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Shop 'Til You Drop at Marblehead—In Your Dreams!

Tom Barnes expresses skepticism about plans for an outlet mall at the Marblehead site.

As we move further into the deleveraging economy of the “Great Correction,” the issue of who is going to shop at Plaza San Clemente (the outlet mall planned for ) when, and if it is built, needs to be addressed.

Did this project make sense, even in a booming economy, to take part of 247 acres of prime ocean view land and put an outlet mall on it? It makes you wonder.

Outlet malls are supposed to go in remote locations like Cabazon and Camarillo, not prime ocean view land. With the real unemployment at about 17 percent and nearly everyone else except the uber rich cutting back, who is going to buy the goods and services the Marblehead outlet shops will produce?

SunCal, the primary developer of Marblehead, has recently emerged to once again become a major California property owner. Its latest plan is to reclaim bankrupt properties it once owned, like the 247 acre Marblehead project, Plaza San Clemente.

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Standing in SunCal’s way is the Lehman Brothers court-appointed bankruptcy trustee, who may squelch the deal.

But with SunCal’s recent acquisitions of property in California, don’t count the land acquisition giant out. 

One thing is certain: the end result will be a windfall for the attorneys who argue the case in court.

While all of these machinations play out, there is some movement on the infrastructure promised to the city of San Clemente as construction of the bridge has resumed. The Pico improvement is near completion and things are looking up for the city.

With Target nearing completion, Walmart chugging along, nearby Costco and Smart & Final one mile from San Clemente’s city limit, how much need is there for the proposed 120 stores at the Marblehead Outlet? Just what will these stores be, and when will they be ready?

Craig Realty Group, the developer of the center, once said construction should begin late summer 2011 (isn’t that now?) with an anticipated opening in the late fall/early winter of  2012.  Of course waiting for this to happen is like Waiting for Godot in the Samuel Beckett play.

As for the stores themselves, Plaza San Clemente will contain upscale retail shops and restaurants. With consumer spending in the doldrums and likely to remain there for a long time, it’s silly to assume that these posh stores will lure customers away from Target, Walmart, et. al. who needs more?

Craig Realty calls Plaza San Clemente a destination retail and entertainment center with “breathtaking ocean views, lush landscaping and unique water features.”

“A mixture of dinner houses and casual dining, a boutique hotel with visitor and conference facilities, and a blend of neighborhood services,” will complement the outlet and retail stores in the 650,000 square foot project.

Sounds good but it is based on the dubious premise of “if you build it, they will they come.” This Field of Dreams scenario is truly, to mix metaphors and quote Joe Hill, a pie-in-the-sky promise.  

Valet parking will be offered during peak shopping periods. Valet parking in San Clemente is an anachronism in 2011.

Craig Realty thinks it is 2005 and that San Clemente is Newport Beach. Wrong. The most sensible plan for the next 20 years for most of the public is to survive.

The days of "he who dies with the most toys wins," are over. Two generations of Americans have lived beyond their means. Wages have remained flat for the last four decades while purchases and debt skyrocketed. A recent USA Today article reported that the total of America's debts and unfunded obligations increased by $5.3 trillion last year and now stands at $534,000 per household.

With a debt like that it is no time to go to the Mall.  

Furthermore, the type of stores Plaza San Clemente will host, according to the Craig Realty website is, “a wide variety of nationally recognized designer brand outlet stores offering apparel and accessories typically featured in ads of magazines such as Allure, In-Style, Vanity Fair and Lucky.”

Wow! Just the type of goods that do not appeal to our blue-collar roots. Those in San Clemente who want to create a Newport Beach “vibe” just don’t get it. We welcome Target but eschew pricey “designer brands.” We are a Spanish Village by the sea, not a shopping Mecca. 

Craig Realty’s assertion that Phase I is currently over 75 percent “committed” is ludicrous.  Jancee Aellig, leasing executive for Craig Realty Group, claims, “To date, leases have been signed with 31 tenants and another 9 are in lease negotiations ... Also, the landlord is in negotiations with an additional 30 tenants which account for 100 percent of the Phase 1 retail portion.”

Aellig declined to name the tenants that have signed leases. Now we have mythical tenants in a non-existent outlet mall. What fantasy is next?

Where does all of this leave San Clemente? A financier in bankruptcy, a developer trying to finagle a 45-percent discount on price, another developer promising leases but not naming lessees—sounds like “humbug” to me.

In short, it is a long way to an outlet mall in San Clemente and all those anticipated tax revenues that were supposed to come with it.   

