Port Blakely announces plan to build highlands shopping center
July 12, 2011
By Warren Kagarise
The plan to add more stores to the Issaquah Highlands, a subject responsible for much grumbling among neighborhood residents and city leaders, lurched ahead July 5, as highlands developer Port Blakely Communities announced a deal to sell 14 acres for a proposed shopping center.
If the deal is completed, as executives hope, construction could start as early as next year. The announcement also prompted some residents to point to similar — albeit unsuccessful — attempts in the past.
The agreement calls for Regency Centers, a real estate investment trust based in Florida, to purchase about 14 acres of highlands land and build a 175,000-square-foot shopping center along Northeast High Street and Northeast Park Drive — a site once set aside for a stylish retail destination called The High Streets.
Regency Centers also plans to acquire a retail-and-office building along Northeast Park Drive. Caffe Ladro and other businesses occupy the building’s 39,000 square feet.
The companies did not disclose terms of the transaction. The deal is expected to close by the end of the year.
Jacksonville-based Regency Centers owns almost 400 shopping centers from coast to coast, including Pine Lake Village and Sammamish Highlands on the Sammamish Plateau.
Rene Ancinas, Port Blakely Companies CEO and Port Blakely Communities president, said the national scope could aid Regency Centers in the search for businesses to settle in the highlands.
“I think it’s important to remember that Regency’s core strength has been owning, operating and developing grocery-anchored community shopping centers. What that means is, these are places within a community where people go to do their shopping and do their eating and do their socializing,” he said. “It really is very much along the lines of what we’ve always talked about in terms of Issaquah Highlands being a community on the hill with its own form of a town center.”
Company adds national scope to project
Executives modified the plan to create something upscale, such as The High Streets, and focus on neighborhood needs instead, due to the recession and a changed commercial landscape.
“The reality in the marketplace is, what people call a town center now or a shopping mall now, or any of those descriptors we’ve heard over the years, has changed with the reset in the economy,” Ancinas said. “Retail has changed, people’s consumption has changed, the economy has changed in terms of what people are willing to spend and do. It really needs a big, stable developer like them that has the financial resources, the tenant relationships and the track record to be able to do something like this in the current economy.”
Craig Ramey, senior vice president and senior market officer for Regency Centers, said the company intends to pursue a grocer, retailers, restaurants and service providers for the complex. The companies did not disclose possible tenants in the announcement; Ancinas said Regency Centers needs more time to reach out to businesses.
“Regency brings both national experience and local awareness to the project,” Ramey said in a statement. “We are confident that this development will create a hub for a vibrant community that is already among the region’s top places to live, work and play.”
Other possible tenants include a cinema. Port Blakely Communities announced a deal 23 months ago to open a Regal Cinema in the neighborhood in May 2011, but the theater plan remains stalled.
Craig Johnson, a retail consultant and president at Customer Growth Partners in New Canaan, Conn., said Regency Centers focuses on customer traffic.
“They focus more on what are called community centers or strip centers and so forth,” he said. “They virtually always want to have those anchored by something that provides a lot of trip frequency. Grocery stores are the classic example of that.”
Economy prompts back-to-basics approach
Issaquah City Council members loosened parking and signage rules for the highlands last August, in a push to boost economic development in the neighborhood. Still, aside from a Swedish Medical Center campus and a self-storage facility, most construction in the highlands is residential.
Patty Edwards, chief investment officer at Trutina Financial in Bellevue, frequent CNBC “Fast Money” contributor and a Preston resident, said a retail destination is passé, but a neighborhood shopping center could prosper.
“There’s a lot of malls that are having a hard time filling up space, so another destination when you’ve got crickets playing in certain parts of The Bravern, for example,” no longer seems as feasible, she said.
Future businesses in the highlands could also benefit from passers-by as commuters traverse the neighborhood.
“There a lot of people who are traveling through there that don’t have to necessarily live in the highlands to make that the most convenient place for them to do their grocery shopping or whatever on the way home,” Edwards said.
In addition to a grocery store, a drugstore or discount clothing chain, such as Old Navy, could succeed in the community, she added.
“Whatever it is that goes in there, it’s not going to be too high of a price point, because of the fact that it is a lot of younger families,” Edwards said. “It’s got to have the kid’s clothes, and if it’s got stuff for mom or dad, great, but that’s going to be an add-on.”
Highlands residents offer hope, skepticism
The possible downside for the highlands is a robust commercial core elsewhere in Issaquah.
“A lot of people would say, ‘Well, you’ve got stuff that’s so close. You’ve got a Fred Meyer, a Best Buy, a QFC, a Safeway. You’ve got Gilman Village. You’ve got all of the restaurants down on Gilman and around. You’ve got a PCC. You’ve got two sporting goods stores. What more do you need?’” Edwards said.
The city commission responsible for development in the highlands and Talus raised questions about Regency Centers’ shopping centers in other states. Ancinas said potential designs for highlands facilities could not be determined so early in the process.
Port Blakely Communities built the highlands as a pedestrian-friendly community and planners intentionally eschewed plans for traditional strip malls.
“They have not approached the city yet, so I’m not sure what their expectations are. But, clearly, some of the photos would be your traditional, suburban retail center,” said Keith Niven, city Major Development Review Team program manager. “So, we’ll need to figure out how that model works with the design guidelines for the highlands, which clearly is about ped orientation and things of that sort.”
Port Blakely Communities consultants unveiled the agreement to Urban Village Development Commission members July 5. The commission contains some skeptics about commercial construction in the highlands, including member and highlands resident Geoffrey Walker.
“While I don’t want to be difficult, I’ve heard this song before, and I appreciate the movement and the moving forward on this, but I look forward to continued good news and more information as we go along,” he said. “I would really hate to take more steps backwards. It probably goes without saying, but I said it anyway.”
Warren Kagarise: 392-6434, ext. 234, or email@example.com. Comment at www.issaquahpress.com.