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Friday, Dec 1, 2023

Retail Becomes Residential in Mall Upgrade

Finally, Burbank is getting a bit of the retail and housing boon sweeping across other parts of L.A. County. A joint venture between two developers is behind a massive, estimated $475 million proposal to renovate the roughly 25-year-old Burbank Town Center and redevelop the adjoining Ikea store property and other stores on the site once they become vacant into 750-plus dwelling units. Ikea is building a larger location nearby and expected to complete that next spring. “From our perspective, we looked at the San Fernando Valley as having five regional malls; all of those have been updated. Ours hasn’t been,” said Lance Taylor, director of Dallas, Texas-based Capref Manager, which owns the Burbank Town Center, the two movie theaters and three adjoining parking structures. “As we interviewed Burbank residents, they said they were tired of going to shop somewhere else. We looked at Burbank Town Center as ripe for redevelopment.” Capref has joined forces with the mall’s former owner, Crown Realty & Development Inc. of Costa Mesa, to undertake the project in a joint venture called CC Development Partners. Capref will handle the town center’s renovation and will join Crown Realty in redeveloping the Ikea, Corner Bakery Cafe and Office Depot Inc. properties into 765 dwelling units of mostly apartments and 70 condominiums with a plaza-like setting of retail, walkways, landscaping and subterranean parking. For the estimated $60 million shopping center renovation, Capref plans exterior and interior renovations, including moving the food court to the bottom floor and building a new dining area, Taylor said. Capref is also helping pay for new luxury seating at the eight- and six-plex AMC Theatres. And two of the three parking structures at the town center will get new entrances. Crown Realty Executive Vice President Jim O’Neil said the center’s first floor will become a power center and will include value-oriented retailers, while the second floor will be primarily apparel-focused and include many existing stores. The third floor will feature family-oriented, indoor entertainment venues along the lines of a Dave & Buster’s restaurant, O’Neil added. “Millennials today want a sense of place – they want an experience, and convenience,” he said. Conejo Investors International and domestic issues – including tanking oil prices, uncertainty about what the Federal Reserve will do with interest rates and a spike in the junk bond index – have only had a modest impact on commercial real estate so far this year, according to L.A.-based CBRE Group Inc.’s recent report on global capital market trends. One region that despite the issues has seen increased investor activity is the Conejo Valley, according to CBRE Vice President Michael Longo, who specializes in capital markets. More than 1 million square feet of office space has been leased within the Conejo Valley’s nearly 12 million square feet since 2014, he said. “That’s roughly 9 percent of total office inventory – it’s really a staggering figure when you compare that to the greater L.A. market with 225 million square feet, and that has only absorbed about 3.8 percent,” Longo said. The majority of lease activity has been for Class A offices, he said. A recent example of investor activity is L.A.’s Black Equities Group Ltd. purchase of L.A.-based insurer Farmers Group Inc.’s 64,500-square-foot building at 31051 Agoura Road in the Westlake Village City Center on May 12 for $18.6 million, according to real estate activity tracking database CoStar Realty Information Inc. The building is leased to one of Farmers’ insurance exchanges. Longo, who helped arrange the deal with other CBRE brokers, said the price per square foot was higher than the average for recent office sales in the area. “They (investors) are focused on income-producing properties that are stable,” he said. Rising Retail Retail rents in the San Fernando Valley and the Tri-Cities are on the rise, according to a recent report by Calabasas’ Marcus & Millichap Inc. In its second-quarter report, 570,000 square feet of new construction boosted local supply by 0.7 percent compared to the same time last year, with most of the building in the Valley. That pushed up vacancy rates to 4.7 percent for the Valley and Tri-Cities while average asking rents rose 5.6 percent to $26.97 a square foot. Average asking rents are expected to rise to $29 a square foot by the end of the year, according to the report. Also on the rise was the number of retail deals in the Valley, which rose 15 percent, according to the report. Staff Reporter Carol Lawrence can be reached at (818) 316-3123 or clawrence@sfvbj.com.

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