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THE PROMENADE SHOULD BE RENAMED “THE GHOSTWALK”

Dale Kasler did a follow up in the Sacramento Bee about General Growth Properties, Inc. it’s Reorganization Plan, and the prospects for the Promenade in the near future. Elk Grove’s unfinished megamall will likely remain stalled even though its developer has taken a major step toward exiting bankruptcy protection. General Growth Properties Inc. said it has reached agreement with lenders to restructure billions of dollars in debt, as part of a reorganization plan that would leave the Chicago mall developer largely intact. The plan needs the approval of creditors.

But unfinished projects, including the Elk Grove Promenade, aren’t part of the reorganization plan. General Growth is still negotiating with lenders on those projects, company spokesman Jim Graham said Wednesday.

The Promenade’s future “remains to be seen,” Graham said. Construction on the on the 1.1 million-square-foot mall ground to a halt in October 2008, and lawsuits from contractors seeking payment began piling up. Last February the project, surrounded by chain-link fence and sprouting weeds, was officially put on hold indefinitely. Two months later, buried under billions of dollars in debt, General Growthfiled for Chapter 11 bankruptcy protection. The site is now a steel ghost town, an e1ery site that looks like the survivor of a nuclear winter or an outtake from the Omega Man.

The company tried to sell the mall earlier this year but pulled it off the market several months ago. Graham said the Promenade’s fate is “subject to market conditions that are unrelated to the bankruptcy.” Analysts agree, saying the Promenade190 is a troubled project regardless of what happens to General Growth.

Another point of view might be that the market conditions that caused the bankruptcy was the failure of the developer and planners to adequately prepare feasbility studies and understand demographic trends. Ambition and greed may have factored into a ill fated decision to go ahead and build before the time was ripe. That’s of course the dual problem of being a developer, being a visionary and being accurately able to predict future growth patterns.

The Sacramento research director at commercial real estate broker Colliers International, Garrick Brown, said the Promenade won’t open “for three years at best, more likely four years.” Brown said the retail market is starting to improve, but the Promenade was built too far out in front of Elk Grove’s housing development. The mall is about two miles from the nearest housing. “Nobody wants to touch it until there are homes there,” he said. The mall, first proposed in 1997, has been a symbol of Elk Grove’s ambitions and frustrations. It spurred Elk Grove’s push for cityhood in 2000. Macy’s and Barnes & Noble were among the earliest anchor tenants committing to the project.

With unemployment officially at 10.2% nationwide, the State in Deep Financial crisis, Bankrupticies at all an all time high, and Chairman of the Fed Ben Bernanke saying Monday that the employment picture isn’t going to get dramaticallly better in the near futre, until economic circumstances change, the Promenade is going to be a symbol of ambition gone awry and failed dreams. The Promenade might now be known as the “Ghostwalk,” a regional symbol of the times, where the dreams of visionaries haunt the landscape, waiting without hope of a certain future.

Paul R. Bartleson
Sacramento Bankruptcy Lawyer.

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The Sacramento Bee reported today that General Growth Properties, Inc., the developer of The Elk Grove Mega Mall, called the Promenade, which remains unfinished, took a big step toward exiting bankruptcy today, but the project remains in limbo. General Growth said it had reached agreement with lenders on more than 90 malls, part of a bankruptcy reorganization plan that would keep the Chicago mall developer largely intact. But the agreement didn’t cover unfinished projects such as the Elk Grove Site known as the Promenade, said Jim Graham, company spokesman.

The company halted construction on the Promenade in October 2008; in February it said the project was on hold indefinitely. Contractor lawsuits and mechanics liens started piling up. The company tried selling the mall site to investors but pulled it off the market several months ago.

Market analysts believe the mall won’t get completed for several years, regardless of what happens to General Growth. There are obviously a variety of factors involved in this, included high unemployment and the State of California’s fiscal crisis.
Graham reportedly said the fate of Elk Grove mall is “subject to market conditions that are unrelated to the bankruptcy.”
General Growth filed for Chapter 11 Bankruptcy in April of 2009, staggered by billions in debts.

It’s uncertain what Mr. Graham meant by “market conditions that are unrelated to the bankruptcy,” but those might include problems in obtaining financing and investment capital. Another factor might be grossly overestimating the region’s ability to absorb growth based on demographics, rather than housing projections. Harry Dent, the same guy who wrote the Roaring 2000s, wrote an interesting book called the “Great Depression Ahead,” in which he predicted a stock market and real estate crash based upon sheer demographics, that the real estate market was bound to decline simply because the baby boomers were starting to retire, and the generation following up behind was smaller in number, and in addition, holds different values and buying habits. As the era of rampant consumerism and free wheeling credit winds down, it appears to be anybody’s guess when, if ever , the project will be completed.

