The developer of the Malibu Lumber Yard has gotten a financial break from the city, because the upscale shopping center has leased up slower than expected while costs of an elaborate on-site wastewater treatment system have run higher than anticipated.
The break could be worth $100,000 or more annually by allowing developer and owner Malibu Lumber LLC to defer a portion of its rent for the city-owned land. The revised deal was approved by the Malibu City Council on Sept. 29 in a 5-0 vote.
The 31,000-square-foot center has been a high-profile one, even before it opened in April with a star-studded party. That's because it was the first such retail center to open in development-averse Malibu in two decades. What's more, the project at Pacific Coast Highway and Cross Creek Road is near the celebrity hangouts of Malibu Country Mart and Malibu Colony Plaza.
However, project co-developer Richard Weintraub and a broker who has handled leasing at the property acknowledged that the recession has hurt the $25 million shopping center and forced them to trim asking rents.
"The fact that it's a new project in Malibu, it creates new energy in the area," said Matthew May, a retail broker and president of May Realty Advisors who is not affiliated with the project. "But no matter how perfect the opportunity is and how pretty the real estate is, it still doesn't trump the economic times."
The project, which was co-developed by Weintraub and ValleyCrest Cos. Chief Executive Richard Sperber, includes high-end clothing shops such as James Perse, Intermix and Kitson, along with a handful of smaller local retailers. Getting the retail center approved and built was a big task for the developers, who had to contend with development-wary factions in the city. Significantly, they also had to meet tough requirements set out by the Los Angeles Regional Water Quality Control Board.
The agency required the installation of an advanced wastewater system, which takes the sewage from the property and recycles it for other uses and pumps treated water to an adjacent field where it can seep into the ground. The system wound up costing $4 million, not the $500,000 the developers had planned on, and it costs $250,000 to operate annually five times more than projected, Weintraub said.
Then there's the economy. The retail sector has been ravaged by the recession, which has forced consumers even in the wealthy set to slash discretionary spending. Trendy retail strips such as L.A.'s Robertson Boulevard have cooled and landlords across Los Angeles County have lowered rents.
For reprint and licensing requests for this article, CLICK HERE.
Stories You May Also Be Interested In
- Malibu Puts Duo Through the Mill For Retail Center
- Malibu Lumber Yard Site Turns Into Major Retail Project
- Malibu Stuck In Septic Muck
- Malibu Stuck In Septic Muck
- RICHARD WEINTRAUB
- Big Plans Raise Builder's Low Profile
- Malibu Developer Alleges Scheme in Hotel Deal
- Owners Finally Shore Up Deal for Malibu Mall