Marin City Mall Still Developing - San Francisco Chronicle - Sept 5, 1997

Marin City Mall Still Developing
Gateway center disappoints on jobs, shoppers
Carol Emert, Chronicle Staff Writer

Friday, September 5, 1997

(09-05) 04:00 PDT MARIN CITY -- After more than seven years of planning and two years under construction, the Gateway Retail Center in Marin City is still struggling to attract shoppers and create sorely needed jobs.

The center, a joint project between private developers and nonprofit community groups, was envisioned as a development engine for economically depressed Marin City -- a community surrounded by affluence, but where unemployment is high and about one-third of the residents live in public housing.

Planners say the center's performance is slowly improving after a year of construction foul-ups and other problems that caused each of its four anchor tenants -- FoodsCo, Longs Drug Stores, PetsMart and Ross Stores -- to open at different times.

A grand opening celebration scheduled for last October had to be scrapped, and the center suffered from a messy, under-construction look until May, when the last anchor, Longs, finally opened.

Gateway is also fighting a stigma associated with Marin City, which has a large ethnic population and more poverty than most of Marin County, said people involved in the project.

Today the center, which lies along busy Highway 101 outside of Sausalito, employs just 250 people in retail jobs. That is far short of the 400 to 600 jobs predicted when ground was broken on the former site of a popular flea market in 1995.

Attrition and layoffs have pushed the number of jobs held by Marin City residents down to 44 percent of the center's retail payroll from more than half several months ago, said Al Flemming, executive director of the nonprofit Marin City Community Development Corp., a Gateway partner. The center's goal is to have 50 percent of the workforce made up of Marin City residents.

While some stores, such as Ross and Longs, reportedly are doing well, others are having difficulty. Many smaller tenants, which rely on the anchors to attract highway traffic and shoppers from other parts of Southern Marin, have been hurt by the center's weak start.

FoodsCo, a supermarket specializing in bulk foods, has cut its payroll to 25 from more than 40 when it opened last August. It scaled back its initial round- the-clock opening time due to lack of demand, and reportedly is considering de-emphasizing economy-sized goods.

``At the moment we are not getting the market share that our studies showed we would, though we will continue to try and hit that,'' said FoodsCo Vice President George Tucker.

Gateway's boosters say the center simply needs more time.

``Long term, Gateway is a fantastic asset, but it will take a couple of years for people to get used to shopping in a new place,'' said Dan McNevin, project manager for Martin Group, a co-developer. ``Over time, it will develop its own following because of where it is.''

Indeed, despite its rocky first year, the center's leased rate has risen to a healthy 94 percent. That does not include two spaces that are not yet built, but the center is close to a deal with a restaurant for one of those spaces, said Jim Kessler, an executive vice president with Burnham Pacific Properties, the center's lead developer.

The unfilled properties will bring the center to 186,000 square feet. Its other tenants include General Nutrition Center, Radio Shack, Casual Male Big & Tall, Post 'N Plus, Fabrix, Taco Bell, and independent restaurants and dry cleaners.

Despite its initial stumbles, Kessler said he is enthusiastic about Gateway's prospects, in part because of the success of a similar Burnham Pacific shopping mall across the bay in Richmond.

The downtown Richmond center has been virtually fully leased since its 1993 opening and is generating a robust $225 in sales per square foot, Kessler said.

He projected sales at Gateway will hit $200 per square foot within two years. While still healthy, that rate is lower than the Richmond complex because Gateway has more competition and larger anchor stores, which drive down sales relative to size.

The outlook at Longs, which has experienced above-plan sales, is also positive.

``I would expect this store to be equal to, if not better than, the average Marin store, which is better than our average store,'' said Jim Famini, vice president and district manager for Longs.

Russ Pratt, president of the nonprofit Community Marketplace Development Institute in Washington, D.C., said that optimism is not misplaced.

``You need to measure performance starting when the last anchor opened,'' said Pratt, a former Marin retail developer whose organization matches developers with troubled communities.

``I give my centers three to five years; it takes that long before they mature,'' said Pratt, who is not involved in the Gateway project.

While some of Gateway's stores may be suffering, the poor sales have not affected the center's partners. Their income is generated by lease payments, which must be paid regardless of how well the stores are doing, and whether or not they open their doors on time.

Flemming said he expects profits from the center this fiscal year, which ends in September, of between $400,000 and $450,000. Earnings will be split evenly between the community and the developers.

Pratt said shopping centers in down- and-out areas tend to succeed when retail is supported with other ``community-building'' efforts.

At Gateway, for example, the nonprofit Marin City Project offers training and job-placement services. The center includes a child care facility and a new library that is so popular school children have petitioned to extend its opening hours. Apartments and townhouses, 40 percent of them subsidized, have been built nearby.

Perhaps Gateway's biggest challenge at this point is to keep Marin City residents on the job.

The number of Marin City employees at Ross, for example, has dropped to a little over half from more than 90 percent when it opened, according to Flemming. A Ross spokeswoman declined comment.

While a high turnover rate is normal at new projects, as some employees realize that a career in retailing is not for them, Gateway's planners have at times made the mistake of placing workers too quickly, said Darro Jefferson, the employment and training coordinator for the Marin City Project.

``We'd get a call saying we need seven individuals, and we would send them to work without enough training,'' Jefferson admitted. ``Those have come back to haunt us.''

On the other hand, several Marin City residents have parlayed their experience into better-paying jobs outside of the center, said Jefferson.

For those who failed to keep their jobs the first time around, ``We need to train them and retrain them and retrain them,'' he said.


Page B - 1