Modesto shopping center moving forward after legal challenge

Construction could start as soon as spring for a northeast Modesto shopping center that will be anchored by a Save Mart now that litigation against the center has been resolved in its favor.

The Marketplace shopping center is slated for 18 acres at the southwest corner of Sylvan Avenue and Oakdale Road. The center would have 170,000 square feet of retail space at build-out. But Save Mart will close a nearby grocery store when it opens a new, bigger store in The Marketplace.

Save Mart public affairs manager Nannette Miranda confirmed the grocery chain will close its store at The Lakes shopping center at Floyd Avenue and Oakdale Road when it moves into The Marketplace. She said the grocery chain’s plan is to transfer The Lakes employees to the new store as well as hire at least 50 employees to fill new positions.

Miranda said Save Mart is making this move in response to a competitive environment.

“In recent years, the competition has increased dramatically, with the opening of a new Raley’s and Walmart in the community,” she wrote in an email. “Grocery shoppers prefer new, larger stores that provide services that we are constrained to deliver at our current site. With the new shopping center being developed down the street, Save Mart jumped at the chance to bring a brand new store to the community that we have served for so many years.”

Save Mart did not reveal the details of its new store, but Miranda said that “it will have a more contemporary design and enhanced service departments.”

The Lakes shopping center is less than a mile from the site for The Marketplace. The Lakes’ Save Mart opened in 1987 when the center opened. The store encompasses 34,000 square feet. The new grocery store will be 51,730 square feet.

The City Council approved The Marketplace in January 2014 over objections from nearby Naraghi Lake-area homeowners. They said the center was not needed, arguing that there are too many empty stores in Modesto, it would worsen traffic on nearby streets and it would contribute to urban blight as businesses abandon nearby shopping centers for The Marketplace.

But others say while it may take time, empty stores eventually find new uses. For instance, Hobby Lobby is in a building once occupied by Mervyns, and the Golden Corral operates a restaurant at the site of a former car dealership.

The Naraghi Lakes Neighborhood Preservation Association sued Modesto in February 2014, claiming the project was not consistent with state environmental law and the city’s general plan. The association lost in Stanislaus Superior Court and then lost on appeal. The association had until mid-August to ask the California Supreme Court to review the case but did not do so.

Davis attorney Donald Mooney, who represented the association, said he and his client would not comment for this story.

Berberian Holdings is the property owner and developer of The Marketplace. Dave Romano of Newman-Romano is the project’s land-use consultant. He said the shopping center will be built in phases. He said the first phase will consist of the Save Mart and an approximately 15,000-square-foot retail building next to the grocery store. He said a retailer has not been lined up yet for that building.

“I think the hope now is to start construction perhaps as early as spring 2017,” Romano said, adding that it should take about 12 months to complete the first phase. He said there is no timeline for the other phases.

Some Modesto shopping centers have suffered when they lost their anchor tenants. But one of the principals with the company that owns The Lakes does not think that will happen at his shopping center.

“If Save Mart leaves, we are confident we will find a very good tenant to replace them,” said Bob Kalof with Southern California-based Rybar/Modesto Associates, which developed and owns The Lakes. “We are very, very confident in this real estate.”

Kalof said he knew Save Mart had expressed interest in leaving but that it has not notified Rybar/Modesto Associates. Kalof said he wishes Save Mart well and said it has has been a great tenant. Save Mart leases its store at The Lakes and is looking for someone to take over its lease. “Our goal is to have a new tenant lined up by the time the new store opens,” Miranda said in an email.

Kalof said his shopping center is in an excellent location and has been at nearly full occupancy since opening. Tenants said the center has a good mix of businesses, including a bank branch, restaurants, CVS Pharmacy and Dollar Tree store.

Two of the shopping center’s longtime businesses weighed in on Save Mart’s departure.

William Solymanbeyk said his family’s Superior Cleaners II has been in the shopping center for decades. He said the business depends on strong word of mouth. “My clientele is based on my reputation,” he said. “Will it (Save Mart’s leaving) make a difference? Maybe, maybe not.”

Solymanbeyk said this could be an opportunity for the center to bring in another quality tenant. His choice? “I’d love for a Trader Joe’s to come in. That would help my business if they came.”

Klassy Kuts of Modesto owner Jackie Sada said the hair salon has been at The Lakes for nearly 29 years and she’s owned it for the past nine years. She is confident the center’s owners will find a good tenant. But she does not look forward to the day when The Marketplace is full of businesses, which could include a salon. “I’m worried about my business,” she said. “That’s more competition for me.”

This story was originally published September 24, 2016 at 3:44 PM with the headline "Modesto shopping center moving forward after legal challenge."