Australian-based Westfield Group, which owns seven of the county's largest malls, says it has the money for multimillion-dollar renovations and expansions of its centers. But while renovations will continue, expansions won't occur until the economy improves.
Jonathan Bradhurst, Westfield senior vice president of U.S. development, said each of his centers, which employ a total of 15,000 people in San Diego County, is better than 90 percent leased. Bradhurst said even though spaces are usually quickly filled after they are vacated and Westfield still retains more than $3 billion in equity capital despite the recession, this isn't the time to pull the trigger on any major expansions.
"Even with leverage there is $8.7 billion available, so the money is there, but the timing has to make sense," Bradhurst said.
Westfield malls in San Diego County include Horton Plaza, with a reported fair market value of $360.8 million as of the end of last year; Mission Valley Center, with a fair market value of $331.9 million; Westfield North County, with a fair market value of $243.9 million; Parkway Plaza, with a fair market value of $308.7 million; Plaza Bonita, with a fair market value of $376.6 million; Plaza Camino Real, with a fair market value of $196.8 million; and University Towne Center, with a fair market value of $198.6 million.
Each one of these centers (most with planned or newly completed upgrades) saw their per-square-foot sales decline last year. Horton Plaza saw the largest percentage per-square-foot decline year-over-year, with an 8.4 percent drop to $444 per square foot in 2008. Plaza Bonita fared the best, with only a 1.4 percent drop in 2008 to $448 per square foot.
UTC garnered the highest annual per-square-foot sales figure at $619. Plaza Camino Real posted a $343 per square foot average at the other end of the spectrum.
University Towne Center was on the verge of implementing a 750,000-square-foot expansion to its mall with the addition of 250 multifamily residential units when the recession hit. Now the project going for LEED Gold certification has been placed on hold.
Bradhurst said UTC could be started within eight to 10 months if conditions improve.
"It's a troubled economy right now, but this project is fully entitled and we remain committed to do it," Bradhurst said.
If a LEED Gold rating is achieved, the project will not only be able to power the center, but may actually send power back to the grid.
Westfield Mission Valley also has a planned major expansion, but the size of this growth and other possible elements are still nebulous at this point and will naturally depend on market conditions.
When Bradhurst first discussed the proposal before the Mission Valley Unified Planning Committee last August, he said the mixed-use project might expand the mall by as much as 500,000 square feet, add perhaps 450,000 square feet of office space or a hotel and maybe 250 residential units. However, that was just days before the economy collapsed.
"The only activity we're doing there right now is renovation work," Bradhurst said.
Bradhurst, who said he has received a favorable endorsement of at least the retail portion of the plan, said "the proposal is pretty fungible at this point."
While Westfield expansions have been placed on hold -- Plaza Bonita's was recently completed, and expansions had also been considered at the North County location in Escondido and Plaza Camino Real in Carlsbad -- renovation plans have continued to move forward.
No new space will be added at Horton Plaza, but when the work is eventually done it will be a virtually new mall.
Bradhurst said he had obtained letters of intent from a fashion retailer and restaurants that would occupy the old Robinsons-May space at Horton.
"This is going to be a substantial transformation," Bradhurst added, noting that a Mervyn's space vacated a couple of years ago has since been replaced with new retail.
Parkway Plaza in El Cajon, which at 1.3 million square feet is Westfield's largest asset here, is in the process of being renovated, as is the Westfield North County mall.
"Westfield North County has a new Apple store, a new Coach store and H&M, a Swedish fashion store," Bradhurst said. "That's a delightful center."
Plaza Camino Real, built in 1969, is the oldest member of the Westfield family here.
"We're very close to launching a submission for that," he said. The work there will include a substantial renovation and a possible expansion.
Westfield recently completed a 330,000-square-foot expansion of the Plaza Bonita shopping center in National City. A 14-screen state-of-the-art AMC Theatres anchored the expansion, which also included a new Border's Books and other retailers.
Westfield may be well capitalized, but that doesn't mean it has been untouched by the recession. The company saw $2.6 billion in lost value at its 118 malls around the world last year, and values may have only declined since then. What's more, as of this writing, the company's stock price had been cut roughly in half from a year ago. Westfield Group is traded on the Australian Stock Exchange.