Developer Plans Open-Air Mall in Sacramento

Nov. 5--Wal-Mart Stores Inc., the mega-discounter often blamed for ruthlessly destroying its competition and undercutting wages, may be just the thing that saves the foundering Florin Mall.

San Francisco-based South Sac LLC, which recently purchased the 667,000-square-foot portion of the property from developer Buzz Oates, plans to showcase one of Wal-Mart's Supercenter stores where consumers can buy shoes or tires, then go down the aisle for a gallon of milk.

The store will anchor a $65 million open-air mall known as Florin Towne Centre, which will be built where the enclosed mall now stands. The sale does not include the Sears store, which is separately owned.

Wal-Mart said the 218,500-square-foot store will replace its 130,000-square-foot Southgate Plaza operation in 2007. The company is "fully committed" to finding "a new quality tenant for the former store site," according to a Friday press release.

The plan would move Wal-Mart one step closer to its goal of planting 40 California Supercenters in the next few years. The retailer, based in Bentonville, Ark., now has three of the grocery-and-general-merchandise stores planned for Sacramento County -- in Galt, Elk Grove, Florin and Antelope -- plus one slated for West Sacramento in Yolo County.

It also opened Supercenters in Roseville and Dixon earlier this week.

Jim Kessler, partner and spokesman for South Sac, said that the new center would cater to nearby residents who now have to drive north or south to shop.

"Florin is the hole in middle of the retail donut," Kessler said. "To the north you have the downtown mall and Arden Fair, to the south, Elk Grove. We're at the midpoint, an area with a lot of bodies but not a lot of shopping choices."

Built in 1967, Florin Mall became Sacramento's bright retail light, with three department stores, dozens of specialty shops, ample parking and easy access to Highway 99.

It fell on hard times, however, after nearby competitors such as Arden Fair and Downtown Plaza poured money into renovation while outlying cities built competing malls and shopping centers.

The mall's decline accelerated after Federated Department Stores Inc. shuttered the Weinstocks store in 1996 and J.C. Penney Co. Inc. closed its outlet business in 2003. Sears, which owns its building, was the lone remaining anchor.

What was once a destination for shoppers throughout the region had become a half-empty shell by the time Oates finished buying everything except Sears in 2003.

"Buzz had the Weinstocks and J.C. Penney building on the market for years," said Heath E. Charamuga, investments senior vice president for commercial broker Grubb & Ellis in Sacramento. "At the same time, he was trying to get tenants in there and he couldn't."

South Sac's decision is to raze the structure and bring a Wal-Mart into Florin Towne Centre would add Sacramento to the handful of cities with urban Supercenters, most notably Los Angeles and Dallas, said George Whalin of Retail Management Consultants in San Marcos.

"(Wal-Mart) is trying a new model -- which is both urban and suburban," Whalin said. "They've not been urban at all before."

Although the Supercenter will undoubtedly be a customer magnet for a site that long ago lost its luster, the plan has a downside, said Larry Kosmont, a Southern California land-use consultant.

"Wal-Mart will be both a blessing and an obstacle," Kosmont said. "The store will draw tremendous customer traffic, but it will also reduce the number of stores that can do well around it because it cuts across so many categories (of merchandise)."

Restaurants and small specialty stores can thrive in the shadow of Wal-Mart, Kosmont said, but not much else.

"Things like stationery, clothing and shoe stores can benefit from the customers that a Wal-Mart pulls in," he said. "The centers that I've seen that have a Wal-Mart anchor are doing pretty well, but they've had a very limited number of tenants."

Wal-Mart spokesman Kevin Loscotoff said that the Florin Towne Centre plan does not affect the discounter's intention to build a similar store five miles south at Sheldon and Power Inn roads in Elk Grove.

Putting two Supercenters that close together is not unusual, said retail consultant Whalin.

South Sacramento and Elk Grove are two distinct neighborhoods, he said, and many stores seem to have dividing lines as to who will shop where.

"(Wal-Mart) might have looked at this really hard and figured out that the customer who will shop at the old Florin Mall may not at all be the customer who will shop at the other one," Whalin said. "That's why they could put them that close."