In The News : 2002

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Retail Project Creates An Oasis in the Desert

May 24, 2002
This article also appears on another site: Real Estate Journal (The Wall Street Journal Guide to Property)

Retail Project Creates

An Oasis in the Desert

By MORRIS NEWMAN

Information on this page is provided by GRID.

May 24, 2002 -- It's startling to see an acre of water by the side of Highway 111 as you head east out of Palm Springs, Calif., into Rancho Mirage. In the high desert of Southern California, sometimes the reflection of the sun looks like water. But this is the real thing. Water -- a lot of it -- is the first thing most people notice about the River at Rancho Mirage, a $50 million, 240,000-square-foot shopping center fronted by a one-acre reflecting pool. Water, at least in public places, is in short supply in this desert landscape of bright stucco buildings, kiln-hot sun and a wall of mountains that looks close enough to hit with a tennis ball.

An even rarer commodity in the area than water, however, is foot traffic, and the River seems to be generating plenty of that as well. People turned out in large numbers last fall for the unofficial opening of the shopping center. Though still incomplete, it is currently 85% leased, and merchants have been busy. Borders -- the first big-chain bookstore in the Coachella Valley -- is seeing heavier-than-expected sales volume and has hired 45 sales clerks rather than the 30 originally planned. "There's a lot of flow through here," says Borders general manager Tawny Raymond. P.F. Chang's China Bistro, the Scottsdale, Ariz.-based restaurant chain, also is experiencing patronage "beyond our expectations," according to operating partner Tom Eads. "The River is the only place in the Valley where people can go with undefined plans and say, 'We'll figure out what to do when we get there.'"

To ensure that there is plenty to do, the mall includes a 12-screen multiplex operated by Krikorian's River Theaters and eateries in addition to P.F. Chang's such as YardHouse, Bang & Olufsen's, Ben & Jerry's and Fleming's Steakhouse.

Developer Jerry Snyder says he is "absolutely surprised" by the level of response. Affluent Rancho Mirage is hardly lacking in retail, with plentiful suburban-style centers and big boxes lining Highway 111. However, this tourist-rich resort community has relegated nearly all of its open space to private uses -- high-priced country clubs, tennis clubs and golf resorts -- so the appearance of something like a town square has an immediate appeal. "We are filling a social need," says Mr. Snyder.

The River, in fact, is a recent entry in the growing lineup of town center-style retail, in which outdoor shopping centers are designed to look like downtown areas or city squares, with outdoor walkways, plentiful landscaping and street-like arrangements of shops and restaurants (See Town Center Succeeds in This California Suburb).

The origins of the River stretch back to early 1999, when Mr. Snyder, on the golf course, received a cellphone call from Barry Foster, the economic-development director of Rancho Mirage. The Los Angeles-based developer had vacationed in Rancho Mirage for 20 years but had never built there. Mr. Foster asked him to submit a proposal to the city for the use of the 30-acre property, which had gone undeveloped for nearly a quarter of a century. The city had assembled the site for a civic center that was subsequently built elsewhere, and a string of earlier developers had run aground.

Mr. Snyder responded quickly with a proposal for an entertainment center anchored by a multiplex cinema and orientated around open courtyards and water features. "Mr. Snyder had the vision to create that focal point, a downtown for the community," Mr. Foster says. "I think the city council could have easily changed the direction and settled for something marginal in quality, such as a big-box center. But that was not the wish of the community."

The design, by the Jerde Partnership of Venice, Calif., goes well beyond the featureless stucco containers that line much of Highway 111. Water is visible throughout the project. From the reflecting pool along the highway, a stream dotted with artificial rocks meanders through the mall, traversing a stepped waterfall next to a freestanding restaurant and a fountain paved in river stones. The high point of the design is an open-air bar, which stylishly updates the Mid-Century style that is currently bringing architectural tourists to the Palm Springs area. The sight of the bar jutting out over the reflecting pool with the mountains in the background is a memorable composition, especially in contrast to the sometimes banal landscape of Highway 111.

Retail is a comparatively recent property type for Mr. Snyder, who began his career in the 1950s as a prolific homebuilder. He switched to office development in the 1970s and 1980s and entered retail during the real-estate slump of the early 1990s. His current projects are spread evenly among office, residential and retail. Mr. Snyder says he tends to favor urban infill sites like that in Rancho Mirage. "The beauty of infill is there are no NIMBY [not in my backyard] problems," he says. Another advantage of retail developments, according to Mr. Snyder, is that tenants will more readily pre-lease space. "You can't pre-lease an office building," he declares.

A disadvantage for Mr. Snyder of building a project in his vacation spot is that he has had less time to play golf in Rancho Mirage, and his handicap remains stuck at a modest 12. Mr. Snyder remains philosophical. "I'd rather be building."