Mixed-Use Along The 405
Hopkins Real Estate Group and LNR Property Corporation have teamed to develop Avalon at South Bay, a mixed-use project that will bring over 1 million square feet of retail to a major freeway intersection in Southern California.
Randall Shearin

A lot of developers see the perfect site day after day, only to realize that it has such stumbling blocks that development will be nearly impossible. At the junction of Interstates 405 and 110 in Carson, California, such a site exists. With incredible visibility, great demographics and a leakage for retail in the market, the site has been the target of many developers for more than 20 years. However, once they got past the basics, the prospective developers all saw the realities: the site, which was once a landfill, was environmental nightmare.

Steve Hopkins regularly drove past the site on his way to Los Angeles from his base in Newport Beach and had also redeveloped South Bay Pavilion, just across I-405 from the site. However, it was the new development director for the city of Carson, who had worked with Hopkins on a project in a different Southern California city, that first approached Hopkins about the opportunity. Hopkins says the director had been in Carson for 2 days before calling him about the site. Almost immediately, he decided to make a run for the property, which had been in escrow with another company. A small pension fund owned the property. Luckily for Hopkins, the manager of the fund’s boss was his college roommate. A letter of intent was signed December 24, 2003, and sold in March 2004. Hopkins teamed with LNR Property Corporation as an equity partner to get control of the site, and now is in the process of developing Avalon at South Bay (formerly known as Carson Marketplace), a mixed-use project that will contain more than 1.3 million square feet of retail.

Shopping Center Business recently met with Hopkins, who is president of Hopkins Real Estate Group (HREG), along with Lang Cottrell, president, west region-south, LNR Property Corp., Dennis Reyling, chief operating officer of Hopkins Real Estate Group, and Bryan Miranda, vice president for LNR Property Corp., at LNR’s headquarters in Newport Beach, California, to discuss the project.

LNR is a private company involved in both the development and financing of real estate projects. LNR was spun off from Lennar Corporation as the commercial development and investment arm of the homebuilder and operated at first as a public company. Since going private 2 years ago, LNR has concentrated on its development fund, which has grown to $1.1 billion. With the fund, it co-invests and develops properties for its own account. LNR has been involved in the redevelopment of six former military bases through the Base Realignment and Closure Act (BRAC). It has partnered with its former parent, Lennar, to develop commercial properties on the sites. That experience gave LNR a practice of dealing with brownfield sites.

“The insurance, clean-up and characterizations of brownfield sites are entirely different than green sites,” says Cottrell. “It really prepared us for what we’re going through on the Carson site.”

LNR and Hopkins Real Estate Group (HREG) have been working on the site for 3 years. Just after putting the site in escrow, the NFL tried to buy the partnership out to place an NFL stadium there. The effort, while widely publicized, fell apart.

The site’s traffic counts are among the highest in California. About 275,000 cars per day pass by on the 405, while another 230,000 pass by on the 110 Freeway. The 91 Freeway and the 710 Freeway are also within a mile, adding to the potential for customers. At 168 acres, the site is estimated to be the largest tract of land available for development in Los Angeles County. The demographics add to the attractiveness: within 5 miles there are 600,000 residents.

“In terms of accessibility, it is a fantastic site,” says Hopkins. “The project is really designed to reach out to the entire South Bay area of Los Angeles. The accessibility will allow for residents to visit the project, which will really be the only one of its kind in the area.”

The site sits atop the former Cal Compact Landfill, which is classified by the state of California’s Environmental Protection Agency (CalEPA) as a Class II environmental area, and is being remediated by HREG and LNR. CalEPA has partnered with the developers to remediate the property. All groundwater on the site will be contained and another system will capture and burn off any methane gas in the ground. The gas monitoring system is active 24 hours a day, 7 days a week. The entire site will be capped underground by a geo-synthetic membrane that will capture gas and liquids below the surface. Most buildings will sit on pilings to ensure stabilization from any settling.

An integral element to The Avalon at South Bay will be a 330,000-square-foot lifestyle/entertainment component.

“CalEPA was in agreement that if this site was remediated properly, that residential could be done,” says Reyling. “They are viewing Avalon at South Bay as a model for redevelopment and reuse of brownfield properties in the state of California. They have been very supportive of our development program every step of the way. They have been at a lot of public meetings and spoken on behalf of the safety of the project to the community.”

The mixed-use style of the project will bring a number of uses to the project. In addition to the 1.3 million square feet of retail, HREG and LNR plan a 300-room hotel and 550-1,250 residential units. The leadership of the city of Carson really wants the project to be a downtown gathering place for the community. As such, the developers are creating a lifestyle area that is centered around a main street. This area of the project will feature a multi-screen theater, restaurants and retailers. A separate retail area will surround the lifestyle hub with big box retailers. HREG has had tremendous interest from retailers in the project.

“This is a real hole in the market for a lot of national retailers,” says Reyling. “We have two national tenants for almost every box competing to get into the center. It is a great place for us to be.”

The developers will have a warehouse-type tenant, home improvement, a department store and big boxes in the office, electronics and clothing uses. They also want to bring a large, modern grocery store to the center, since there isn’t one to the north of Del Amo Boulevard, which runs to one side of the project.

Avalon at South Bay has been selected as the project’s official name and will inspire the architectural theme and sense of place.

A number of tenants have expressed interest in the lifestyle area of the project. This area will also have a water feature designed to attract shoppers and set the project as part of the community. The developers are talking to a number of theater operators to create an iconic theater, since the project, with the theater at its center, will be highly visible from the 405 Freeway.

“This community has lacked for years an exciting and vibrant open-air gathering place for the community to go and enjoy,” says Reyling.

A further draw to the project is the nearby Home Depot Center, a venue used for concerts and events, including the Los Angeles Galaxy soccer team, which recently signed David Beckham. Beckham’s presence on the team is expected to draw hundreds of thousands of soccer fans to the Galaxy’s games every season. The Home Depot Center also includes a world-class velodrome and a U.S. Open tennis center.

Future development is also a possibility. Hopkins and LNR are under contract to purchase  an 80-acre golf course across the 405 Freeway from the site. Now, Hopkins and LNR control a total of 250 acres on both sides of the freeway.

“The city of Carson deserves a lot of kudos for staying involved in this project and having the vision to see that a landfill could be developed into a project of this magnitude that will be great for the community,” says Cottrell. “We think it is a win-win between the city and the developers. It is also a win for the community in that it gets rid of a 150-acre former landfill.”

Avalon at South Bay marks the second time that LNR and HREG have partnered together. The companies’ first collaboration was Whittwood Town Center, the redevelopment of Whittwood Mall into a department store-anchored lifestyle center and condominium community. The companies completed that development in 2006.

“Whittwood has been very successful for us,” says Cottrell. “There are a lot of similarities between Avalon at South Bay and Whittwood, but first and foremost is that we have a good partner to work with.”


©2007 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.