Bill S July 21, 2011 at 06:50 PM
Maybe they should build a 50,000 sq ft mini mall called the Anti-outlet mall up on Marblehead. Then they could serve chardonnay and cheese and/or lattes and blueberry pancakes. On a serious note; these delays and the economic pressures that we all live with now will most likely change the plans quite dramatically. I find it hard to believe that an outlet mall is still the realistic end goal. Great Article Tom!
Larry Corwin July 21, 2011 at 08:07 PM
I enjoy everything Tom Barnes writes and believe he writes with passion and on fact. On this issue, I may actually disagree with Tom. I am a firm believer of the free enterprise system when it involves the business institution. Business's put private capitol at risk and enjoy profits if they're right and lament in losses if they are wrong. By itself and in it's purist form, it's perfect. I think professional developers like Craig are right more often than they are wrong or they wouldn't have millions to invest in the first place. Despite an ever changing shift in how American's purchase goods, Craig wants to place millions of his private dollars at risk in San Clemente, then I couldn't be more pleased or supportive. A far cry from projects like Playa Del Norte where the government sector was asked to place assets and millions of public funds at risk. Personally I wish Craig success with their project. I5 frontage is not ideal for residential and if an outlet can draw transient dollars off the freeway and into San Clemente and create jobs for our citizens, I think that's great. Great article Tom, keep up the good work.
James Schumaker July 21, 2011 at 08:19 PM
This Marblehead proposal sounds like LAB on steroids. Do we really think there is enough demand for such a mall when we already have a much bigger and better mall just up the road in Mission Viejo, and when people are struggling simply to make their house payments? Competition is fine, but if this mall is built, there will be too many stores in San Clemente chasing too little money. In my opinion, there will be two likely results if Marblehead is built. First, the currently congested I-5 will become a real traffic nightmare. Second, either Marblehead will eventually turn into a ghost town, or Del Mar will. Speaking personally, I prefer supporting San Clemente's traditional downtown area to putting up yet another outlet mall.
Helen July 21, 2011 at 08:33 PM
Thank you so much for the update! I don’t understand who on the city council is so RICH that they want more shops & restaurants in SC. I for one am struggling to even shop at Wal-Mart…If rich people want designer goods let them drive to Newport Beach or South Coast Plaza (they can afford the gas)… LOL
Mr Salty July 21, 2011 at 10:20 PM
Good work as ever Tom. Thanks for all you do.
juniel July 21, 2011 at 10:52 PM
A nice hotel there should bring more tourists to San Clemente. Right now Dana Point has the monopoly on nice hotels. An outlet mall does not sound appealing. People need to change their shopping habits and learn to save more as people in China do...Bet there are things in their own closet they have forgotten about....
Mr Salty July 22, 2011 at 01:40 PM
Shop shop shop shop shop DROP!
Gary Headrick July 22, 2011 at 02:31 PM
Well stated Tom. Very insightful overview.
Lindsey Hanson July 22, 2011 at 03:33 PM
Sandy try online shopping if the 8 minute drive to MV is too much for you.
Lindsey Hanson July 22, 2011 at 03:45 PM
So let’s think smart business here for a minute. People go to Mission Viejo to shop, well that and New Port. People go to Dana Point for the Harbor. Laguna for the galleries. Why do People come to San Clemente? People come to San Clemente to go to the beach. How can we capitalize on "OUR" commodity? I say we spend our money making our beaches the best around. Better Bathrooms would be a good start. That and some sand raking machines? That sort of thing. We don't need shops and restaurants on the beach to make it more appealing. The beach trail has brought thousands of people to our town. I think we need to change the way we think. Destination spots are not limited to Shops and food. I'm all for a boutique hotel. I think a beautiful high end hotel on that bluff would absolutely bring people to our town. Potentially it could create a lot of jobs as well. "Shop shop shop who needs the beach? Shop Shop Shop..We wannna eat!" Quite the mantra... You'd think anyone with half a brain would know by now that it is that mentality that has put us in this tough economic time. Get a hobby that does not involve consumption. I know it usually requires a bit more thought but you will find it is quite rewarding.
Sam La Sala July 22, 2011 at 05:35 PM
At what point is the increase of "tax revenue" to the city offset by the additional services that the city has to provide to the development, e.g., law enforcement (shoplifting, robbery, credit card scam, traffic enforcement et al.) paramedic calls( medical emergencies and accidents), fire protection, engineering services (sewer and storm drain, traffic signal maintenance etc.) And then there is the diminution of the quality of life: the intrusive lighting, free-way oriented signs and more traffic. And what cannibalizing effect is Craig's juggernaut going to have on existing businesses like Talega Village which is already struggling and downtown Del Mar? What impact will it have on Target, the income from which, the city is counting on to maintain the Sports and Aquatic Center? Unsustainable expansion has been the bane of societies, large and small, since the beginning of recorded history.
Lindsey Hanson July 22, 2011 at 06:32 PM
