Western Real Estate Business

SEP 2017

Western Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Western United States.

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76 • September 2017 • Western Real Estate Business www.REBusinessOnline.com RECREATING A LEGEND Donahue Schriber is renovating and expanding Del Mar Highlands Town Center, a North County San Diego center that has helped define the area's lifestyle. By Randall Shearin D el Mar Highlands Town Cen- ter has been a fixture of life in North San Diego for 30 years. The center has helped define the re- laxed lifestyle that's prevalent in the area, providing goods, services, and entertainment by keeping up with the trends. Donahue Schriber devel- oped the center with Pardee Homes in 1987. The center began its life as a small, neighborhood center anchored by Ralphs Fresh Fare and Rite Aid, who remain tenants today. In 1991, Donahue Schriber extended the cen- ter by 12 acres, bringing in a cinema, service retail, and a 10,000-square-foot first-of-its-kind Jimbo's… Naturally! Natural Foods Grocer. "The market had grown-up, and is so different than when we originally built the center in 1987," says Patrick Donahue, chairman and chief ex- ecutive officer of Donahue Schriber. "About 4.5 million square feet of com- mercial space now surrounds the cen- ter. We have a tremendous daytime population when you combine the office market with the surrounding residents." One of the catalysts for the improve- ment was that the market is under- served for restaurants. At the same time, Donahue Schriber wanted to make its entertainment offering at the center match the upscale nature of the market. The catalyst for both was the signing of Cinépolis Luxury Cinemas. While the theater went from 1,700 seats to 650 seats, going upscale has made it more desirable and differenti- ated it to the market. The theater has gone from $3.5 million as an Ultra Star to $12.5 million in sales per year as Ci- népolis Luxury Cinemas. "The addition of a luxury cinema was really the driver for us to remodel the shopping center in 2010 and bring it up to date," says Donahue. "With the addition of the theater and retail- ers, we saw our sales go from $650 per square foot to $750 per square foot. Now with our parking structure complete, we have the infrastructure to expand the center by an additional 120,000 square feet and continue to in- crease sales." In 2013, Donahue Schriber pur- chased its partners' shares in the property and became the 100 percent owner of Del Mar Highlands Town Center. "Now, under our ownership, we've taken some time to let the center ma- ture and try to fully understand where our sales are coming from," says Do- nahue. With 25-year leases turning from the 1991-92 expansion, the timing is right for the center to begin its next phase. That includes the 120,000-square-foot expansion known as The Collection at Del Mar Highlands Town Center that will add a new and improved Jimbo's… Naturally!; a food hall and beer garden, new retail, and plenty of parking. At the same time, Donahue Schriber is updating the entire center so that it will have a modern, cohesive look and contain amenities that to- day's consumers desire in a physical retail environment. "Beyond addressing the changing market, renovating the center will al- low us to address the changes in retail that are going on right now," says Do- nahue. Construction began at The Col- lection at Del Mar Highlands Town Center, along with renovations to the existing center, last year. The new parking structure is near completion and will add 800 additional stalls. KinderCare Learning Center is being relocated to the top of the parking structure, freeing up space to build a 50,000-square-foot box that will house the new 25,000 square foot Jimbo's… Naturally! Natural Foods Grocer and The Skydeck. Donahue Schriber is de- signing this portion of the center to become a major attraction and anchor of the center. In its existing location, Jimbo's… Naturally! currently per- forms at well over $1,000 per square foot, according to Donahue Schriber. The new store will allow Jimbo's… Naturally! to be more competitive by offering a broader selection of mer- chandise. Between Ralphs Fresh Fare and Jim- bo's… Naturally!, the center is selling about $1.5 million per week worth of groceries. Other retailers at the center include Mendocino Farms, Nékter Juice Bar, Bluemercury, Bank of Amer- ica, Pappalecco, Pokewan, Drybar, Starbucks, AT&T;, Papyrus, Panda Ex- press, Grater Grilled Cheese, Club Pi- lates, Wells Fargo Bank, Geppetto's - A Child's Fantasy, and Snooze an A.M. Eatery. High-end restaurants like Searsucker, Urban Plates, Sammy's Woodfired Pizza & Grill, Davanti Enoteca, and Champagne Bakery also have a home at the center. Philz Coffee will open in the first quarter of 2018. "We have really specialized in a nice mix of local, regional, and national tenants," says Donahue. With The Collection, the center will also expand its food offerings, as well as new fitness, health, and beauty of- ferings. When the expansion and ren- ovations of Del Mar Highlands Town Center are complete, the project will be approximately 380,522 square feet. The center sits in an affluent, well- educated trade area. Approximately 72 percent of residents have a college degree, and the average household in- come in the trade area is $170,000. "Even with that level of income, this is a casual customer," says Donahue. "They live at or near the beach, so they like that casual lifestyle." Donahue Schriber was instrumen- tal in bringing the food court concept into malls, first launching the effort at Glendale Galleria in 1976. Draw- ing its inspiration from El Nacional in Barcelona, Spain, The Skydeck at Del Mar Highlands Town Center will be a restaurant collective redefining the way customers eat, drink, relax, and gather with family and friends. The state-of-the-art facility brings the outside in with 25-foot-high window storefronts, large roll-up glass doors, and a retractable roof highlighting the mild coastal climate North Coun- ty is famous for. The Skydeck will feature a diverse mix of five to seven exciting and unique restaurants, each with its own dining area, as well as a lively and inviting common area that encourages people to connect and stay awhile. "This Skydeck concept is specific to Del Mar Highlands Town Center. We are not going to roll this out across our portfolio," says Donahue. "Because of the demographics, the office market, and our ability to extend the hours of operation at the center; we think we have something really special here." With the expansion and revitalized tenant mix, Donahue Schriber intends to move the needle of its sales from $750 per square foot to over $900 per square foot in the near future. "It's been a fantastic project, and it has been a lot of fun. We are excited to see the new space come to life," says Donahue. n Drawing its inspiration from European food halls, The Skydeck at Del Mar Highlands Town Center will be a restaurant collective with 25 foot-high window storefronts, large roll-up glass doors and a retractable roof. Del Mar Highlands Town Center has been a fixture for North San Diego residents since 1987.

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