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Shopping Center For Lease
Museum Market Plaza Presented by
1 NWC Palm Canyon&Tahquitz Canyon Dr.,Palm Springs,CA 92262
ZN
CBRE
Rental Rake: $24/SF/Year CB RICHARD ELLIS
Min.Divisible: 720 SF
Max.Contiguous: 50,168 SF
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Property Type: Shopping Center Request additional Information
,f Property Sub-type: Specialty Center Maggie Montez
Additional Sub-types: Restaurant (760)341-2272
Retail(Other)
t)anie)le Alexander
Anchor (760)340-0106
Gross Leasable Area: 200,000 SF Contact listing broker
Year Built: 2008
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Last Verified 9/20/2010
Listing ID 15127760 Email
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Df 4 �j,t�iL/G 66406 1'2/2010 3:18 P
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. Space 111 Space Available: 8,273 SF Print listing
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Rental Rate: $2/SF/Month
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Space Type: Specialty Center
Additional Space Retail(Other)
Types: Restaurant advertisement
Lease Type: NNN Created 5/8/2007
Space 141 Space Available: 3,438 SF
Rental Rate: $2/SF/Month
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Types: Restaurant
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Space 287 Space Available; 5,893 SF
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Types: Restaurant
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Space 291 Space Available: 9,564 SF
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Additional Space Retail(Other)
Types: Restaurant
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Space 301A Space Available: 50,168 SF
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Space Type: Specialty Center
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Types: Restaurant
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Space 525 Space Available: 3,100 SF
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Types: Restaurant
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Space 531 Space Available: 720 SF
Rental Rate: $2/SF/Month
Space Type; Specialty Center
Additional Space Retail(Other)
Types: Restaurant
Lease Type; NNN
A4 9/22/2010 3:18 P
Desert Fashion Plaza Redevelopment
S. Hamlin
9/22/2010
US Retail Sales Forecast
According to the forecasting group(forecast.org), retail sales for 2010 will emulate the
peaks and valley of 2009 with a slight increase in December 2010 over December 2009.
However, the 2011 forecast are below 2010 levels. The decline in retails spending is a
result of families saving at a higher rate than the past four decades in order to make up for
lost equity in stocks and real estate. Economists have also trimmed the 2011 forecasts for
GDP growth, which is fueled primarily by consumer spending.
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On the positive side, The Westfield Group, an Australian company, who owns and
operates the mall in Palm Desert, is predicting 2010 profitability after a 2009 loss.
http://www.blool-nberg.col-n/news/2010-08-17/west fie ld-group-reports-first-lialf-
operatin 7-c� arnings-of-932-million_.htmi
Most interestingly, many older, regional malls have weathered the retail storm better than
new ones, primarily because of location,
http://www.planctizen.com/node/45353
http://retailtrafticinat;.com/news/developers_rethink mail06272010/
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Desert Fashion Plaza Redevelopment
S. Hamlin
9/22/2010
Desert Fashion Plaza (I)FP)
The DFP is not a regional mall and, if renovated, will have competition from the Palm
Springs Mall and the three shopping centers built in Palm Springs on the perimeters of
the city: The Springs, Gene Autry Plaza and.Smoke Tree Center.
The likelihood of finding a mall developer or even a `lifestyle' developer is not high,
particularly because the compound annual growth rates (CAGR) of the surrounding cities
has been less than 2% for the last decade, which means barely replenishing in
demographic theory. The addition of a `lifestyle' component would simply add to the
excess and unsold inventory of homes in Palm Springs.
City 2000 2010 Growth Percent
Coachella 23356 42591 1.0619 6.19%
LQ 26082 44421 1.0546 5.47%
Indio 50436 83675 1.0519 5.19%
D14S 16771 25811 1.0440 4.41%
1 W 4147 5144 1.0217 2.18%
PD 42075 52067 1.0215 2.15%
RM 13817 1.7008 1.0209 2.10%
Cathedral City44086 52641 1.0178 1.79%
PS 43397 48040 1.0102 1.02%
Note: These numbers were published in The Desert Sun.
Not only is the local population (IW, PD, RM, CC and PS) not growing, the
demographics of the age groups indicate that an aging population, such as found in these
cities, tends to consume less.
