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Recession a Mixed Bag for Retail in Marin

Columnist: Bill Meagher
December, 2009 Issue

Bill Meagher
All articles by columnist

As Santa tunes up the sled and does his cross checking of naughty and nice kids and adults, Marin County retailers are faring better than their brethren in other locales. At a time when retailers are pulling back, malls are emptying out and consumers are holding tight, Marin has seen an expansion of its retail sector.

For instance, the Austin-based Whole Foods grocery chain has cut back on its new store rollouts nationally, but in Marin, it’ll open two locations in 2010. A large store will open in Novato on the ground floor of the (so far) ill-fated Millworks complex, a mixed-use property of condos-turned-luxury apartments. In Mill Valley, a new Whole Foods will open on East Blithedale Avenue in the former Lucky’s location. The strip center has been without a supermarket for better than two years and, originally, Whole Foods’ lease was thought to be a ploy to keep Trader Joe’s out of the area.

Speaking of Trader Joe’s, it opened a new location in Larkspur in the Cost Plus Plaza. The new store filled up the former Tower Records locale, and while it’s chock full of proprietary treats such as Blister Peanuts, its jazz section sucks compared to Tower. The other Trader Joe’s locations in San Rafael and Novato continue to do serious business.

The city of San Rafael has OK’d a new supermarket for the Canal District. The Latino grocery chain Mi Pueblo Food Centers will take over the former location of bankrupt electronic retailer Circuit City and open a new store in 2010. The 36,000-square-foot store will include a bakery, a meat counter and a tortilleria and will hire 175 employees. Until now, the neighborhood has been without a supermarket, forcing residents to go downtown to shop for groceries. The fact the new store will sell liquor has caused grumbling among some neighbors and the Marin Institute, which suggested the store could be a model for others by not selling booze. But given the thin margins for grocery stores—and the fact that alcohol is likely to make up just 4 percent of its total business—the call fell on deaf ears.

Locally owned upscale grocer Paradise Foods opened in the remodeled Pacheco Plaza in the Novato neighborhood of Ignacio. The brand new store is the second location for Paradise; the first is in Corte Madera. The new location is part of a $7 million facelift for the strip center. Paradise hired 100 new employees, which takes the spot grocery giant Safeway left when it headed for Hamilton Marketplace. At this writing, the owner of Pacheco Plaza, Walter Kieckhefer, is still trying to fill some empty space at the 72,000-square-foot center. Rumor has it Kieckhefer is trying to lure a bookstore, which makes sense given the distant locations of Book Passage in Corte Madera and Borders in San Rafael.

Not all is positive on the Novato retail front, however. DeLano’s Market on Novato Boulevard shut its doors in light of the plunging economy and the aggressive grocery sector in Marin’s northernmost town. DeLano’s, which also has stores in Mill Valley, Fairfax, Tiburon and San Francisco, also closed a store in Tiburon at the beginning of the year. Lest you think DeLano’s, which is headquartered in San Rafael, is in retreat, the company opened a new store in Davis recently.

Northgate mall in San Rafael is emerging from a $75 million remodeling designed to transform the indoor center from a 1980s holdover into something that looks like it belongs in Marin [See “The Sky Is the Limit,” Nov. 2009]. Besides the extensive changes that include new entrances, an outdoor center, a new food plaza and windows designed to bring the outside into the mall, Northgate has added Kohl’s as an anchor store replacing bankrupt Mervyn’s. Additionally, the center boasts new stores such as H&M; Fingers and Toes, Faces and Places; Sole Desire and The Children’s Place (among others), along with food purveyors Berry Twist; BJ’s Brewhouse; Tomatina; Chipotle Mexican Grill; Shogun Fresh Japanese Grill; Great Steak and Potato Co.; Wetzel’s Pretzels and Panera Bread.

The mall, owned by Southern California real estate investment trust (REIT) Macerich, has looked long in the tooth for years, and the city had hoped a remodel of the 725,000-square-foot shopping center would include some housing. But Macerich never warmed to the idea, and the city gave up its efforts, settling for what it hopes is an updated look that will draw more shoppers. Macerich took out an $80 million, seven-year fixed-rate loan on the center, which was previously unencumbered. The company also took out an $80 million loan to pay off a $63 million loan on the Village at Corte Madera, a mall it owns in partnership with a California pension fund. The REIT has tried to position Northgate as a family center and draw for teens, especially given the new stores.

Unrelated to the work and ownership of Northgate mall is the remodeling planned for Northgate One, the strip mall located a five iron away on Freitas Parkway. The center, owned by Howard Properties of San Francisco, lost Pier One as a tenant in July and is replacing it with a Walgreen’s. Most of the work, including new facades and pedestrian improvements, will take place next spring so as not to disrupt the holiday shopping season.

The much-talked-about Target store planned near Home Depot on the Shoreline Parkway has been shelved—at least for the near future. Target cites an unfriendly economy as the reason. Cal-Pox Inc., the San Rafael developer that owns the Shoreline Center, continues to shop the property where Target could be built, as well as the space where Team Chevrolet used to sell cars. An environmental impact report for the Target big box has been completed despite the Minneapolis chain’s decision to put the location on hold. The retailer continues to operate its Novato store at the Vintage Oaks shopping center.



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