By Jon Peterson
The Macerich Co. plans to invest up to $260 million in expansion and redevelopment of the 778,000-square-foot Broadway Plaza Shopping Center in downtown Walnut Creek. This would include adding up to 300,000 square feet to the property.
The open-air center, which added an 86,000-square-foot Neiman Marcus store a year ago, is located in an area generally bounded by South Main Street to the west, Newell Avenue to the South, South Broadway to the east and Mt. Diablo Boulevard to the north.
The Santa Monica-based real estate investment trust and the city of Walnut Creek are working on a long-term development agreement for the project that would outline their relationship and the development program for the next 10 years to 20 years. “We are in discussions with Macerich now and hope to have this agreement worked out in the next several months,” said Sandra Meyer, community development director for the city of Walnut Creek. “I would think that the developer would like to get work started on the project sometime early next year and have work on the first phase impacting as little as possible on the Christmas holiday shopping for the next year.”
Based on sales, Macerich ranks Broadway Plaza 11among 64 malls nationwide that Macerich owns with sales of $678 a square foot, according to the company’s most recent quarterly reports to the Securities and Exchange Commission. The company’s top-selling Queens Center in Elmhurst, N.Y., produces sales exceeding $1,000 a foot. Sales per square foot are based on the performance of retailers leasing 10,000 square feet or less at the mall over the previous 12 months.
Occupancy at the center has fallen from 97.9 percent a year ago to 94.6 percent today. But Tom O’Hern, Macerich senior executive vice president and chief financial officer, said on the company’s most recent call with analysts, “We’re keeping the leases short because the long-term plan is to demolish the majority of the center,” according to a transcript from SeekingAlpha.com.
Macerich projects the cost of the re-development will be $240 million to $260 million and that it will be completed between 2015 and 2017, according to the SEC filings. Macerich did not respond to phone calls for this story.
The Broadway Plaza project would be done in three phases. The first phase includes adding 40,000 square feet to the existing Macy’s stores in the property and demolishing and re-developing some of the parking space. The mall currently has two Macy’s stores. The main store is 190,000 square feet. The Macy’s men’s and junior’s store is 70,000 square feet.
A joint venture, Macerich Northwestern Associates, owns 50 percent of the Walnut Creek mall. California shopping centers produce more than a quarter of Macerich’s net operating income.
Meyer said that improvements to Broadway Plaza improve life for Walnut Creek residents. “This property has attracted many shoppers to the downtown area for some time. This fact along with some public-park improvements that Macerich will be paying for make this project a long-term benefit for the city,” she said.
Broadway Plaza is a regional mall that is anchored by Nordstrom in addition to Macy’s and Neiman Marcus. The property was originally developed in 1951.
The property has a five-mile trade area, according to the Macerich Web site. This incorporates Lafayette to the west, Walnut Creek to the east and Alamo to the south. There are 240,357 residents in this region. The average household income exceeds $100,000 a year. Around 45 percent of the residents have four or more years of college and beyond.
Photo courtesy of Empire Realty Associates