DDR drops the ball
Storefronts sit empty at the Riverside 12 building. Prospective tenants have been clamoring to rent them. What’s the problem?
All in all, Elise Russell is pretty happy with how things are going with her store, Parasols on the Riverwalk, which opened in the Century Riverside 12 building last October. However, she wonders how much better things would be if Parasols weren’t the only occupied storefront of the four on the Truckee River side of the building."Considering that I’m here by myself, things are going quite well,” she says.
But she, along with other business owners along First Street, wonders why Parasols is all by itself. On the Rocks, a wine bar, was supposed to open next to Parasols last summer, before Russell’s shop was open for business. And interest in the other two vacant Riverside 12 storefronts has been high, too. There is no logical reason, it seems, for the spaces to still be unoccupied nearly 20 months after the theater started welcoming paying customers.
“I could have probably leased these spaces six times over,” Russell says. “It’s anybody’s guess as to why that hasn’t been done.”
Actually, nobody needs to guess why the spaces are open. There’s a simple answer: The landlord, Cleveland-based Developers Diversified Realty Corp., doesn’t have its act together. And until DDR gets its act together, frustrated city officials and business owners can do only one thing.
Victims of the divorce
Dorene Soto, the economic development manager for the city of Reno, doesn’t hesitate when asked why vacancy signs are still up at the Riverside 12.
“It’s definitely because of the split,” she says.
The split she’s talking about involves two companies: DDR and San Diego-based OliverMcMillan. The companies merged interests in 1998 to form DDR-OliverMcMillan, as they have complementary focuses: DDR builds and operates commercial ventures, such as shopping centers; OliverMcMillan specializes in urban projects that mix different qualities, such as entertainment and shopping. It was the married company that the city of Reno signed up to lead its riverfront redevelopment efforts.
After a lack of results, the city essentially fired DDR-OM in April 2000. But Reno was not the only place where this marriage of companies wasn’t working, and in May 2000, the companies decided to get a divorce. The Century Riverside 12 building, which DDR-OM still had control over even after Reno ended its other ties with the company, was stuck in the middle.
Apparently, the divorce didn’t go very smoothly. DDR got custody of the Century Riverside 12, but it seems that OliverMcMillan got the paperwork. The owner of one First Street business, who asked not to be named, says he had to send DDR copies of all back rent checks for DDR’s records, because DDR didn’t want to have to get them from OliverMcMillan.
DDR and OliverMcMillan also have different ways of doing business. DDR-OM signed on Premier Properties, a local property management company, to help with the Century Riverside 12 building. But after the divorce, DDR informed Premier Properties that its services would no longer be needed, as DDR does not use outside property management companies.
“We were notified at the first of the year by DDR that they would handle the building themselves,” says G. Kent Mowry, a real estate agent for Premier Properties. “We managed the building until about a month ago.”
Mowry wouldn’t comment on the specifics, but he says that Premier did receive several leasing offers for the open storefronts that were forwarded to DDR, although he doesn’t know what happened to them.
The fact that Premier Properties is no longer involved means potential tenants—as well as the current ones—have nobody to deal with locally.
And this is causing problems, too. Sandra Adams has been trying to lease one of the storefronts since last fall. She wants to open Bantu Spirit, an art gallery featuring art from Africa and by African Americans. She says that with the help of Premier Property’s Mowry, she sent in a lease proposal to DDR and reached a “verbal agreement” on terms. However, Theresa Rooney-Malky, DDR’s regional leasing manager for Western states, vetoed the proposal and asked Adams to re-submit it after changing some of the terms. Adams did just that, and submitted the revised proposal in January. She hasn’t heard anything since.
Then there’s the On the Rocks wine bar, which was supposed to have opened nearly a year ago. That has not happened because of strained relations between the owners and DDR. A banner in one of the storefront’s windows proclaims the bar will be “opening soon.” But a number for On the Rocks in the phone book is disconnected, as are the cell phone numbers that other First Street businesses had been given by the owners, Bill England and John Stewart.
Soto says she could not comment on the status of On the Rocks, as attorneys for both DDR and On the Rocks were involved.
This is clearly not a good sign.
The waiting game
Meanwhile, business owners have nothing to do but wait and hope that DDR gets its act together.
“What’s the game?” asks Terri Montague, the owner of Esoteric coffee house and art gallery, located in The Parking Gallery across from the Riverside 12. Because DDR is not her landlord, she can speak more freely than other First Street businesses that pay rent to DDR every month. “I know there is lots of interest in the property. But DDR is not returning phone calls, and they’re giving misleading information. Is this a game?”
Rooney-Malky did not return calls from the RN&R. Also disturbing is the fact that the Century Riverside 12 project is not on a list of DDR’s operations published on the company’s Web site.
Ann Fullerton, an owner of Gallery Cui-ui, in the Century Riverside 12 building, says she and co-owner Pam Bobay are dedicated to making First Street work as a destination, although the leasing delay is wearing on them.
“We’re very excited for this project to be done, and waiting is difficult,” she says.
However, there is room for optimism. A DDR representative was in town this week to meet with the businesses in the Riverside 12 building. Soto says she spoke to a senior vice president with the company last week, who told her that DDR was moving on finding tenants. Soto says DDR was also taking tangible steps toward leasing the property, such as determining how much rent to charge for CAM fees, aka common area maintenance fees, for such things as landscaping, maintenance and security.
“They want to know what to charge new tenants,” Soto says. “The building’s been in operation for more than a year now, and they want to know how much these things will cost when the building is 100 percent leased up.”
Soto says she’s optimistic there could be tenants moving in by the end of the summer, because negotiations take at least 60 days. And she insists the city’s pushing for leases to be signed ASAP, so Elise Russell and Parasols on the Riverwalk won’t be so lonely anymore.
“I’d like to have seen it rented out six months ago," Soto says. "Wouldn’t we all?"