Tuesday, September 2, 2008

Retail centers, the next ghost towns.

There was a good article in the LA Times today. It mirrors a similar article from the Press Enterprise from a few months back that spoke of the problems facing many of the new retail centers that have been built all over the IE. Interestingly both articles chose to single out the Dos Lagos center in South Corona as their poster child.

Dos Lagos is far from the only retail center that is in trouble. Many of these mega centers as well as many more smaller centers built in the last few years are finding customers are just not spending these days. What's going to happen to these centers? Well you need to look no farther than Moreno Valley to see what will happen. During the last boom several large centers were built. Many of those still sit empty. Right off the 60 Fwy is Canyon Springs center. Once home to a thriving retail center. When the bust hit in the early 90's roughly 70% of the stores moved out. What remained were discount shops or seasonal shops. Only Toy's R Us weathered the storm. Even well known eateries like Tony Roma's could not make it in an empty shopping center. Another example is the McKinley Center. That center is now deserted and a new center is being built right across the freeway. Just in time for the latest crash. Even worse is the new center they are building on the eastern end of MoVal. There is a new Target, WalMart, Kohls, Best Buy and I saw they are just finishing a Circuit City when I drove past a few weeks ago. That center is doomed. It was built in anticipation of several thousand new homes being built east of Lake Perris. Those homes aren't being built so who's going to drive way out there now? A year from now that center will be empty. Just like Dos Lagos and most of the other centers built on the edges of these former boom towns.

Here's the LA Times article

The Promenade Shops at Dos Lagos opened two years ago in Corona, aimed at serving the legions of people moving into upscale new housing tracts in the surrounding hills.

Discount center it isn't. This is where you go to find a $3,300 home espresso machine at Sur La Table, a $500 handbag at Coach or a $6 cup of Pinkberry frozen yogurt. Harder to find are paying customers. On a recent weekday afternoon, most stores had fewer shoppers than salespeople.

Outside the Starbucks, Melissa McVicar was selling sunglasses from a cart, $12 a pair. Five hours into her shift, McVicar had sold only six pairs. And most of her customers weren't paying cash.

"People are buying on credit, even if it's only $12," she said.

A year after the median home sales price in Southern California started to go down, Dos Lagos is a good example of how the housing slump is spreading into the broader economy. New housing developments were supposed to have brought thousands of big-spending residents to the area. But only a fraction of those houses were actually built and sold, leaving the rolling hills around the mall bulldozed and bare.


BrianH said...

you mean in an area where the typical household income is under 60k and most people commute long distances there is not sufficient demand for coach hand bags, ultra high end make-up stores, 75 dollar per head dinning establishments and 8 dollar jamba juice drinks????

WTF man I though every single person in south corona was rich as hell.

Sellin @ Da Drop said...

I called this several years ago when I saw the type of stores being built around here. As a long time resident of the 'Valley of the dirt people' there is no way in hell this area can sustain these type of establishments. It was all being fueled by the house ATM now empty. Good bye Pottery Barn. Goodbye BomBay furniture. Good bye COach. Good bye Dr. Venkitarian's house of boobs.

Marsupial said...

Dos Lagos never took off in the first place. It was like someone took a miniature version of Fashion Island, without the anchors or any interesting stores, and plopped it in the area between 'South Corona' and "Really South Corona'. I guess it wasn't just me, then, that doesn't care for the place.

Terry said...

And yet SRS stubbornly refuses to go up! I just know it's waiting for me to sell out of frustration and then it'll skyrocket.

I'm Not POTUS said...

SRS covers all real estate types. So I am keeping the faith for the spike.
CRE sector is the next shoe to fall. When it does watch out.

Jack said...

hmmm.. i was there last week and there was a line at Counter.. they have some tasty sweet potato fries...