Developer bets $115 million on vibrant Livermore retail market
Jan 31, 2018, 11:56am PST
Republic Urban Properties is close to starting construction on a 27-acre Livermore development, which will include 65,000 square feet of restaurants and shop space, two hotels and swaths of parking.
The hotels will be co-developed with Illinois-based Tharldson Hospitality Group, and the 112-room Marriott Residence Inn and the 104-room Homewood Suites are expected to be up and running by 2020.
The project joins a vibrant retail scene in the Tri-Valley where another large shopping center is already under construction. Building more retail at a point when landlords across the country are scrambling to fill theirs may not appear to make much sense. Headlines of late have cast the national retail market as a disintegrated heap of empty malls, struggling tenants and click-happy customers. Meanwhile, the national vacancy rate rose to 6.6 percent at the end of fourth quarter 2017, up from 6.1 percent for the same period a year earlier, CBRE Econometric Advisors found.
However, Republic and a handful of other developers in the Livermore area are banking on their success thanks to a two-part strategy — a focused retail lineup and their proximity to the fully leased San Francisco Premier Outlets, a mega-shopalis that attracts more than 7 million visitors each year.
The 57-acre outlet mall has been a magnet for new retail construction over the past few years, and Republic Urban Properties CEO Michael Van Every said that the Simon Property Group (NYSE: SPG) asset will be an anchor for the developer’s own plans.
“The jewel for the site was the outlet, and while it has been a destination for shopping, it was kind of left there. It’s just that — a shopping destination — but it has lacked the entertainment experience that make up successful regional shopping centers in the Bay Area. By offering shopping, entertainment and eateries, we’ll provide it,” Van Every said.
To avoid the pitfalls of the current retail market, Van Every said the developer is filling the available space with food and entertainment, such as a theater, bowling alley or other big-box amusement tenant. The site is already about 40 percent pre-leased.
Outlets, off-price and themed retailers are some of the few players winning the fast-changing retail game. The nearby Pacific Pearl, for example, is an Asian-themed, 112,000-square-foot center that is 90 percent leased by tenants like 85C Bakery, Kura Sushi and Jinya Ramen.
The Shops at Livermore is another ground-up center at the West Jack London Blvd. and El Charro Road intersection. The project, which is under construction, is expected to deliver 120,000 square feet of discount-focused retail in 2019.
Colliers’ Senior Vice President Stephen Rusher, who is on the property’s leasing team, said the developers — RedMill Capital and ANICO Eagle LLC — are trying to capitalize on the rising demand for discount fashion with a tenant lineup that already includes Ross, Ulta and some incoming home furnishings retailers. All said and done, the property is nearing 70 percent pre-leased.
“There is a barbell effect in retail now where discount is doing really well and luxury is doing really well, but there’s not middle ground,” Rusher said. “We felt the market was telling us discount made the most sense, because we didn’t want to be stuck in no man’s land.”
Rusher said the incoming developments are different enough that over-saturation isn’t yet a concern.
“If you had a lot of homogenous retail, I’d be a lot more concerned,” Rusher said.
In addition to the Livermore project, San Jose-based Republic Urban Properties is also currently seeking approvals for a $300 million project at the Millbrae BART station that is slated to include 376 units of housing, 150,000 square feet of office, 42,200 square feet of retail and a hotel.