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PALO ALTO, CA-Entitlements for a major expansion of Stanford Shopping Center could be in place by the end of the year, assuming the city council here signs off on the project. Simon Property Group, the Indianapolis-based REIT that purchased the 1.4-million-square-foot development in 2003 for $333 million, wants to add a 120-unit hotel and another 240,000 square feet of retail to the 70-acre site.

The city is on its third year of review for the project. Steven Turner, the city planner on the project tells GlobeSt.com that an environmental impact report that covers the retail expansion should be ready to go in the next couple of months. If there are no big issues that can’t be mitigated, the city council should begin its formal review of the entitlements this fall and vote on them by the end of the year, he says.

While SPG’s development timeline may be extended to account for the economy, “they’ve told us they’d like to have [the shopping center expansion] completed by 2015,” says Turner.

Stanford is one of the top upscale retail districts in the region along with Union Square in San Francisco and, in San Jose, the adjacent Westfield Valley Fair and Santana Row developments. Stanford Shopping Center, built in phases beginning in 1956, is anchored by five major department stores–Neiman Marcus, Nordstrom, Bloomingdale’s, Macy’s, and Macy’s Men’s Store. Specialty retailers include Pottery Barn, Williams-Sonoma, Coach, Tiffany and Cartier.

Plans call for the bulk of the additional retail at Stanford Shopping Center to be in multiple buildings facing El Camino Real, where there is currently a sea of surface parking. The design of the expansion would be similar to Santana Row’s. The hotel is currently slated to go toward the other end of the center, at the corner of Quarry and Arboretum roads. As part of the expansion the plans call for the surface parking being lost to be replaced with additional structured parking.

SPG acquired Stanford Shopping Center with a $220-million, 3.60% interest-only five-year fixed-rate mortgage arranged by Credit Suisse First Boston. It is now encumbered by a five-year, $240-million, variable rate loan that matures in 2013. As of the end of 2008, the interest rate was 2.59%.

The ground beneath the center still belongs to Stanford University, as required by its founding grant. SPG controls the land under a long-term ground lease. The EIR nearing completion also covered a proposed expansion of Stanford Hospital because the partially adjacent developments are on similar timelines, Turner says.

Worldwide, SPG owns or has an interest in approximately 324 properties comprising 246 million square feet of gross leasable area. In the greater Bay Area, SPG owns five regional malls and five outlet properties. In addition to Stanford Shopping Center its regional malls are Stoneridge in Pleasanton; Hilltop Mall in Richmond; Great Mall of the Bay Area in Milpitas; and Coddington Mall and Santa Rosa Plaza, both in Santa Rosa.

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