By Meghan Hall
Retail isn’t dead, but it is changing. The Westgate West Shopping Center, a popular outlet center on Prospect Rd. in San Jose, is set to be expanded, according to property documents filed with the City. Costa Mesa, Calif.-based Donahue Schriber Realty Group (DSRG), a private real estate investment trust who specializes in retail center development, has submitted plans to add 16,450 square feet to an existing commercial building at Westgate West, an indication of the market’s sustained strength despite the closure of some brick-and-mortar retailers.
Plans indicate that the expansion will add to an already existing, 23,550 square foot building at the southeast corner of the intersection of Graves Ave. and the Lawrence Expressway at 5365 Prospect Rd. The space was previously occupied by Orchard Supply Hardware, which closed all stores nationwide by February of this year. The proposed project will also partially reconfigure the center’s parking lot, adding 29 vehicle parking spaces.
San Francisco-based McG Architects has been hired to work on the project. Once entitlements are secured, construction is anticipated to occur over a seven-month period.
DSRB acquired the 233,813 square foot retail property in September 2016 for $91 million, or $389 per square foot according to public property records. The seller was Grosvenor Americas, a world-wide, privately-owned property developer. Currently, the site is anchored by a Trader Joe’s and Sprout’s Farmers Market. Boudin SF, Bikram Yoga San Jose and Color Me Mine also call the center home.
According to DSRG’s website, the property currently has seven spaces available to lease, and they range in size from 1,300 square feet to 52,840 square feet in size. The 52,840 square foot space, located next to the center’s 24 Hour Fitness just off of the Lawrence Expressway, is the largest rentable unit on the property and is also part of the building that DSRG intends to expand.
Currently, DSRG owns and operates 65 neighborhood, community and power retail centers, which total 11 million square feet and are valued at $3.5 billion. 31 of those properties are located in Northern California and throughout the Bay Area from Danville to Berkeley to Los Gatos. According to its site, DSRB is aiming to expand its presence in core markets with high barriers to entry in cities such as San Diego, San Jose and Seattle.
Generally, these markets all boast strong leasing fundamentals and demographics. Westgate West sits at the center of several other regional shopping centers, including the El Paseo de Saratoga, anchored by AMC Theaters and REI, and the Westgate Mall, anchored by Nordstrom Rack, Burlington Coat Factory and Target. Westgate West is also located within a strong and affluent trade area; over 200,000 people live within a 3-mile radius of the site, while the daytime population sits close to 66,000, according to a leasing brochure for the property. The average household income for those in the surrounding area is $135,518, and Westgate West is easily accessible to communities such as Saratoga, which has the fourth highest income in the San Francisco Bay Area. The combination of location and strong trade area means the center is likely to remain a solid investment for DSRG.