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Wednesday, Oct 5, 2022
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Modified Mainstream at Source

Visitors to Buena Park’s soon-to-open retail center, The Source, next year should have the chance to check out a movie in a theater that incorporates interactive special effects, relax at a spa, play a round of virtual-reality golf, and sample fare from across the globe at a variety of restaurants unique to the area.

Buying a new outfit for work or some furniture for your home, though, could be harder to accomplish.

“Mainstream doesn’t do it anymore,” in terms of what works and what doesn’t at shopping centers, said Luis Valenzuela, executive vice president for the project’s developer, M&D Properties.

Lynwood-based M&D is betting big that guests at the nearly 400,000-square-foot retail portion of The Source—the largest retail project built in Orange County since 2008—are looking for new entertainment and food options, not traditional retail.

The center’s due to see its first batch of tenants open their doors in the first few months of next year.

The three-story center is the focus of the mixed-use project, which also includes a seven-story office and retail building that’s open and now getting leased up, as well as a four-star, 174-room Hilton Hotel that’s about a year away from opening.

The entire 12-acre development, at the intersection of Beach Boulevard and Orangethorpe Avenue, runs about 600,000 square feet.

Valenzuela said its price tag is in excess of $300 million.

Much of the funding for the project is being provided through the EB-5 program, a federal initiative administered by U.S. Citizenship and Immigration Services that allows foreigners to apply for permanent residency in the U.S. in exchange for investing funds in job-creating projects here.

A majority of EB-5 funds currently come from China, according to federal data.

Korean Focus

Ties to South Korea also play a big part in The Source, with a number of the center’s retail tenants hailing from the country or targeting Korean-American visitors.

Close to 10,000 people of Korean ethnicity live in Buena Park, and the city is sometimes referred to as Orange County’s Koreatown.

M&D expects the center will draw locals, tourists visiting Knott’s Berry Farm and other local destinations, as well as residents of both OC and Los Angeles looking for new entertainment options.

Officials with the developer describe the retail portion of the center as “a place to experience the best entertainment, dining (and) interactive experiences.”

The final mix of tenant types wasn’t the initial plan when M&D started development and entitlement work more than seven years ago. When construction started in full force in 2012, a late 2014 opening was projected.

A more traditional mix of retailers was initially envisioned; clothing retailer H&M was signed as an anchor tenant but no longer is expected to be there, and a Macy’s was also once expected to be an anchor. Later, there were thoughts of incorporating a mix of outlet mall-type retailers.

Changing trends in retail—in particular the emphasis on unique dining options—helped push the three-story project designed by NBBJ Architects to its current mix whose three levels will each have a unique focus.

Restaurants

The top floor of The Source will include a hive of restaurants, including Chinese-themed OOAK Kitchen, Gangnam House, a Korean barbeque restaurant, and a farm-to-grill restaurant opened by Korea’s YG Republique.

Along with a food hall, the top floor will also be home to CGV Cinemas, a theater operator that offers a movie experience in what it calls “4-D,” a combination of 3-D plus motion and other effects. It’ll be the South Korean chain’s second U.S. location after one in Los Angeles.

The second floor will largely be filled by service-oriented tenants, likely including beauty schools and a health club.

The developer is in talks with a large gym operator for a two-story facility that would anchor much of the western side of the project, Valenzuela said.

The second floor also will be home to a second food hall called Square Mixx. The 16,000-square-foot hall will be similar in respects to hip food halls like Costa Mesa’s OC Mix and the Anaheim Packing House but will largely incorporate Korean vendors.

The ground floor of the center will likely hold more traditional retailers—luxury brands such as Manolo Blahnik, Vera Wang, MCM are said to be among those leasing space—in addition to providing an open-air plaza that’s designed to hold public events.

The center has hosted an auto show, Octoberfest event and a few other gatherings over the past few months prior to stores opening.

Leasing Up

Current tenant plans at The Source resemble what’s now at Costa Mesa’s Triangle shopping center, a once-troubled mall that was converted into a thriving entertainment and restaurant center over the past few years by Irvine-based Greenlaw Partners.

That 204,523-square-foot property at the end of the Costa Mesa (55) Freeway now features some of the busier restaurants and nightclubs in OC on its top floors, while lower levels include a bowling alley, gym, and other entertainment options.

The retail portion of The Source—nearly twice the size of Costa Mesa’s Triangle—has a ways to go to fill out its tenant roster. The center is about 40% leased, and the developer has contracts out that could bring occupancy close to 60%, Valenzuela said.

The first batch of restaurants should come on line within the next 90 days or so.

“In the next six months, you’ll see (the center) get really activated, Valenzuela said.

The center shouldn’t be hard to find, with 17 large LED screens illuminating it, making it visible to traffic from the nearby Artestia (91) and Santa Ana (5) Freeways and giving it a Times Square-type appearance.

M&D, the developer behind Lynwood’s Plaza Mexico retail center on the southern edge of Los Angeles County, could eventually move forward on additional phases of development at The Source once leasing of the retail center and 60,000 square feet of office space are completed.

The company’s eyeing nearby property for a residential project that could run close to 1,000 units, among other plans.

The Irvine office of brokerage JLL was recently given the leasing assignment for the office portion of the development, while Madison Marquette is handling leasing for the retail center.

Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.
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