Move over, Fletcher Jones. Here comes David Wilson.
Wilson, whose automotive empire isn’t as well-known but generates even more revenue than that of Fletcher Jones, is planning a ritzy, $60 million Lexus dealership in Newport Beach.
It’s set for eight acres at Jamboree Road and MacArthur Boulevard,a mere 1,000 feet away, as the seagull flies, from Fletcher Jones’ palatial Mercedes-Benz dealership.
Wilson said he believes the Lexus dealership,projected to open in fall of 2006,will be the costliest yet.
Plans call for a 40,000-square-foot showroom, a 75,000-square-foot service shop and a four-story parking structure.
An artist’s rendering of the proposed facility, with its craftsman-style architecture, resembles the Montage Resort & Spa in Laguna Beach. Amenities are set to include a wine cellar, coffee bar, outdoor barbeque and shoeshine stand.
The dealership should be close in size to Ted “Fletcher” Jones Jr.’s plush Mercedes dealership on the other side of Jamboree and the Corona del Mar (73) Freeway.
The Lexus project stands to give one of Orange County’s most prominent office districts, straddling the Irvine-Newport Beach border, two sprawling car lots.
“It’s good for both of us,” Wilson said, calling Jones a friend.
He suggested the dealerships would be more complementary than competitive:
“It provides some synergy,two of the biggest luxury brands virtually kitty-corner from each other. Hopefully it will draw even more people to the area.”
Garth Blumenthal, general manager of Fletcher Jones’ Newport Beach dealership, agreed.
“I’m sure they’ll do well but we also plan to do well,” Blumenthal said. “Luxury is a segment of the industry that’s doing well.”
The site is next to a strip mall that includes a Diedrich Coffee at Jamboree and Bristol Street. To make way for the dealership, Wilson plans to raze several buildings,two at an Avis Rent A Car and three at the Park MacArthur office complex housing Platt College.
The project still needs approval from the Newport Beach City Council. The dealership has support from city officials, Wilson said.
The zoning is in place for a dealership, he said. And the project complies with the city’s stringent development restrictions, according to Wilson.
In 2000, Newport Beach voters passed Measure S, known as the Greenlight initiative, which requires a public vote on developments of more than 40,000 square feet and requiring a general plan change.
City approval is expected around June, said Casey Griffin, vice president of Wilson’s real estate arm, Logan Asset Management. The timetable is for work to start around August with an opening about a year later, Griffin said.
An environmental report on the project indicates only minor traffic issues need to be addressed, according to Griffin.
To help offset the project’s high development costs, the city has agreed to share with Wilson the dealership’s sales tax revenue, he said. The city’s 1% tax is expected to generate about $5 million a year, to be evenly split with Wilson for up to 20 years, or until Wilson collects $9.5 million.
“I wanted the same deal as Fletcher,” Wilson joked.
Fletcher Jones Motorcars didn’t get a tax sharing deal, according to Wilson. It got something better: free land from the city, he said. Wilson is buying his property from Wattson Breevast, a Newport Beach-based venture of local developer Tony Wattson and the Dutch firm Breevast BV.
Wilson said his agreement prevents him from discussing the land sale price until escrow closes next month.
A ballpark estimate of $3 million an acre would put the price at $24 million. The project’s estimated total cost of $60 million includes land, demolition and construction, Wilson said.
Wattson had sought to put two eight-story office towers on the site but was stymied by Greenlight, according to Griffin.
“It squelched their plans but gave us an opportunity because we fit in with the existing entitlement,” Griffin said.
Wilson said the deal culminates years of efforts to achieve a seemingly impossible dream,finding a site for Lexus in luxury-minded Newport Beach.
Two other would-be Newport Beach Lexus dealers earlier forfeited their area rights with Lexus parent Toyota Motor Corp. after failing to find a site. Wilson said he too had been unable to assemble parcels because of the Greenlight initiative’s limits.
The motivation to do a deal was partly defensive, Wilson said. He didn’t want anyone else opening a Newport Beach dealership that might cannibalize his Tustin Lexus.
Griffin said he expects Tustin Lexus to keep growing because of nearby homebuilding, including a redevelopment of the former Tustin Marine base and with The Irvine Company’s north ranch projects.
OC has been underserved by Lexus, according to Wilson. There are four Mercedes and four BMW dealers in the county. But, as of now, there only are three Lexus dealerships.
The face-off between Lexus and Mercedes in Newport Beach could be fierce: Wilson himself said that while Lexus outsells Mercedes by a 5-to-4 margin nationally, Mercedes clobbers Lexus in Newport Beach by 6-to-1.
Wilson projects Newport Beach Lexus will sell about 300 new and 100 used vehicles in its first full year, generating about $250 million in revenue. That’s about 50% more revenue than his Tustin Lexus and about half the volume of Fletcher Jones Motorcars, he said.
Newport Beach Lexus yearly revenue could reach $500 million a year by 2010, he said.
The dealership is set to employ about 125 people at first and grow to 200, according to Wilson.
Orange-based David Wilson Automotive Group, which includes Toyota of Orange and 10 other dealerships in Southern California and Arizona, is one of the 10 largest auto dealers and one of the 10 largest private companies based here.
The company reported $1.3 billion in sales in 2003, compared with $1.1 billion for Fletcher Jones Management Group, which is based in Las Vegas. Wilson group sales are set to surpass $1.4 billion this year, he said.
A Midwestern farm boy, Wilson went into the car business after graduating from the University of Northern Iowa. He was general manager of Toyota of Orange before buying the dealership in 1985.
