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Disney’s Development Dreams

A third major development proposal has been added to Anaheim’s real estate pipeline, in the form of a potential theme park expansion for Disneyland Resort.
 
Disney’s initial proposal, first announced on March 25, could add new attractions, hotel rooms, retail, dining and other mixed-use elements within the 500-acre resort owned by Burbank-based Walt Disney Co. (NYSE: DIS) over the next several decades.

 
Though plans are still in the early stage for this potential expansion—the company must first look to the city to change its development restrictions to allow for a physical expansion—the investment could be the largest Disney has made locally in two decades.

 
It would also “undoubtedly” increase the resort’s economic impact in Southern California, which has been pegged at $8.5 billion on a typical year, notes Visit Anaheim CEO and President Jay Burress.

 
Coupled with other multibillion-dollar development plans in the works for the areas around Angel Stadium and Honda Center, Disney’s recent move is “yet another vote of confidence for Anaheim,” said city spokesperson Mike Lyster.

 
“As we emerge from what has been the most difficult year for tourism in Anaheim, this news shows the confidence in the market and helps pave the way for economic recovery,” Lyster said.

Entitlements  

Disney’s development goals are reminiscent of the company’s first expansion in the 1990s, when it gained approvals to add its second theme park, California Adventure; and a hotel and a shopping district, now known as Downtown Disney.

 
As part of that expansion, the city approved long-term development rights that set up districts within Disneyland Resort, and restricted the types of commercial uses allowed in each district.

 
Those approvals also set up entitlements for Disney, allowing the company to build up to 6.5 million square feet for the two theme parks, 5,600 hotel rooms, 300,000 square feet of retail space, 34,300 parking spaces, and 350,000 square feet for the planned Downtown Disney shopping district.

 
Disney, which opened its first namesake Anaheim theme park in 1955, has made many improvements since these entitlements were first approved, including the recent addition of Galaxy’s Edge, built at a cost reported to be more than $1 billion, and the Marvel’s Avengers Campus. The latter has yet to debut.


Disney has yet to near build-out for any of these uses, meeting less than half of its allowed theme park space, about 40% of its hotel space and two-thirds of its retail space for both inside and outside of the theme park gates.

Privately Funded 

Though the company has the land and the entitlements, Disney’s development agreement has been unchanged since the 1990s, and restricts the company’s ability to add hotels, attractions and other uses in a more integrated expansion.

 
Disney’s recent proposal, called DisneylandForward, requests new approvals from the city “to allow for integrated development to be located and built throughout Disney properties,” the company said in a fact sheet released late last month, when it kicked off the multiyear public planning process.

 
The approximately two-year planning process is expected to set Disney up for several decades worth of development, officials said.

 
The size and scale hasn’t been determined; initial plans put its potential cost well ahead of the Galaxy’s Edge addition, the new Star Wars-themed land at Disneyland spanning 14 acres, yet the planned expansion is likely to be more spread out over time.

 
Unlike the California Adventure expansion—which was estimated to be about $1.4 billion when the plan was approved in 1996—Disney is not expected to use any public funding for DisneylandForward.

New Lands, Attractions 

The expansion wouldn’t add a third theme park—or third gate, as has been in discussions for some time—but would add new lands, including rides and attractions, as an extension of both Disneyland and California Adventure.

 
This expansion would also be more mixed-use in nature, with hotels and shopping elements mixed in with new attractions.

 
Disney is currently eyeing two locations for potential development sites on the eastern and western edges of its property.

 
A theme park expansion on the west side of the property could replace the Downtown Disney and Lilo & Stich parking lots, while the Toy Story lot on the east side of the property could make way for a mixed-use expansion that would add theme park attractions, hotels, retail and dining.

 
Disney is also looking to build a new parking structure off of Harbor Boulevard.


Any future construction would use union contractors, Disney notes, creating “thousands of good-paying new jobs throughout construction and operations.”

Economic Driver 

In a typical year, Disneyland, which has been shuttered since March 2020, is the county’s largest employer with about 30,000 employees.

 
It’s also the top economic driver in Anaheim, and is a major contributor for the county and larger Southern California region.

 
A fiscal year 2018 study prepared by the Woods Center for Economic Analysis and Forecasting at California State University, Fullerton, said Disneyland Resort has an $8.5 billion economic impact in Southern California, and supports 78,000 jobs in the region.

 
The city of Anaheim indicates the resort district generates $94.5 million in surplus revenue each year for its general fund.

 
The closure of the park—which brings in an average 25 million visitors per year—has been devastating for the local economy.

 
Between fiscal year 2019-2020, which spans from July to June, the city brought in a projected $123 million in transient occupancy tax revenue, a 24% drop from the prior fiscal year.

 
That figure is expected to drop to $24.8 million this year.

 
Just as the closure has a direct impact on the local economy, an expansion could lead to significant jumps in revenue, largely from hotels.

 
Between 1999 and 2006, the county saw hotel revenue nearly double as a result of Disney’s first large-scale expansion.

 
It also helped support the county through a drop in tourism in the wake of the terrorist attacks in 2001.

 
“We saw a small dip in 2002, but the expansion helped us hold steady,” Lyster said.


Several years later, the opening of Cars Land at California Adventure in 2012 helped contribute to a 14% boost in hotel revenue that year.

 
The new expansion is expected to support Anaheim’s recovery in the wake of the pandemic, which caused a $114 million city budget shortfall in the past year.

 
“This news couldn’t have come at a better time,” Visit Anaheim CEO and President Burress said.

 
“It’s a powerful thing that Disney calls Anaheim home.”

Three Mega-Plans 

Disney’s expansion news is the third major Anaheim development project announced in the past year, following the 115-acre redevelopment plans for land surrounding Honda Center, and a largely ground-up development proposal for the area around Angel Stadium.

 
The two stadium-centered projects—located in the Platinum Triangle about 4 miles from Disneyland—have an estimated development cost topping $8 billion (see story, page 8).

 
Disney’s proposed expansion is similar to that of the Honda Center plan—led by Anaheim Ducks owners Henry and Susan Samueli—in that it will “better utilize” properties already owned by the respective firms, notes Lyster, while Angels owner Arte Moreno is creating a mixed-use hub on land that’s currently used for parking.

 
Conversely, Disney’s plan differs in that it already has development entitlements, it’s just shifting where it builds on those entitlements.


It’s not yet clear how the size of Disney’s real estate expansion will stack up against the other two, though all three entertainment-focused improvements are expected to drive more visitors and residents into the city over the next decade.

 
“Our recovery will take some time, but an expansion like this will enable us to build back even better than before,” Burress said. 

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