Travel Forecast
Price Waterhouse Coopers' US lodging forecast expects the lodging recovery that
accelerated in the first half of 2010 to gain further traction during the remainder of 2010...
http://www.pwc.com/us/en/press-releases/2010[PricewaterhouseC'oopers-lodging=
industry-orecast.ilhtml
The above report also mentions that the slowdown in hotel construction which started in
2007 will actually create increases in this sector due to lack of supply. Thus, PWC
suggests a modest increase in the lodging segment of the economy.
As mentioned above, the age group represented in the US is not in the high consumption
stage of life, but is in a age when travel is a meaningful activity.
Desert Fashion Plaza Redevelopment
S. Hamlin
9/22/2010
Recommendation
The city of PS should consider alternative developers for the Desert Fashion Plaza, but
should not concentrate on mall or lifestyle development. The travel industry, which
includes hotel and resort developers, would be a better focus given the modal age group
of the US and the projected state of retail in the United States.
The item for discussion 5B could be a start in catching the wave of these trends.
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*�'MCOR'orFv''�9- CITY COUNCIL AND REDEVELOPMENT AGENCY STAFF REPORT
DATE: SEPTEMBER 22, 2010 NEW BUSINESS
SUBJECT: STAFF UPDATE AND POTENTIAL CITY AND COMMUNITY
REDEVELOPMENT AGENCY ALTERNATIVES WITH RESPECT TO
THE DESERT FASHION PLAZA.
FROM: David H. Ready, City Manager
BY: Douglas Holland, City Attorney
SUMMARY
The Desert Fashion Plaza occupies a key location in downtown Palm Springs. The City
and Redevelopment Agency have consistently focused on potential redevelopment of
the Desert Fashion Plaza in order to revitalize downtown Palm Springs and remove the
obstruction to other private investment and development that exists due to the blighted
and underutilized condition of the Desert Fashion Plaza. Despite more than seven
years of focus upon the redevelopment of the Fashion Plaza properties, the City and the
Redevelopment Agency have been unable to reach agreements with Wessman
Development for the redevelopment of the Desert Fashion Plaza.
Staff is requesting direction from the City Council and/or the Redevelopment Agency
regarding the initiation of a comprehensive consideration of all alternatives for the
rehabilitation and/or redevelopment of Desert Fashion Plaza.
RECOMMENDATION:
1. Approve an agreement with Integra Realty Resources, in a form approved by the
City Attorney, in an amount to not exceed $45,000, for the completion of an
appraisal adequate for the initiation and completion of acquisition of the Desert
Fashion Plaza and/or the Town and Country Center or any portions thereof.
2. Authorize staff to initiate a Request for Qualifications for potential developers of
Desert Fashion Plaza, prepare an Agency redevelopment alternative, and invite
Wessman Company to respond to the Request for Qualifications.
3. Develop potential alternatives for financing any Redevelopment Agency or City
participation in any approved project or the acquisition of Desert Fashion Plaza.
ITEM NO. 5.13.
City Council/RDA Staff Report
September 22, 2010-- Page 2
Desert Fashion Plaza
DISCUSSION
For more than seven years the City of Palm Springs and the Palm Springs
Redevelopment Agency have been working with Wessman Development, the owner of
the Desert Fashion Plaza, on the Plaza's potential redevelopment. During this period of
time the Desert Fashion Plaza has been the City's and the Agency's primary priority.
Due to its size, its central location and its unfortunate deteriorating condition, the Desert
Fashion Plaza critically impacts the vitality of the entire downtown.
Beginning in 2009, Wessman Development, the City and the Redevelopment Agency
embarked upon the creation of a Specific Plan and Redevelopment Area Plan
Amendment for the Plaza and the Town and Country properties (the "Market Plaza
Specific Plan").
In December 2009, the Redevelopment Agency adopted the Specific Plan as the
Design for Development for the Redevelopment Area Plan. In approving the Specific
Plan and the Design for Development, the Council and Agency expressed its belief that
the adoption of the Specific Plan and Design for Development, with its new zoning and
organization of the properties, accented by a new street from the Palm Springs Art
Museum through to Indian Canyon Drive and a potential expansion of the Palm Springs
Art Museum and the creation of new public spaces, could provide an opportunity for the
redevelopment of the property with private development.
Beginning in January 2010, staff and consultants of the City and the Redevelopment
Agency engaged Wessman Development in a defined, six month program to negotiate
a Development Planning Agreement ("DPA") that would provide essentially a set of
mutually agreeable assumptions, timelines, and general requirements for the
negotiation of both a Development Agreement and Owner's Participation Agreement for
the redevelopment of the Desert Fashion Plaza. Despite the efforts of all parties, no
agreements were reached.
