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Shopping Centers Today -> September 2003
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SUNNYVALE, CALIF., LOOKS FORWARD TO NEW CENTER
BY IAN RITTER
A half-empty mall in Sunnyvale, Calif., has a date with the bulldozer, and it couldn’t come soon enough, as far as this city of 132,000, about 40 miles southeast of San Francisco, is concerned. A developer, Smyrna, Ga.-based Forum Development Group, proposes to turn the enclosed mall into a mixed-use project.
“We’d like to see it start as soon as possible, because we don’t want to have an empty mall downtown,” said Robert Paternoster, the city’s community development director.
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Keeping the current Macy’s and Target anchors, Forum wants to replace the mall with The Forum at Sunnyvale Town Center, a 1.3 million-square-foot, town-center-style development with 900,000 square feet of retail, plus offices and residential units. The center will cost $200 million to rebuild, Paternoster says. The opening is scheduled for the fall of 2005.
The Hahn Co. (now Trizec Properties) built Sunnyvale in 1979 in the center of downtown in the style of malls built at the time in Long Beach, Pasadena and other California cities — enclosed and insulated from their surrounding streets, Paternoster says. (The Long Beach and Pasadena malls have both since been opened up to the streets around them.)
According to Rhonda Diaz, a vice president at San Francisco-based real estate services firm Terranomics, the mall has struggled for about 10 years because it has failed to serve the city’s increasingly wealthy population. The median household income in Sunnyvale, according to the 2000 U.S. census, was $74,409, up from the $46,403 recorded in the 1990 census. People shopped instead at Stanford Shopping Center, 10 miles away in Palo Alto, and Westfield Shoppingtown Valley Fair in Santa Clara, five miles to the east.
Forum is not the first developer to take a crack at turning the property around. Sherman Oaks, Calif.-based American Mall Properties bought Sunnyvale in 1998, but defaulted on its bond payments. The center came under the financial control of investment bank Lehman Bros. Forum, which said it expects to close on the deal at the end of the year, is paying $48 million for the center.
“When we saw it, looked at the demographics and saw what it could become — it’s a diamond in the rough,” said Ron Pfohl, the company’s managing director.
Pfohl says he envisions Sunnyvale’s retail component as an upscale lifestyle center that would complement, not compete with, Stanford Shopping Center, with national retailers that appeal to the more affluent shopper.
Forum, founded in 1998, is also developing The Forum at Carlsbad (Calif.), a mixed-use center about 25 miles north of San Diego.
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