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Tuesday, May 17, 2022

Promenade Pullback

Shortly after Promenade 2035 – the $1.5 billion overhaul of mostly dormant Westfield Promenade shopping mall in Woodland Hills — got final approval last month, the developer decided to wait to start construction.Given the effect of the coronavirus pandemic on the retail, office and even housing sectors of the real estate market, the developer, Unibail-Rodamco-Westfield, plans to pause until the dust settles and the future direction of those sectors becomes clearer.“Everyone wants to get the virus behind us” before taking that big leap forward with the construction of Promenade 2035, said Unibail-Rodamco-Westfield’s Senior Vice President of Development, Kim Brewer. “We want to keep retail alive. … We believe in the future of retail.” No construction start date has been announced, and it’s unclear now whether the components of the project may be altered. The plan calls for a great amount of office, retail and housing space – all of which may or may not see big changes in the future.Larry Green, Brewer’s predecessor in the senior vice president role, who worked years shepherding the long-in-the-making Promenade 2035 project, said: “To talk about spending $1 billion into a mixed-use project at this point and time is too difficult to talk about. Is the office sector coming back? Will residential move out of the cities? … I think we need the vaccine to come out and take stock.”The plan, which is envisioned to be a centerpiece in the creation of a mini-downtown in the West San Fernando Valley, has been four years in the approval process and even longer in the planning.Last month, the Los Angeles City Council approved the latest version of Westfield’s mixed-use project. It includes the overhaul of the Promenade shopping center, closed except for a few tenants, into a hub of residential units, retail, an office tower, hospitality and a sports and entertainment stadium that will take shape either as a 7,500-seat partly exposed venue or a 10,000-seat outdoor arena.

“We’ve been through the planning process for about four years and it wouldn’t have been possible without the community and the project’s stakeholders,” Brewer said. Brewer particularly thanked Los Angeles City Councilmember Bob Blumenfield, who was instrumental in creating the Warner Center 2035 Specific Plan to redevelop Warner Center into the downtown of the San Fernando Valley.As Blumenfield put it: “With thousands of new housing units, job opportunities for our community and a place-making new entertainment center, the Westfield Promenade 2035 project is a game-changing development for the West Valley. Our housing affordability crisis will only be solved by building affordable units, and this project includes the very first affordable housing in Warner Center. Thanks to Unibail-Rodamco-Westfield for working so closely with me and the community stakeholders to design a project that helps meet this urgent need.”Located between Oxnard Street and Erwin Street from south to north and between Topanga Canyon Boulevard and Owensmouth Avenue, the project will sit near two Westfield retail centers to its north: The Village at Westfield outdoor mall and Westfield Topanga indoor mall.With Promenade 2035, Westfield plans to create a 34-acre entertainment center to include shops, cafes, a grocery, interlacing walkways and 10 acres of landscape and public plazas. The blueprint also calls for 1,400 apartments, including 162 lower-income units; the sports and entertainment center; a 25-story, 731,500-square-foot office tower; and a 572-key hotel. Promenade 2035’s parking capacity will accommodate 5,655 vehicles.Westfield estimates Promenade 2035 will create more than 10,800 construction jobs and 9,700 permanent jobs upon completion. The retail property developer also believes Promenade 2035 stands to generate an estimated $1.9 billion in total economic output and roughly $17.2 million in net new annual revenues to the city’s general fund.

Surviving 2020 Westfield’s Brewer deemed the city of L.A.’s approval of Promenade 2035 the company’s highlight in an otherwise turbulent year, not only for Westfield but for the entire industry.  “It was an unbelievable win in what has been an unprecedented year for the retail industry,” Brewer said. “It made it really sweeter given the challenges the company has had this year.” While the coronavirus limited consumer spending as well as access to retail stores and particularly indoor malls, the company worked to keep tenants open while also fixing its eyes on the prize of its Woodland Hills project.That said, Westfield has seen some dark days in 2020, including some store damage in Woodland Hills following June’s disturbances, a public tussle with the state of California over restaurant and food operator closures and imposed closures that most retailers in California had to endure.

“We had a closure of 170 days,” Brewer recalled. “That’s a very long time.” On the corporate side, Westfield had to contend with the departure of Green (see accompanying story).“Larry was with the organization for a very long time,” Brewer said. “He is definitely ingrained in the Valley, especially in Woodland Hills.” Green, who now works as a real estate investor, said he had been preparing to leave Westfield for several years.

“I’m still in touch with the people at Unibail,” Green said. “They’re well positioned.”  “Even before he left the company, we were really shifting our responsibilities,” said Brewer, who has been with Westfield for 24 years. “He was instrumental in getting us to where we got.” As for the construction delay of undetermined length, Green said that Westfield’s approach to creating Promenade 2035 will be meted out in due time in measured ways, especially with its elaborate plans for retail and office space, hotel and a sports arena.Green concluded: “Retail has changed. Office has changed. … Let the dust settle and let us understand where we’re at. Long term, (Promenade 2035) is the right plan and the right vision, but I think you’ve got to take a little bit of a pause and that’s prudent.”

Michael Aushenker
Michael Aushenker
A graduate of Cornell University, Michael covers commercial real estate for the San Fernando Valley Business Journal. Prior to the Business Journal, Michael covered the community and entertainment beats as a staff writer for various newspapers, including the Jewish Journal of Greater Los Angeles, The Palisadian-Post, The Argonaut and Acorn Newspapers. He has also freelanced for the Santa Barbara Independent, VC Reporter, Malibu Times and Los Feliz Ledger.

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