"Up north we do have some ground for development in Portland and potentially a site in Washington," says Dale Kemp, CFO of MBK. "We're looking for repositioning properties, retail malls and centers having difficulties. We have sufficient things going on in Portland and Seattle, so our next step is a strong push in Southern California."
MBK President Mike Voss says he expects some retail centers to falter next year due to troubles in the theater industry, stemming from overbuilding and over encumbering themselves with too much debt. Still, finding property in the greater Los Angeles area is difficult due to intense competition for the few existing centers on the market.
"We like to see retail centers that are well located from a demographic standpoint, but with anchors and tenants that are either weak or inappropriate for that particular market. What we do is we come in and renovate and reposition the center by, first of all, physically reconfiguring [the center] and then bringing in new tenants," Voss says.
Once a property is identified and purchased, it takes MBK typically anywhere from 18 months to three years to complete the renovation. In fact it is not uncommon for them to tear down as much as one-third to one-half of a center to reconfigure it. Then they look to change the tenant mix, Kemp says.
"We're short-term holders and redevelopers of retail properties. Ninety percent of our projects we think we've identified, but we are looking to expand aggressively. We are greatly hoping to find something in Orange County or the greater Los Angeles area," he adds.
When searching the market for projects, MBK is typically looking for centers from 500,000 sf to 900,000 sf, with a price tag in the range of $50 million to $100 million. Local contractors are used for the construction work.
Then they work on getting the right tenants in the project. Over the years, MBK has developed solid relationships with such big box retailers as Best Buy, Home Depot, Linens N' Things, Ross Dress for Less, Comp USA, the Gap and Old Navy. Once the national anchors are in, they look for local specialty retailers to fill the remaining space. "We have very good connections with the major retailers because we've helped them succeed [in other projects]," Kemp says.
Although the 1.5 million sf of space may be a bit of a stretch, Kemp admits that, for the most part, it is looking very realistic, and he expects 2001 to be a banner year for the company. In fact, he believes the next two to three years will be strong ones as well.
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