Grupe Huber — a regional development firm with a successful retail portfolio — has acquired Promenade Shops at Orchard Valley.

City officials believe the new ownership will end what has been mostly 16 years of frustration working with previous owners to fill in-line space that has been vacant since it was built in 2008 as well as to utilize what was originally eight approved free-standing pads approved for restaurants

"The Promenade Shopping Center has been underutilized for too long and will benefit from Grupe Huber's ownership,” City Manager Toni Lundgren  said. “As local owners with a successful track record in the Central Valley, they are committed to taking this shopping center to the next level. We look forward to seeing them elevate this premiere shopping center and create new jobs through new tenants.”

The sale comes as four significant commercial center projects are moving forward including Manteca Crossings now under construction at Airport Way and Atherton Drive.

Grupe Huber purchased the 54-acre complex with 760,000 square feet overall where Sutter Health earlier this year started tenant improvements in a 17,500 square-foot building neat JC Penney. The group medical clinic is scheduled to open in 2025.

"We are excited about our next step of breathing new life into the shopping center, and the positive impact it will have on the community," said Fritz Huber, Senior Vice President at Grupe Huber. "Our team's dedication and hard work over the past six months have made this acquisition possible, and we are committed to continuing the work in transforming The Promenade Shops at Orchard Valley into a thriving hub for residents and visitors alike."

Grupe Huber’s portfolio includes retail, apartments, offices, and industrial.
They also manage University Park — a master plan development on the old state hospital grounds near St. Joseph’s Hospital catering to healthcare, education, and commercial tenants.

Their largest retail complexes are the Marina Shopping Center and Quail Lakes Shopping Center. Both are located in Stockton.

“I’m pleased to collaborate with Grupe Huber to reenergize The Promenade Shopping Center,” Mayor Gary Singh said. “As a local property owner, they are committed to Manteca’s success by enhancing shopping experiences for residents and visitors.”
“As part of my role on the City Council’s Economic Development 2x2 Committee and through my attendance at retail trade shows, I will continue to work hard to attract the businesses our community demands, adding The Promenade Shops to our list of vibrant commercial destinations.”

Orchard Valley opened

with promise in 2008

Bass Pro Shops opening in October 2008 was seen as a watershed event for the Manteca economy.
More than 7,000 people lined up for the opening ceremonies of the anchor for the envisioned 760,000-square-foot Promenade Shops at Orchard Valley lifestyle center designed to emulate the feel of Main Street.

Cars were parked miles away.

By the time the four-day opening was over, nearly 60,000 people walked thru the giant sequoia leading from the lobby to the sales floor.
JC Penney and Best Buy were opening in the following months.

Store space was being built for smaller retailers with the expectation they would soon be filled.

At the same time Bass Pro opened so did a 16-screen theater. One of the eight free-standing restaurant pads was developed with Red Robin.

While the economy was sputtering no one had any inkling that the housing crisis would drag it down to the point that it would earn the moniker “The Great Recession.” The smaller stores did not come.

Poag & McEwen ditched the lifestyle approach.

They shifted gears believing an outlet mall approach would work. That had limited success, but it did snare three stores.

Then they started talking about tearing down vacant in-line space and replacing it with apartments. They envisioned townhomes where parking spaces were along Atherton Drive.

The city even secured a state planning grant to create zoning rules for adding residential to existing shopping centers as a way to address California’s chronic housing shortage while creating a “walkable community” in terms of accessing restaurants, retail, services, and amenities.

City officials for years have been trying to get the owners of the Promenade Shops at Orchard Valley to complete the development at Union Road and the 120 Bypass.

Roughly a third of the overall planned square footage has never been utilized even though much of that space was built in 2008.

Over the years the city has explored everything from establishing a police substation in the space to opening a library.

The owners would engage but then things would go nowhere.

Grupe Huber, with a firm grasp of the fast growing Northern San Joaquin Valley market, is expected to much more aggressive than the previous owner.

 “With the ongoing growth of Manteca and surrounding communities, we think there is significant pent-up demand for complementary retail in The Promenade’s available space and adjacent pad sites,” added Jeff Badstubner, Managing Director, JLL. “We’re targeting a host of entertainment, restaurant and retail uses that would leverage The Promenade’s strong existing anchor tenants and serve this thriving regional trade area.”

Deal insulates Manteca
from paying the piper
should things go south

 To land the center and to help Poag & McEwen land the mega-regional draw tenant that Bass Pro Shops has proved to be even after additional stores were opened in Rocklin and San Jose, the City of Manteca struck a deal with the developer and not directly with Bass Pro Shops.
Manteca rented the 1,922 parking spaces for 35 years from Poag & McEwen.

In essence, it became a silent partner.
The terms of that agreement called for Poag & McEwen to get 55 percent of the local sales tax collected — excluding the public safety tax (Measure M) and county transportation tax (Measure K) — and the city 45 percent based on the first $1.1 million annually over a 35-year period. If it is less than $1.1 million, the city’s payment to Poag & McEwen is capped at 55 percent of the amount collected. If it more than $1.1 million the excess all goes to the city.
The maximum that Poag & McEwen could have received over 35 years was $18.5 million.  

As then City Manager Bob Adams noted at the time, Bass Pro would have gone wherever it got the best deal from the developer or the city. Well over 95 percent of Bass Pro’s receipts are from money not spent by Manteca residents. And if Bass Pro Shops hadn’t located here,  Orchard Valley would not have been built and there would be no Manteca JC Penney store.
While the deal enraged critics of “corporate welfare”, Adams was on target when he was quoted back in January of 2008 when he said, “(Manteca) is giving up 55 percent of what we don’t have. If we didn’t have a Bass Pro Shops, we’d get none of that revenue.”
That said the empty stores represent lost opportunity for additional sales tax. But the bottom line meant Poag & McEwen wan’t going to receive anywhere close to the maximum $18.5 million under the deal.
The deal Manteca crafted means the city — unlike other municipalities that used differed deals to snare a Bass Pro — is not on the hook financially for anything at Orchard Valley on the outside chance it goes south.

Other cities weren’t as
careful as Manteca
Independence in Missouri floated $74 million in bonds for the construction of “The Falls at Crackerneck Creek” that is anchored by a Bass Pro Shops. In 2011 as the economy weakened the city found itself on the hook for $3.5 million in bond payments or 6 percent of their municipal budget. That forced the city to lay-off six workers and required all the other remaining municipal employees to take unpaid furloughs in order to keep the city solvent. City officials had anticipated a sales tax bonanza but then the economy went south. Bass Pro Shops was generating decent sales tax but it wasn’t enough to cover the debt.
The Manteca deal isolated the city’s pocketbooks and put Poag & McEwen on the hook.
Adams — as the chief architect of the deal with Poag & McEwen — made sure that Manteca would never be put in the same position as Independence.
 
To contact Dennis Wyatt, e-mail dwyatt@mantecabulletin.com