On August 9, the City Attorney's Office on behalf of the Redevelopment Agency advised
Wessman Development that the Agency was unwilling to wait indefinitely for Wessman
Development to propose and demonstrate financial capacity to redevelop the Desert
Fashion Plaza. Wessman Development was also advised that the Agency would be
actively exploring alternatives with other interested parties, while assuring Wessman
Development that the Agency remained open to potential Wessman Development
proposals which met necessary criteria.
The Agency has and will continue to fully comply with its obligations to afford Wessman
Development its full owner participation rights; but Wessman Development must also
reasonably cooperate with the Agency in the negotiation of an Owner's Participation
Agreement and provide the Agency with appropriate and necessary financial
information that will enable the Agency to evaluate the project, including a significant
City Council/RDA Staff Report
September 22, 2010-- Page 3
Desert Fashion Plaza
public subsidy that Wessman Development expects of the Agency. Although Wessman
Development has provided some rudimentary information regarding the movie theater
component, a component that Wessman Development has indicated that the Agency
should subsidize, the information was incomplete and inadequate to justify a public
contribution as required under the State"s redevelopment laws. The Agency may be
willing to participate in the Museum Market Plaza project, but any such participation
should be predicated on Wessman formally committing to undertaking and completing
the entire Museum Market Plaza project and not just one component of the project.
It should be emphasized that the City and Agency did not discontinue or terminate
discussions with Wessman Development. In fact, Wessman Development was
specifically advised that the Agency would remain open to further discussions; however,
such discussions would be predicated on Wessman Development providing the Agency
with the detailed, substantive financial information and evidence of financing necessary
for the entire Museum Market Plaza project.
The concept of owner participation rights does not mean that an owner of property must
be afforded the exclusive right to develop its property in perpetuity in any manner it sees
fit. The owner must be given reasonable opportunities to participate in the development
or redevelopment of its property in conformity with the redevelopment plan. If a property
owner is unable or unwilling to move forward with redevelopment in a manner
acceptable to the Agency, the Agency can consider redevelopment alternatives that
may not include the participation of a current owner. Such alternatives could include
proposals put forward by third party developers or the Agency itself and could ultimately
involve the acquisition of the property.
Staff is proposing that the City solicit requests for qualifications from potential
developers and to complete an appraisal of the Desert Fashion Plaza property that can
be used for the acquisition of Desert Fashion Plaza. Staff will develop an Agency
alternative plan for Agency consideration. And lastly, staff will explore and develop
financing alternatives for the acquisition of the Desert Fashion Plaza. When these steps
are complete, the Agency will have a more complete understanding of the potential
redevelopment alternatives and the costs associated with each alternative.
One of the alternatives may be that Wessman Development is fully able to timely
proceed with the redevelopment of Desert Fashion in a manner acceptable to the
Agency. If that is the case, then an Owner's Participation Agreement should be
negotiated and presented to the Agency for approval. In the event Wessman is unable
or unwilling to proceed, or the Agency finds that the proposal is unacceptable, the
Agency may wish to consider a third party alternative and authorize its staff to negotiate
an appropriate agreement with such third party, or consider the implementation of an
Agency alternative plan. In order to implement either of these alternatives the Agency
may acquire the property. If the Agency decides to acquire the property, the Agency
must negotiate in good faith with the property owner for the acquisition of the property
and would be required to pay an amount consistent with an approved appraisal of the
City Council/RDA Staff Report
September 22, 2010-- Page 4
Desert Fashion Plaza
fair market value of the property. In the event that the Agency is unable to negotiate the
acquisition of the property after reasonably negotiating with the property owner, the
Agency may consider acquiring the property by eminent domain, an action that would
require the Agency to adopt a resolution of public necessity at a public hearing by a two-
thirds vote of the Agency Board. Such an action would be perfected by filing an action
in Superior Court and securing appropriate judicial orders completing such acquisition.
Thomas Wilson, ssistant City Manager Douglas . Holland, City Attorney
DAVID H. READY �AGER
MATERIALS TO FOLLOW
5.13. STAFF UPDATE AND POTENTIAL CITY AND COMMUNITY
REDEVELOPMENT AGENCY ALTERNATIVES WITH RESPECT TO
THE DESERT FASHION PLAZA:
RECOMMENDATION: 1) Discussion of potential alternatives for the
Desert Fashion Plaza; and 2) Direct staff on potential alternatives.
Item No. 5 * 13e