Donahue Schriber Focused On Growth
The company is active in neighborhood centers in some of the West's fastest growing markets.
Randall Shearin

Donahue Schriber's Del Mar Highlands Town Center in San Diego, California.

“In 1997, we made a conscious decision that we couldn't compete in the regional mall business,” says company President Pat Donahue. “The business was consolidating rapidly and capital wanted to be with the public companies. We saw a huge void on the west coast of any dominant grocery-anchored and necessity-based retail property owner.”

Donahue Schriber aligned itself with capital sources and took its 30-year expertise of developing centers and applied it to the neighborhood center business. The company now owns 70 shopping centers, 54 of which are grocery-anchored. There are no regional malls in the company's portfolio. Of those centers in its portfolio that are not grocery-anchored, Donahue says that those have “necessity” tenants that drive traffic daily. These are tenants like specialty grocers, dry cleaners and drug stores.

Finding growing communities has been a focus of Donahue Schriber. The company developed Windmill Marketplace in the growing area of Clovis, California.

For instance, the company recently acquired Fig Garden Village in Fresno, California. Donahue Schriber has demolished about 50,000 square feet of obsolete space at the center, and is under construction with 75,000 square feet of new lifestyle tenants. The center will be anchored by Whole Foods and have tenants like J. Jill, Banana Republic, Pottery Barn, Williams-Sonoma and Coach. While the center may sound like a star, institutional investors generally prefer markets where they can have a concentration of centers. In Fresno, Donahue Schriber will own the only center with most of these tenants.

Despite the company's development focus, Donahue Schriber has outpaced its estimated acquisition volume over the last year. The company anticipated that it was going to acquire $24 million in properties, but instead acquired in excess of $100 million in assets. The company opened nine new centers in 2004, and it will open six centers in 2005. Of the additions to its portfolio over the last year, the company acquired about 50 percent of its new additions and developed the other half. Over the next 2 years, Executive Vice President of Development Mark Whitfield estimates that the number of centers the company develops will be greater than the number it acquires. Currently, the company has 14 properties in its development pipeline opening in 2006 and beyond.

A rendering of Donahue Schriber's latest center in Lathrop, California.

Avoiding the institutional quality assets has helped Donahue Schriber bypass the feeding frenzy that goes on in a market like that which exists today. By staying outside of the competitive bidding wars, and looking for opportunities which aren't heavily marketed, it has been able to acquire a number of assets for its portfolio. Donahue Schriber has also been able to acquire several centers that are “off market” — or technically not for sale. Fig Garden Village in Fresno was such a center.

In Las Vegas, Donahue Schriber acquired a portfolio of properties from American Nevada Corporation that gave it a foothold in the market. The centers were 85 percent occupied. Donahue Schriber has since boosted the centers' occupancy rates.

“We really let the market dictate whether we acquire or develop,” says Whitfield. “A lot of our incredible growth pace that we've realized has really been driven by the growth in housing in some of the markets where we are active.”

Donahue Schriber has developed The Shoppes at Gilbert Commons in the growing community of Gilbert, Arizona.

In Northern California, Donahue Schriber has been active recently in the East Bay area of San Francisco, stretching to the Central Valley area. This area is expanding rapidly with new homes that are more affordable than most in the Bay Area. As Donahue points out, though, “affordable” is a relative term in California.

“This is where people are living and moving in the Bay Area to get a piece of the American Dream,” he says. “We are following a lot of that growth. We are following where the rooftops are selling, and where they need goods and services.”

  Eighty percent of Donahue Schriber's properties are in California, with about half in Northern California and half in Southern California. About 10 percent of the company's centers are in the Phoenix market, and the remaining 10 percent are in Las Vegas.

“We are going to look at other Western markets like Denver, Seattle and Portland, in years to come,” says Donahue. “We are not going to be naïve and think that we can just open an office and be a formidable competitor in those markets. We are going to have to buy a portfolio of properties or find a local developer who wants to team up with us and use our capital and our resources to build new centers.”

When Donahue Schriber expanded their Arizona presence, for instance, it partnered with Charlie Hickox, a local developer. In the past few years, Donahue Schriber has developed a number of centers in the market in a short amount of time. This type of local partnering is what Donahue Schriber hopes to accomplish as it enters new markets over the next few years.

Donahue Schriber sees a bright future in the West, and it is keeping its eye out for future deals that will take the company to 2010 and beyond.