"He lives at the racetrack" may soon be more than hyperbole in California.
Rick Caruso, one of the busiest developers in Los Angeles, is expected to announce today plans for shopping and residential complexes -- behind the grandstands at Santa Anita Park in Arcadia and Golden Gate Fields on San Francisco Bay.
They could well be the first mixed-use developments on racetrack property. And Magna Entertainment Corp., whichs owns the two tracks, doesn't see that as a gamble: The bettor's baby who needs new shoes will be able to try them on while daddy wins the money to pay for them.
"It might be that the old man goes to the track and his wife does a little bit of shopping," said Magna Chairman Frank Stronach in a telephone interview from his office in Aurora, Canada. He called it "family entertainment."
The projects are expected to cost as much as $400 million each. That will bring to more than $1billion the value of the real estate enterprises Caruso's company, Caruso Affiliated Holdings, has in the pipeline.
Magna bought the 69-year-old landmark Santa Anita track, where the legendary Seabiscuit ran his last race, in 1998 and has been pondering improvements ever since.
"Over the years," Stronach said, "I looked at it and saw a big ugly parking lot and thought, can we improve that? What can we do to get more people to the racetrack?"
The solution, he decided, was an entertainment-oriented shopping center on site. Stronach said he was impressed with the Grove in L.A.'s Fairfax district and asked Caruso to do something similar at Santa Anita and Golden Gate Fields, which is near Berkeley.
According to Caruso, the complexes would complement the grandstands and other buildings. He said he envisioned them being much like the Grove, with lots of open space and a movie theater, plus "a few hundred" apartments or condos sitting on top of stores and possibly even a hotel at Santa Anita.
The plan is to complete the design and receive construction permits for both racetrack projects within a year, he said.
As for the Santa Anita Fashion Park, a 1-million-square-foot mall next door to the track, Carsuo said he wasn't worried. He said the long-established mall shouldn't fret, either. In fact, he said, the shopping center would benefit from having another mall nearby that would bring customers to the area, the same way concentrations of car dealerships attract buyers for one another. "This is going to be a boost to them," he said.
Rivals in Glendale don't buy that argument. General Growth Properties, which owns the Glendale Galleria, filed suit in an attempt to stop Americana at Brand, a $264-million complex with 238 apartments, 100 condominiums and 475,000 square feet of stores and restaurants -- constructed around a three-acre park -- that Caruso aims to start building in the fall. The Glendale City Council unanimously approved the project, which is next door to the Galleria. The lawsuit is pending.
In Los Angeles, the City Council hasn't yet voted on a Caruso project in Playa Vista, where he agreed to build the commercial district of the massive planned community near Westchester after winning a "beauty contest" among developers who wanted the job.
"Rick knows how to build wonderful neighborhoods," said Steve Soboroff, Playa Vista's president. "Retailers may pay a little more rent because his finishes are better. His layouts are a little better, a little quainter" than other shopping centers.
If the plans are OKd, Caruso could start work in less than a year on the $140-million development. It would cover 11 acres in Playa Vista, with 195,000 square feet of stores, probably anchored by Whole Foods, topped with 175 apartments.
Caruso Affiliated Holdings is privately held, and Caruso intends to keep it that way. He won't release financial data but said revenue has grown 23% a year for the last five years and that sales per square foot in his centers were 40% higher than the industry average.
Among the Caruso projects underway: a $40-million makeover of the Marina Waterside shopping center in Marina del Rey and a $17.5-million addition to the Lakes at Thousand Oaks shopping center in that city.
Real estate consultant Greg Gotthardt, a partner at Ernst & Young, called Caruso "one of the most active, successful retail developers we have in southern California" who has "done a great job at creating environments where people want to be."
For his part, Caruso said that his environments have a "hometown" feel. "We think about building a place people want to hang out," he said. "If they are happy and feel better, feel safe, they also spend more money."
Magna Entertainment is the biggest thoroughbred track owner in terms of revenue in North America. But average daily attendance at most horse tracks has been falling steadily for years. Caruso said that mixing stadium-seating movie theaters with grandstands, and putting luxury condos a few paces from betting windows, could reverse that trend.
At Santa Anita and Golden Gate Fields, adding shopping and entertainment offerings would help "expose a whole new generation" to horse racing, he said.
"We can really drive traffic to the track."
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Caruso Affiliated has six major retail projects planned or under construction in California with a total value of more than $1 billion.
*--* Location Project Size Cost (acres) (in millions) Arcadia Santa Anita Park 85 $300-400 Bay Area Golden Gate Fields 45 $300-400 Glendale The Americana at Brand 15.5 $264 Los Angeles Playa Vista 11 $140 Marina del Rey Marina Waterside 10 $40 Thousand Oaks The Lakes at Thousand Oaks 7.5 $17.5
Source: Caruso Affiliated