More stores do not always = more tax revenue. If they don’t get the necessary foot traffic the revenue won’t generate. . In all actuality if there isn’t enough foot traffic to go around the stores will ultimately bleed the city dry and eventually go belly up. Or even worse struggle to survive and in so unable to maintain their properties and eventually rot. How about an over saturated market? My proposal to spend more on our beaches is in an attempt to bring more folks here to spend money at our already existing stores and restaurants. You gotta spend money to make money. If a business is thriving it will need more help. If a business is thriving it can pay competitive wages. If a business is barely making it they will have a small staff of underpaid workers. Which is better? Remember we are talking smart business not wishful thinking. Thriving businesses last and ultimately become part of the community. Changing out the pavers at the pier was a waste if the bathrooms are so gross no one wants to go in them and the sand is covered in trash. I admit there have been some wonderful aesthetic changes I agree with at the pier and NB but I think making people comfortable at the beach is the best way to attract the customers to our already suffering shops and restaurants. Thriving businesses with well paid employees = a happy community. Not a multitude of barely thriving shops and eateries. What happened to the age old rule of quality not quantity.
Larry Corwin July 22, 2011 at 06:47 PM
I think this discussion has gone terribly wrong as I'm not sure what points people are trying to bring forward. The facts include this property is private property, not public property (that is a profound difference). The project is funded privately (meaning private owners are taking ALL the risk) and it conforms with all local building and business codes (it's legal) and has already been approved in a lawful process. So what are we debating? in trying to understand the point of people who hold adverse opinions on the project, are you trying to say someone or something like our government should stop them? seize something? legislate a ban on this type of project? I'm really not sure what is being suggested. I do know this is a 100% private business project that aside from whether you will patronize the facility, holds nothing else to debate. I
Lindsey Hanson July 22, 2011 at 06:57 PM
NO the project was wrong from the start and now with the evident change in our financial situation it is painful to think what decisions made eons ago will for our town. I’m all for the ideas behind the financials for the development of this project, it should be solely on the shoulders of the developer (unlike the LAB) however I think it is the LAST thing we need. I think by over saturating our market we will hurt our existing businesses. Sorry if I veer off topic the ideas seem to intermingle. When this project was birthed did we have any understanding of the impact of the Talega developments and or the econmony buckling? The point is it should NEVER Had been approved. This project was invented during the days of Disco... quite a bit has changed. The project has already flopped and dodged disaster and few times.
Larry Corwin July 22, 2011 at 07:36 PM
Now that we are in agreement on! Years ago Jim Johnson (owner of Lusk and developer), successfully changed the general plan for the property from housing, resort hotel and golf course to the current mixed use zoning. There was genuine resistance headed by a group who called themselves Citizen's for Responsible Development. They went as far as to collect enough signatures on a petition for referendum, but due to a technicality, the petition was thrown out (where was Charles Mann when we needed him then?). The zone change resulted in the amended plan that included 3 big box retail (Target, Sav-on and Ralphs), some open space and several hundred residential homes. With a split City Council decision, the big boxes were disallowed, number of homes reduced and the outlet mall was born. Remember perspective at the time, the big box plan and high density residential was so widely hated, the outlet alternative seemed great in comparison. I thought a resort hotel and golf course were awesome projects, but the private owners of the property saw a better financial opportunity with commercial and residential (and it is their job to do that as a business institution), so there we are and that's how we got to this point. To somehow retreat or force changes on the private owners after they lawfully completed an extensive and expensive process, in my opinion would be wrong and perhaps illegal.
Lindsey Hanson July 22, 2011 at 07:49 PM
It is no less sad.
Kathleen Ward July 23, 2011 at 02:50 AM
I can envision a resort hotel on that bluff, but not retail, I hate to admit. So I agree with that use. That actually may have a better shot than retail -- a lot prettier on the grounds, too. I'm sure the developer is monitoring the situation. I can't imagine breaking ground without it penciling out -- that would be suicide. Now that it's approved, I wish them all the luck. None of us want a half-built or empty project.
Kathleen Ward July 23, 2011 at 04:04 AM
Freeway signs? Sam, I cannot imagine gigantic signs on the freeway saying "San Clemente Factory Outlets." Say it ain't so. Please.
Jenifer Massey August 04, 2011 at 11:06 PM
The overflow of mall shoppers flooding our small, narrow, charming streets is sickening to contemplate. I promise to never ever spend a dime there.
Kathleen Ward August 05, 2011 at 02:37 AM
Jenifer: Welcome back to North America! I hope you had a great trip.
Jenifer Massey August 05, 2011 at 02:19 PM
Thanks Kathy. Tanzania & Kenya were Beyond Fabulous ! France aussi !! Now with family in Maine & New England - Glorious !!! C U September.

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