Sunday, January 20, 2008

LA County Developers Taking on San Bernardino's Caroucel Mall (Press Enterprise 011508)

BS Ranch Perspective

Looks like they are going to turn the Central City Mall into a Mexican City Center to make it into a whole shopping center that will make it a whole shopping center and a place with living quarters, such as a apartments or a Condominiums instead of all stores, and shops. This might work. They it sounds like it would have a huge amount of small businesses in the under area and then the upper area would have condominiums in the top stories, However I believe that it would work that the stores and the people that live in the Condos would look after the businesses when they are closed, because they are there living right there and looking after the businesses and they don't want their place to drop in value.

However, Seeing what the City Council is saying, they just might be right that the Condominium idea right now might not work, because the Real Estate Market is just at the beginning of dropping off, at my opinion, and they will be dropping further, the cost of homes will drop down to the prices that they were at the summer of 1994, which was that you could purchase a 1/4 acre of land with a 1935 sq ft home with 4 bdrm 3 bath 2 car garage, for a huge price of $125,000. Now that is not close to what the market is at right now, but they will get there soon. Mark my words. I believe that they will be. This is based upon the sound of all that air coming out of the Real Estate Balloon!!

BS Ranch


LA County developers taking on San Bernardino's Carousel Mall


10:13 AM PST on Tuesday, January 15, 2008
By JOSH BROWN and CHRIS RICHARD
The Press-Enterprise

Video: A visit to Plaza Mexico in Lynwood

Video: Merchants express hope following the recent sale of Carousel Mall

Just a few hundred feet off Interstate 105 in Lynwood sits a Mexican-themed outdoor mall with lavish landscaping, fountains and sculptures. It's almost Disneyesque in appearance.

An Anna's Linen store sits just across the breezeway from the Hispanic-focused department store La Curacao, with a high-end Mexican restaurant beside it. Nearby, a Chuck E Cheese restaurant is across the parking lot from Mexican tourism offices.

This quirky retail center is Plaza Mexico, the best-known development of Donald and Min Chae, who 11 days ago bought the Carousel Mall from LNR Property Corp. for $23.5 million.

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Although the Chaes are mum about their plans for the struggling 36-year-old downtown San Bernardino mall, the Lynwood plaza's mix of retail neighbors may hold some clue to what the Chaes could bring.

"These normal shopping centers don't appeal to us," Min Chae, 52, said in an interview Friday at M & D Properties' office at the mall. "We want to see change."

The Chaes said they hired Mexican designers to re-create a traditional town center. Cuban palm trees, statues and fancy benches line the mall's main corridor.

On a bench outside the company's office, an old man snoozed in the midmorning sun Friday. He stirred as visitors strolled by, offering to take their photo next to a painted zebra statue.

Nearby, workers and shoppers meandered around what once was the entrance to a Montgomery Ward department store, now transformed into a mini mall occupied by clothing and shoe shops, produce and meat markets, and even a pet store. An ornate fa├žade replicates a Mexican city hall.

Plaza Mexico stands in stark contrast to the Carousel Mall, which has been languishing since its major anchors fled a decade ago.

A Place to Thrive

The Chaes began construction on Plaza Mexico in 2000 and opened the majority of the center in 2003. They still own and operate the center and have proposed a second phase that would add 600 to 800 residential units.

Min Chae said if he can build a successful shopping center in Lynwood, an area rife with gang violence and poverty, revitalizing an old mall in San Bernardino will be easy.

"When I approached the bankers about my idea, everybody turned it down," Min Chae said of the Lynwood project. "All the buildings were built on spec. Once they were built, the stores started lining up."

Laura Alderete, marketing manager for the city of Lynwood, said Plaza Mexico has had a positive impact on the community.

"It is the center of Lynwood now," she said. "It's a gathering place. It's improved the pedestrian experience. On a Sunday afternoon, you see families hanging out by the water fountains."

Larry Lazar, a consultant the Chaes hired to oversee a retail and residential project in Buena Park, will be the project manager for San Bernardino. The company already has interviewed about a dozen architects to get their ideas on what could be done at the Carousel Mall site, he said.

The San Bernardino project could incorporate elements of Plaza Mexico and expand on them, Lazar said.

"This would be really good for San Bernardino, to have a place for small businesses to thrive," he said.

Pro and Con

LNR purchased most of the mall property in February 2006 with the intention of helping the city transform its languishing downtown by building hundreds of town homes and condominiums.

After the housing market began to slump, LNR suggested a less dense development, but city officials resisted such a change. In September, LNR told the city that such an ambitious project would not work in the current housing market. The city later terminated the company's right to proceed with the project.

Councilwoman Esther Estrada, who traveled with San Bernardino Mayor Pat Morris' staff last week to visit Plaza Mexico, said she finds the Chaes' cautious approach reassuring.

Estrada, who represents the neighborhood around the mall, said she's confident the Chaes can capitalize on other downtown projects, including the development of American Sports University near City Hall and plans for a new county government campus and courts complex.

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Photos By Stan Lim / The Press-Enterprise
Larry Lazar will be project manager for the recently acquired Carousel Mall in San Bernardino. Developers Donald and Min Chae already have interviewed about a dozen architects to get their ideas on what the Chaes' company could do at the Carousel Mall site, Lazar said.

But with the housing market slump, Estrada stopped short of demanding a mixed-use development for affluent residential and business tenants proposed under LNR's plan.

"Things went sour all over the place in the real estate industry, and that project couldn't happen," she said. "Does that mean it couldn't happen under another situation? I don't know."

At least one San Bernardino official is skeptical about the Chaes' chances.

In a Friday e-mail to city officials, Councilman Neil Derry questioned whether the Chaes have the experience or resources to meet the mall site's potential.

"M & D is not a Forest City (Victoria Gardens' developer), Majestic Realty (Citrus Plaza's developer), a Westfield or some other highly capitalized commercial/office developer with an extensive record of accomplishment," he said.

Derry criticized the Chaes' Lynwood development as "mom and pop stores and low-end retail."

"Plaza Mexico is not the track record we need for choosing a new development partner for the Carousel Mall project area," he said.

The Chaes also will have to deal with the owners of buildings around the mall's periphery, including the J.C. Penney, Harris' and Andresen buildings. Those structures account for almost 1 million square feet of space.

The San Manuel Band of Mission Indians, which operates a casino near San Bernardino, is in escrow on the J.C. Penney building and in talks about purchasing the Harris' building, according to city officials and people familiar with the matter who could not speak on the record because of a confidentiality agreement.

In his e-mail, Derry said the city missed an opportunity to foster a project by the tribe, a local entity, rather than one from outside the community.

Jim Morris, the mayor's chief of staff, said the mayor had little influence on the sale.

"When a piece of private property changes hands, we don't get to say, 'You don't buy it,' " Jim Morris said. "The city doesn't get to choose that."

Hoping for Rebirth

On Monday afternoon, the Carousel Mall was as quiet as usual.

Annie Derghazarian, who works at Variety, the store owned by her husband, Neshan Derghazarian, said she would like to see a return to the days when the carousel was operating inside and there was a lot of life in the place.

Sundays were especially busy, she said.

"It used to be family gatherings after church," she said. "They'd come to eat, and the kids were on the carousel having fun."

The Chaes said they will spend three to six months talking with city officials before announcing any plans.

"The only thing I know for sure: This location has potential," Min Chae said. "And we are the right player."

Staff writer Julie Farren contributed to this report.

Reach Josh Brown at 909-806-3074 or jbrown@PE.com

Reach Chris Richard at 909-806-3076 or crichard@PE.com

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