Galleria Owners Eye Sale
Owners of the Glendale Galleria, one of the nation’s top-performing retail properties, are planning to put it up for sale, and industry sources say the mall could fetch up to $400 million. The Los Angeles office of New Yorkbased Eastdil Realty is handling the listing.
Owned by Cigna and New York State Teachers’ Retirement System and Costa Mesa, Calif.-based Donahue Schriber, which also manages the mall, the three-level center was built in 1976 and was expanded by about a third in 1983 to its current 1.4 million square feet of retail space and 140,000 square feet of office space.
Considered a retail powerhouse, the mall counts five major retailers as its anchors—Nordstrom, Macy’s West, J.C. Penney, Robinsons-May and Mervyn’s—and brings in more than $500 per square foot, dwarfing the national average of $336, according to the International Council of Shopping Centers.
Among its 250 stores are American Eagle Outfitters, Forever 21, Bebe, Gap, J. Jill, Hot Topic, Coach, Williams-Sonoma and the Apple computer store. What it doesn’t have is a movie complex, considered an anomaly in the Hollywood-focused region.
Those said to be eyeing the property include Simon Property Group—owner of Mall of America, the biggest mall in the country—and Westfield America Trust, which has been on a buying binge of late. Recently, Westfield America, which operates 39 centers in the United States, announced two transactions involving the acquisition of 22 centers, including what is now called Westfield Shoppingtown Century City in Los Angeles.
Industry observers say Donahue Schriber, a private real estate investment trust, has been a proactive manager and developer of the property. Two years ago, it spent $2.5 million to open the Zone, an area in the mall filled with teen-oriented businesses and activities. Now, Donahue Schriber is looking to exit the mall business—the Galleria is its only mall property—and focus on developing and adding to its core of 60 neighborhood shopping centers.
“We’re studying our financing options and shortly thereafter, we’re looking to sell the property,” said chairman Dan Donahue. “The [neighborhood shopping center] business is doing well and we’re clearly expanding that business.”
The good news for the mall is that retail is among the hottest sectors of the real estate market, according to Bill Boyd, senior vice president at Grubb & Ellis Co. The $271.2 million sale of then–Century City Shopping Center, which is about one-third the size of Glendale Galleria, to Urban Shopping Centers Inc. in 1999 was considered a premium at the time.
“Right now, retail is looked at very positively by the investment community—more so than office and industrial properties,” Boyd said. “It’s a good time to be selling.”
Key to further growth at the mall is the nearby Town Center under development by high-profile developer Rick Caruso. Still being reviewed by the city, the mixed-use project could include upscale retail and up to 500 multifamily housing units. City officials hope to create a link between the open-air center and enclosed Galleria.
“The new owners of Glendale Galleria will inherit a great project in a great city with not much else they can do with it unless the Town Center goes through,” Boyd said. —Nola Sarkisian-Miller
