Hands On Developer Acquires Troubled Shopping Center
LA developer Dave Paynter has had good success developing some 2.5 million square feet of shopping space in the state. With a good reputation in the commercial retail world Paynter sits tall in the saddle. But now he is the proud owner of Sequoia Mall acquired at what seems like a fire sale. “I knew I had to buy the property at the right price” says Dave who now faces an even taller order – fix the broken down Sequoia Mall.
Clearly the mall has been neglected over the years.Since it was built in 1974,Visalia’s other mall,Sequoia Mall has not had an owner/developer with both the experience,wherewithal and local knowledge base that it has now. Paynter purchased the shopping center in mid-November.
Sequoia Mall had been the sales block since March in what looked like a distressed sale. Sacramento-based Core Commercial listed the property in March under the heading of “Best Offer” with offers due May 1.The announcement of the sale came after the mall’s owners Kimco and Schottenstein “have failed to invest in any remodel effort over the years” said now retired Visalia City Manager Steve Salomon.
While he is from Los Angeles – he is a familiar name around Visalia and the entire Central Valley. Paynter has a 25 year history of turning under performing properties, real challenges – into retail money makers along Mooney Boulevard and retail strips in Porterville,Hanford and Clovis among others.
Remember the “Sin City” apartments at Mooney and Walnut? It is now Park Place Promenade shopping center anchored by Kohls and Ross. Remember how he had to assemble small parcels on south Mooney at James St in the 1990s to build what was to become south Mooney’s biggest sales tax generator, Costco,where Walmart is today.
Now he has taken on perhaps his biggest development challenge – buying a tired,60% empty 70s shopping center – Sequoia Mall last week for an undisclosed sum. The sale includes the 100% leased Tower Plaza. Although the price the Sequoia mall sold for was not released, the betting was it sold for under the appraised price.It was sold in 2003 for $27.4 million to Centro Watt and resold in 2007 to the current owners,listed at the time at $30 million. The county tax collector lists the appraised price earlier this year at about $16.9 million.
Can he turn this turkey around?
”If anyone can do it – Dave Paynter can” says John Dubois of Core Commercial Real Estate who brokered the sale for partners Kimco Real Estate and Schottenstein- boith based back east. Dubois says Paynter “won the bidding on the 24.3 acre mall over multiple offers.” The sale includes Tower Plaza as well as the mall but not the Sears, Hobby Lobby or CVS spaces nor the out parcels along Mooney.
Bringing In New Blood
Paynter’s style is to bring in new retailers that the community has not seen before – working well with city councils eager for sales tax dollars. Most recently he brought in Dicks Sporting Goods to town after buying and remodeling the former FoodsCo center on Caldwell at Mooney. He is expected to soon fill one large space still available there.
Now across the street comes Sequoia Mall that at one time had more going for it than its 60 percent vacant space inside the enclosed mall. This mall has always played second fiddle to its more prosperous sister retail complex – Visalia Mall, down the block.But in recent years after the closure of Borders in the recession years – the mall has been pretty much a ghost town.
The departures of retailers were often no fault of local management with Mervyn’s and Borders closing across the US and Ross relocating to a far more visible space across from Visalia Mall.
One big handicap; the ownership of the mall is divided up so that Paynter has firm control only over the midsection of the property (229,000 sf under roof) with Sears and Hobby Lobby spaces in other hands.There is vast parking space in the back and no reason to walk into the mall’s grand entrance on Mooney except to go to the 12 Plex Regal Theatre that many say – is showing its age.
And yet there is hope since Visalia in recent years has filled a numbing backlog of empty buildings on Mooney.”You could make the argument that perhaps this next developer will get this property at a reasonable enough price that something good could happen here” says council member Warren Gubler.
Clearly the property is well located on the busiest traffic corner in Tulare County. Still, Paynter has to work to develop the property with one arm tied behind his back controlling only about half the square footage and trying to work with Sears,on decline as a national retailer – and the pension group that owns Hobby Lobby to coordinate plans with.
Not strong partners.
Open Air Option
In an interview Paynter suggested there are options but it would take time for them to play out. “Whatever we do will depend on tenant interest.”Paynter says some thought has gone into “de-malling the mall,perhaps making it more open air.”
“The more open air he makes it,the higher the value will be“suggests Fresno commercial broker Walter Smith.”I can’t think of a better player to make it happen.”
Sears needs a new store but times are not great for this company. There are several vacant out parcels in this mall including the vacant Longs Drug Store on Caldwell that was not part of the sale. One bright spot – In Shape City opened in the back of the property this year.
The most obvious choice for an anchor in a remodel – a new Regal 12-Plex or Edwards Theater like was done on Blackstone in Fresno. Regal leases this mall’s older movie theater now. Rival shopping center developer Don Orosco has been courting Regal to build a new theater near the Costco – off Mooney.
“We’ve talked to the Regent people but there is no news right now” cautions Paynter.
Overall “people need to realize that nothing is going to happen real soon.”
While Visalia – like much of California – is coming out of the recession gloom, developing in southern California is easier to experiment with,building a mixed-use type shopping center in places like Sherman Oaks that has been converted from a mall.”In that area there is such a high population density,high median income and lots of office demand” for a mixed-used type project that would blend office and residential with retail.
”We don’t know if some combination project would work in Visalia. Maybe it would.” Paynter says he would entertain ideas.