May 28, 2024


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Grossmont Center, family-owned for 60 years, sells to firm with redevelopment plans

Locally owned for nearly 60 years, La Mesa’s Grossmont Center is now controlled by an out-of-town real estate investment trust that aims to refashion the 64-acre property in the years ahead.

In June, Maryland-based Federal Realty Investment Trust acquired a 60 percent stake in the 925,000-square-foot regional shopping center. The transaction valued the entire property at $175.8 million.

The publicly traded firm characterized the site as a large redevelopment opportunity and will likely weigh a retail-meets-residential vibe similar to the one engineered at its flagship Pike & Rose property in Bethesda, Md.

“At this point, we have no concrete plans for how we want to change (Grossmont Center), other than we’re going to work hard to understand what the market, what the community, what the merchants want it to be,” said Jan Sweetnam, president of Federal Realty’s western division. “It’s fair to say that we’d look at other uses, vertical uses.”

Opened in October of 1961, Grossmont Center is currently home to a mix of mom-and-pop shops and big-box stores. The outdoor mall is 99 percent occupied and anchored by Target, Walmart, CVS, Macy’s, Reading Cinemas, and Barnes and Noble. Prior to the pandemic, the center boasted a packed calendar of events — holiday-themed affairs, blood drives, food festivals and pet adoptions — in a concerted effort to maintain a close connection with the surrounding community.

The sale is a big shift for San Diego’s well-known Cushman family, which has owned the mall since it was erected. Family scion and local businessman Stephen Cushman is known for wearing many civic hats, having advised former mayors, served as a Port of San Diego Commissioner for 12 years and worked as an influential board member for the Convention Center. Cushman was also president of the Jacobs & Cushman San Diego Food Bank.

Although the Cushman family maintains a minority stake, Grossmont Center is now run by its new buyer, which aims to increase the value of the property for its shareholders through an overhaul. In a recent investor presentation, Federal Realty noted that nearly all of the property’s existing leases are set to expire in 2025, making the site a “blank canvas.”

“It’s unique in that almost never can you buy a shopping center where almost all of the leases expire at the same time,” Sweetnam told the Union-Tribune.

Still, it’s early days for the firm’s planning efforts, with shoppers unlikely to experience substantial changes — as in, hammers swinging — until 2025 or later. Federal will consider different uses alongside retail stores, although housing appears to be the most natural fit. The site can accommodate up to 60 housing units per acre, or as many as 3,851 units, according to a city of La Mesa planning document.

Federal Realty has dabbled in San Diego’s real estate market since the mid-’90s. Currently, its only other regional asset is the Escondido Promenade off Auto Park Way, an outdoor shopping center where Target and Dick’s Sporting Goods are anchor tenants.

In total, the firm owns a controlling interest in 105 retail projects — community and neighborhood shopping centers, as well as mixed-use properties — consisting of more than 25 million square feet of space with 3,000 tenants and 2,900 residential units. It specializes in owning and managing open-air, suburban properties near major metropolitan markets that are accessible by car and transit.

At the end of the June, Federal Realty had $304 million in cash and a $1 billion line of credit.