Regions West | Orange County
Sept 6, 2007
By: Paul Rosta, Senior Associate Editor
When its phased opening is complete this fall, the $300 million The District at Tustin Legacy will be both a one-a-kind project for its market and a sign of things to come for retail centers nationwide. The million-square-foot hybrid shopping center is Orange County, Calif.'s largest new center to open in a decade. "What makes it an anomaly here is that they were able to do it in Orange County,” said Reza Etedali, CEO of REZA Investment Group Inc., an Orange County-based investment advisory firm specializing in retail.
Despite its rank as one of the most affluent—and coveted—retail markets in the U.S., Orange County is chronically under-retailed, explained Etedali, who is not involved in the project. The primary reason is that land for new development is scarce in the highly developed county, he explained, and development of the site was possible only because it the center is part of the 1,584-acre redevelopment of the former Marine Corps Air Station in Tustin. “How often do you get 100 acres in a large urban area in Central Orange County?”, said Jeffrey Axtell, project director for Vestar Development Co., which is developing the project in joint venture with its financial partner, Kimco Realty Corp.
The District is the first commercial component of the larger project, termed Tustin Legacy, which will eventually encompass 6.7 million square feet of office and retail space, as well as 4,600 new residences. That development will serve as a built-in bonus for the shopping center, which will draw from a wide-ranging target market ranging from nearby Irvine to coastal communities like Newport Beach, Axtell said.
The massive size of the Legacy site also allowed Vestar to combine lifestyle and power center elements in a way that appears to be the wave of the future wherever infill development or large greenfield sites are available. The District’s destination-style shopping features such familiar lifestyle tenants as Whole Foods, which is opening its first large-scale format in Orange County with a 65,000-square-foot space at The District.
A 68,000-square-foot AMC Theatres multiplex and a Strike Rock & Roll Bowling will anchor the entertainment portion. Power center tenants will include a 135,000-square-foot Target, a 138,0000-square-foot Lowe’s and a 160,000-square-foot Costco. Vestar is planning to use variations of the format in a Las Vegas project, scheduled to open in 2009, and in Riverside County, Calif., slated to debut the following year. Each project represents an investment in the $250 million to $300 million range, Axtell said.
Although the former Marine Corps base offers a rare infill development opportunity, the site also brought some hitches. In the course of building access roads and utilities, Vestar encountered some unknown underground conditions left over from the Marine Corps’ tenure. Dealing with those issues drove up infrastructure costs to $90 million, a significant jump from the original budget, and delayed the project by six to nine months. Overall, the nationwide spike in construction prices resulted in a 30 percent cost increase during the project’s two-year construction period, he added.
By: Paul Rosta, Senior Associate Editor
When its phased opening is complete this fall, the $300 million The District at Tustin Legacy will be both a one-a-kind project for its market and a sign of things to come for retail centers nationwide. The million-square-foot hybrid shopping center is Orange County, Calif.'s largest new center to open in a decade. "What makes it an anomaly here is that they were able to do it in Orange County,” said Reza Etedali, CEO of REZA Investment Group Inc., an Orange County-based investment advisory firm specializing in retail.
Despite its rank as one of the most affluent—and coveted—retail markets in the U.S., Orange County is chronically under-retailed, explained Etedali, who is not involved in the project. The primary reason is that land for new development is scarce in the highly developed county, he explained, and development of the site was possible only because it the center is part of the 1,584-acre redevelopment of the former Marine Corps Air Station in Tustin. “How often do you get 100 acres in a large urban area in Central Orange County?”, said Jeffrey Axtell, project director for Vestar Development Co., which is developing the project in joint venture with its financial partner, Kimco Realty Corp.
The District is the first commercial component of the larger project, termed Tustin Legacy, which will eventually encompass 6.7 million square feet of office and retail space, as well as 4,600 new residences. That development will serve as a built-in bonus for the shopping center, which will draw from a wide-ranging target market ranging from nearby Irvine to coastal communities like Newport Beach, Axtell said.
The massive size of the Legacy site also allowed Vestar to combine lifestyle and power center elements in a way that appears to be the wave of the future wherever infill development or large greenfield sites are available. The District’s destination-style shopping features such familiar lifestyle tenants as Whole Foods, which is opening its first large-scale format in Orange County with a 65,000-square-foot space at The District.
A 68,000-square-foot AMC Theatres multiplex and a Strike Rock & Roll Bowling will anchor the entertainment portion. Power center tenants will include a 135,000-square-foot Target, a 138,0000-square-foot Lowe’s and a 160,000-square-foot Costco. Vestar is planning to use variations of the format in a Las Vegas project, scheduled to open in 2009, and in Riverside County, Calif., slated to debut the following year. Each project represents an investment in the $250 million to $300 million range, Axtell said.
Although the former Marine Corps base offers a rare infill development opportunity, the site also brought some hitches. In the course of building access roads and utilities, Vestar encountered some unknown underground conditions left over from the Marine Corps’ tenure. Dealing with those issues drove up infrastructure costs to $90 million, a significant jump from the original budget, and delayed the project by six to nine months. Overall, the nationwide spike in construction prices resulted in a 30 percent cost increase during the project’s two-year construction period, he added.
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