Builders rethink retail development in light of pandemic

Developers in Visalia and Porterville draft major changes to plans previously slated for retail stores

TULARE COUNTY – One of Visalia’s largest shopping center developers is making big changes to their plans for land across from Costco, just a block off Mooney Boulevard.

DBO Development also known as the Orosco Group filed new plans July 1 with the city of Visalia for approval to build a large 274-unit apartment complex. It’s a change from their original plan to expand the Packwood Creek Shopping Center across from their Grove South project that is next to Costco. The old site-plan on the 16-acre empty parcel on Cameron had featured a movie theater complex as its anchor tenant.

The change in the developer’s plans coincides with a tidal wave that is boosting e-commerce this summer, impacted of course by the COVID-19 stay-at-home phenomenon. The wave has impacted many familiar brick and mortar stores who are now watching their former customers doing most of their shopping over the internet.

That in turn is clearly putting the hurt on shopping center developers like DBO whose bread and butter is dependent on retail growth, not contraction.

The trend has been well underway for many months around the country. In Porterville, after some 15 years of struggle getting approvals in place for a Walmart Supercenter, which included a never-ending bout of litigation, the company finally got approvals in-hand, just to pull the plug last summer. Sources say the vacant land is still owned by Walmart and just sits there today with no takers.

Reliable sources add that the decision to pull back in Porterville is happening across the nation with Walmart putting most new projects on hold well before COVID-19 hit the stage. The company is moving forward on one long term project however, the grocery store at the Noble Avenue Walmart in Visalia, which is still expected to open this fall.

Saddled with vacant commercial land, developers like Orosco and hundreds of others in the Valley are likely to turn to other development plans – ones that they hope they can still fill with tenants. Not just retail ones.

The movie business

Reduced demand and financial troubles are impacting not just retailers but movie theaters.

Theaters closed since March remain empty as people stay home and shun indoor gathering spaces. Across the country movie theaters are shuttered this summer with some theatre chains warning they may not reopen.

The theater chain AMC warned it may not survive the coronavirus pandemic as film studios explore releasing more movies directly to viewers over the internet.

Regal Theaters on the other hand hold steady their plans to reopen cinemas on July 31, say sources. The company has a theater at Sequoia Mall, near what had been the proposed DBO cinema complex. Source says Regal still plans to move forward on the plan announced in January to build a new theater complex at the west end of Sequoia Mall despite the pandemic.

Another developer in Porterville is downsizing planned commercial acreage in a mixed-use project replacing commercial acres with more apartments as well. The applicant is proposing a modification to the existing master plan for Henderson Villas to accommodate the addition of a 104-unit second phase to the initial 168-unit complex. The increase in units will require a reduction in the size of the commercial and retail spaces to be built along Henderson says a city report.

Industrial boom?

If there is a weakness in the big box and entertainment sectors that will be hurting the Visalia economy from here on, the same trend may be the cause of a boom in industrial real estate at the Visalia Industrial Park.

Industrial developer Prologis was recently quoted in the Wall Street Journal noting that retailers and those who supply them now have, “Higher inventory levels and the accelerating growth of e-commerce, which typically requires about three times as much space as traditional distribution operations that serve stores, could increase U.S. warehouse demand by as much as 400 million square feet over the next two to three years.”

It’s not just inside gatherings that are being affected right now. This week Visalia’s single-A pro baseball season was canceled until next year even though fans sit in outside grandstands.

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