San Luis Obispo Business
September, 1999

SLO retail - how much and where?

The future of retailing in San Luis Obispo is at a critical crossroads and may be determined by significant City Council decisions within the next few months.

Opinions differ as to what the right moves will be in regards to three retail development proposals, two of which are currently on the table—San Luis Marketplace and the Court Street redevelopment project—and the Central Coast Mall revamp, which was just recently approved by Council. The sudden rush to bring more retail to San Luis Obispo leaves knowledgable observers wondering if there's enough demand to support all of these projects.

Andrew Trachman, President of MBK Southern California Limited, owner of the Central Coast Mall property, said it's up to the Planning Commission and City Council to make the determination as to retail needs of the city. "The question remains open as to whether there would be adequate demand for 1-million square feet of destination retail, which is what it would be if you include Marketplace, Central Coast Mall and Madonna Plaza," said Trachman.

An overhaul of the Central Coast Mall received a unanimous "go ahead"from City Council last month. Trachman's company plans to rip out and renovate the dying section of the current mall. The renovation calls for a major expansion of the Gottschalks department store and the addition of three larger stores and several smaller stores. Staples has already announced that it's on board as one of the new tenants. The San Luis Marketplace, a 506,000 square foot retail center proposed for the Dalidio property adjacent to the Central Coast Mall calls for a mix of larger discount retailers, such as Target, with a blended "Main Street" theme area. According to Kevin Bird of SC Properties, the project developer, the theme area would provide a mix of specialty retailers that complement the center and the city. Whether those specialty retailers include the same ones, or similar ones, that are being targeted by the Court Street project remains to be seen.

Bird is confident that there are enough consumers to support all three projects and stresses that his company is going after tenants that would not fit in or cannot afford to locate in the downtown region. In a letter written to Mayor Allen Settle and members of the City Council, Bird emphasizes the difference between his center and shopping in the downtown area saying that, "A good example of the different types of shopping centers is to compare a shopper who wants to pick up a video or some children's supplies at a Target Store in our center versus someone who wants to go out, walk around, shop, have dinner, see a movie and go out to a local tavern downtown." It is for this reason, according to Bird, that his project will not compete with the downtown.

The Court Street redevelopment project has received a lot of press of late and is being proposed by the owners of Copeland's Sports chain and the Downtown Centre. The project calls for a mix of upscale retail stores like Banana Republic and Pottery Barn, along with offices, houses and parking which would be located in the current Court Street parking lot and a block-long stretch of Palm Street in downtown San Luis Obispo.

Tom Copeland says his project would bring a group of select stores that fit with and enhance the independent merchants already located downtown. According to Copeland it's all about niches and the high-end specialty stores are one niche that should be kept separate from the big box, discount retailer niche.

"The peripheral area is an important commercial venue too," said Copeland. "But it can't have the same niche as downtown."

Rob Rossi, a prominent local developer and property owner, agrees with Copeland, saying that peripheral retail is a different animal. "I would think, that as a retailer, the first preference would be to locate downtown," commented Rossi. "But that doesn't necessarily mean that every retailer would fit downtown. For bigger stores, like Target, it makes more sense to locate where there's more space."

Rossi, often referred to as a visionary, paints a picture of what the downtown area needs to be in order to be vibrant. "Downtown should be everything it can be, he explains. "It's got to be a balanced place with retail, entertainment, living space and parking.

Parking, a heated issue of late, narrowly passed another hurdle recently when City Council voted to grant a use permit and variance for a multi-level parking garage at the north corner of Pacific and Morro Streets. The additional parking created by the new parking structure will go a long way towards filling the current need, but will not completely solve the parking problem.

Copeland's project will be yet another reason for decision-makers to find ways to improve parking in downtown San Luis Obispo. "We have to plan for the businesses first, then place the parking around it in the most inconspicuous way that works." In looking at the big picture of San Luis Obispo's retail future, Rossi warns of making costly mistakes like those made in other communities. "We don't want to make the same mistakes that were made by Ventura," he said. "They started locating businesses and stores, that should have been in the downtown area, outside of the downtown. Now they're suffering because of it."

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