|
Feature Article, October 2004
Reinventing The Ranch
Somera Capital Management and Coastwood Capital renovate Houston’s West Oaks Mall with a ranch theme.
Randall Shearin
 |
One major change Somera is making to West Oaks is the addition of exterior tenant entrances.
|
|
Changing a mall is never easy. But completely renovating, revamping and re-theming malls that were left behind in the 1990s is something few developers take on. Somera Capital Management is one company that’s doing just that. Founded in 1994, the company is backed by a number of high net worth individuals based in Santa Barbara and Los Angeles, California. Over the years, the partners have invested in a wide array of real estate through partnerships. Its real estate portfolio — which contains everything from hotels, office properties, industrial buildings and retail properties — is currently valued at around $800 million.
In 2002, Steven Plenge joined the company as executive vice president to head up the company’s retail redevelopment efforts. A former development executive in Madison Marquette’s Los Angeles office, Plenge is an expert on identifying older malls in strong markets that need an infusion of capital and new retailers.
 |
Somera is enhancing a lot of existing architectural details at West Oaks.
|
|
In his first year, Plenge established his firm as a serious player on the retail front with several acquisitions, one being the purchase — and subsequent renovation — of West Oaks Mall in Houston. Somera Capital purchased the center in mid-2003 in line with its strategy to acquire older centers and renovate them. Shopping Center Business recently met with Plenge at Somera’s offices in Los Angeles to discuss the renovation of West Oaks Mall.
West Oaks had been heading down a slow path to disrepair for some time before Somera purchased the center. The center was, for a number of years, the dominant center in its West Houston submarket. However, in the late 1990s, after Hines Interests opened First Colony Mall, West Oaks began losing its hold on the market. When West Oaks first opened in 1984, the center was anchored by Saks Fifth Avenue and Lord & Taylor. The mall, says Plenge, was leased too high-end for the market and Sears, JC Penney, Dillard’s, Foley’s and Mervyn’s have since anchored the mall. Adding to West Oaks’ problems was the $200 million renovation of Memorial City mall that was completed last year, about 11 miles northeast of West Oaks.
 |
The center’s food court will feature a large fireplace at the center.
|
|
“It had a good cache, but malls like this need constant attention and capital needs to be infused into them every 5 to 10 years,” says Plenge. “West Oaks has been around for 20 years with little capital placed into it.”
The lender, TCW Realty Advisors, now CB Realty Advisors, had taken West Oaks back from the original developers, JMB/Urban, in the mid-1990s. It languished for 5 to 7 years before Somera purchased the center. In spite of all the problems that West Oaks faced, the market surrounding the center was the best thing that the center had going for it. Throughout the center’s 20 years in existence, the Cinco Ranch area had been growing nonstop, as had the area immediately surrounding West Oaks.
Somera, meanwhile, was looking for a mall to purchase in a major metropolitan city. Plenge knew he wanted to purchase a center in a large city in a submarket that had great demographics. West Oaks, with 300,000 people living in a 5-mile radius with an $87,000 average household income, had what Somera was searching for. However, Somera wasn’t the only buyer that wanted West Oaks. Coastwood Capital, based in Connecticut, also was interested in the center. Plenge spoke with Coastwood’s president, former Taubman executive Cordell Leitz, and the two discussed a partnership to purchase the center. Together, they closed on the center in July 2003.
 |
The new entrance at West Oaks.
|
|
Once the closing was done, Somera and Coastwood set about to renovate the center. First on the list was to position the center for the market. With First Colony and Memorial City serving as bookends, Somera had to figure out which retailers could best serve the market between the two centers, and what kind of center would best appeal to the area’s residents.
“Even though this is a large asset, it is still a community center,” says Plenge. “People like to shop where it’s convenient, close to their home and provides for their shopping needs. We knew people would stay at West Oaks if they had a similar line-up of retailers as First Colony, and if they had a safe, comfortable, clean environment, that was convenient.”
One of Somera’s goals was to make West Oaks a fun, interesting environment for consumers to shop. As regional malls continue to evolve, the company wanted to make sure that West Oaks — while it would remain a mall — was ahead of the times after it was redeveloped.
 |
Soft seating areas and new flooring are just part of West Oaks’ renovation.
|
|
Somera began working with Seattle-based Callison Architecture to develop a new plan for the center. The architect and the developer looked at the way that the market had evolved over the years.
“This area has the typical suburban sprawl; there’s no town center. The mall is about the closest thing you get to that,” says Plenge. “We wanted to create a multi-faceted retail center in a mall environment. We also wanted to be distinct from First Colony and Memorial City.”
Borrowing from a ranch theme, Callison has designed the center to have the feel of a home. When you pull up to the center, there are split rail fences and tall grasses to begin to define the ranch theme. Somera is opening up parts of the center so that there are outside entrances directly to some retailers.
“As you drive up, you know it’s different,” says Plenge. “It isn’t overwhelming, and the entrances soften the look of the mall. It doesn’t feel like you are walking into a fortress. It’s going to be very different from any other mall property in Houston.”
Continuing the theme inside the mall, when a visitor walks in any common area entrance, they will be greeted with a large display of flowers on a table, just as you would see in a home or an upscale hotel. The walk-off mats are imprinted with the brands from historic ranches nearby. Somera is also replacing the existing floor of the center. The new stone floor that the center will have is unique, with fossils embedded in it — a built-in attraction for children.
 |
The new Southwest entrance at West Oaks.
|
|
The center’s food court has been themed like a kitchen. Callison has designed a large copper fireplace in the middle of the food court. Surrounding the fireplace, which goes up over two stories, is banquet seating. The food court also has photographs from historic ranch life and environments. Tabletops will have a brief history of these ranches, along with maps of their locations in and around Houston.
Leasing the center has also been going at a successful rate. Jones Lang LaSalle is leasing and managing the center for Somera and Coastwood. The first of West Oaks’ new tenants to open has been Alamo Theaters. The Austin, Texas-based theater chain has a strategy to renovate older movie theaters by making them more upscale and playing first-run movies. The theaters offer food, beer and wine as well as the usual movie concessions. The center also added Linens ‘N Things that has an exterior entrance as well as an interior entrance.
“Having a home décor anchor really is good for the customer as well as the other retailers,” says Plenge.
Other new retailers include Hollister, Hibbetts Sporting Goods, Hot Topic, Charlotte Russe, Birraporetti’s restaurant and bar, and Dairy Queen among others.
The center is currently performing in the high $200s per square foot, says Plenge, but he anticipates growing it to the mid-$300s over the next 3 years with the changes it’s making.
“We’ve been able to raise the sales growth,” he says. “When the community embraces it, it’s to our reward, and it rewards the retailers and customers as well.”
In some aspects, Somera is bringing elements of the area’s lifestyle to the mall. Creating an environment where the community wants to shop is at the top of Somera’s list, and that means finding retailers that fit the bill.
“The days are gone when mall developers could come in and dictate to the community what they were going to have in a mall,” says Plenge. “You really do have to listen to the community today and see what they want. Today, the community wants convenience, value and quality in an attractive, fun and unique environment.”
Redevelopment construction began on the center this spring and will be completed by the time the holiday shopping season starts in November.
What’s next for Somera? The company has plans to acquire and reposition one to three centers similar to West Oaks for the next several years. The company currently owns four centers and has plans to purchase two more centers by the end of 2004.
©2004 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.
|
