s very likely that the uses we are proposing will ultimately be approved, but we still have no guarantee,” says Steve Coyne president of the SM Coyne Co. and the development consultant to LNR for the project.

The Carson Redevelopment Agency this year unanimously approved an agreement with Hopkins and LNR, called the owner’s participation agreement. However, Coyne says the project will probably not be assured of clear sailing until next year, after the building and remediation plans have gone through the approval process. Before construction can begin on the development, the project will begin with a $115 million cleanup of the landfill, the construction of roads and other improvements.

The prospect of expanding into the new project in a market as huge as the South Bay has retailers eager to get involved, according to Reyling. “One of the things that was very attractive to Steve Hopkins about this site, besides its being one of the largest undeveloped pieces of property in the County of Los Angeles, was that there is a big hole in this market in terms of many retailers who would like to be here but can’t find space,” Reyling tells GlobeSt.com/Retail.

Small retailers can find nooks and crannies to squeeze into in the South Bay, but larger operations that need big spaces are pretty much out of luck. Coyne cites “the void for major retailers” in the market and says that “In our initial inquiries to those types of tenants, there was a tremendous amount of interest.” In fact, Coyne says, “Some of them are more eager to get to the deal than we are.”

According to Reyling, the development partners held meetings with retailers as early in the process as possible “to take their temperature on the time line involved because of the extra time (about 36 months) that the remediation adds.” Although the partners have no signed agreements that they can announce yet, he says that the larger, more sophisticated retailers in particular are comfortable with making commitments so far ahead of time because they have had experience on sites involving remediation.

The 1.3-million-sf retail portion of the Carson Marketplace will consist of three distinct components, according to Reyling: the big box power center portion, a portion occupied by promotional tenants and a lifestyle-entertainment center of about 250,000 sf. 1,550 residential units and 200,000-sf hotel. The Hopkins COO says that area residents want “theaters, bookstores, casual dining and other options that they don’t have now in the community.”

If all goes as planned, the Carson Marketplace will create a new retail, residential and hospitality venue on a site that has remained fallow for decades, where developers and city officials have proposed a number of uses for the former landfill site over the years. One plan called for a two-million-sf mall under one roof. Most recently, the land was on the National Football League’s short list of possible stadium sites. But city officials withdrew their NFL bid and instead chose to work toward the mixed-use development.

Combined with the adjacent South Bay Pavilion that Hopkins is redeveloping, the site represents what Reyling sees as a nearly unparalleled opportunity. With the Pavilion project directly across the 405 Freeway from the new site, “We can position the properties in a way that will be best for both projects,” Reyling says, creating the aforementioned “shopping destination for the whole South Bay.”

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