paulbar Uncategorized Baby Boomers, Bankruptcy Reorganization, Chapter 11 Bankruptcy, Chicago Mall, Company Spokesman, Elk Grove, Elk Grove Mall, Estate Crash, Fiscal Crisis, General Growth Properties, General Growth Properties Inc, Great Depression, Harry Dent, Mall Developer, Market Analysts, Mechanics Liens, Mega Mall, Reorganization Plan, Roaring 2000s, Sacramento Bee, Unfinished Projects

The Saramento Bee ran a number of interesting articles recently which contrasted the decline in the housing market, the fall from grace of local Titans Reynand & Bardis, CC Meyers and others, at the same time as “Active Adult” living seems to be doing quite well.  The question I had in the early 2000′s when houses were growing faster than weeds in Roseville, Lincoln, and Elk Grove, was how many people can afford these kind of houses.  Well the answer was, not that many.  Harry Dent wrote an interesting book called the Great Depression Ahead (he was the same guy who wrote The Roaring 2000′s, if you’ll recall) and one of the significant things he points out that the housing boom was caused by simple  demographics, baby boomers raising families, upsizing and acquiring stuff.  But as the Baby Booms started to leave the job market and started becoming empty nesters and moving to retirement or active adult communities, there was going to be less of a demand for consumers goods and upscale housing.  Gen Xers following behind, are fewer in number and also have different lifestyle values, perhaps not as family oriented and not holding the same kind of materialistic work ethic.

So as developers like Angelo Tskapolous, Pulte and Centex acquire properties to develop at bargain basement prices, and new players enter the market, what kind of housing do they plan to build?  Not only was the housing market artificially overpriced, it appears to have been grossly overbuilt, so if you’re are going to build today, the successful market is going to consider the market, and build what people want to buy, not what they want to sell based on how much profit can be made on large houses.  It appears the housing trend will be toward smaller, lower maintenance living.  If the real estate industry is going to recover, it is going to have consider marketing demographics and do a better job in feasibility studies.

paulbar Uncategorized Active Adult Communities, Baby Boomers, Bardis, Bargain Basement Prices, Booms, Centex, Elk Grove, Empty Nesters, Fall From Grace, Feasibility Studies, Great Depression, Harry Dent, Housing Market, Lifestyle Values, Marketing Demographics, Pulte, Saramento Bee, Significant Things, Upsizing, Work Ethic

Eighty more restaurants fell victim to the weak economy including 10 TGI Fridays in Sacramento and the Pacific Northwest.

In a related series of closures, 70 Jack in the Box restaurants from Fresno to Redding shut their doors in midweek, only to open days later after four controlling entities sought bankruptcy protection from creditors.

The closures followed as the financial woes of troubled Roseville real estate developer Abe Alizadeh continued.  He is listed as president of each of those companies and has controlling interest in half of the newly closed T.G.I. Friday’s restaurants.  The closures temporarily affected about 2,100 employees, not including people thrown out of work at the T.G.I. Friday’s restaurants.in the recording.  According to a representative for Alizadeh and the company, Alizadeh controls two corporations that own and operate five T.G.I.Friday’s restaurants: two in Sacramento two in Roseville and one in Elk Grove.

The corporations, Ten Forward Dining Inc. and TGIA Restaurants, Inc., are headquartered in the same Lava Ridge Court address in Roseville, according to records on file with the California Secretary of State’s Office.

Five other T.G.I. Friday’s in Oregon and are controlled by Alizadeh’s brother, Mike Alizadeh through a company, Great Northwest Restaurants Inc., of Roseville.

The four entities that own and operate the Jack in the Box franchises in the Central Valley, Sierra Valley Restaurants, Inc., Food Service Management, Inc., Central Valley Food Services, Inc., and Kobra Associates, Inc., which filed separate Bankruptcy Petitions under Chapter 11 of the Bankruptcy Code on Friday. Kobra Properties, Inc., another of Alizadeh’s companies, the real estate development corporation, has been in Chapter 11 since November, seeking to restructure approximately $277 million debt.

These Bankruptcy filings suggest the fallout of not only the decline of commercial and retail properties, but also reflect the downturn in consumer spending available to support such restaurant establishments.  These filings likely demonstrate a correlation between falloff in consumer spending, the residential retail market, and the health of retail and commercial properties.

paulbar Uncategorized Abe Alizadeh, Bankruptcy Code, Bankruptcy Filings, Bankruptcy Petitions, Bankruptcy Protection, Brother Mike, California Secretary Of State, Court Address, Elk Grove, Financial Woes, Food Service Management, Food Services Inc, Kobra Properties, Lava Ridge, Northwest Restaurants, Protectin, Real Estate Developer, Retail Properties, Roseville Real Estate, Sierra Valley, Tgi Fridays, Tgia, Valley Restaurants