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Dreaming Big

$550M Las Vegas Hotel, Westminster Mall Revamp & More on Tap for Shopoff Realty

Fresh off celebrating its 30th anniversary, Irvine-based real estate investor and developer Shopoff Realty Investments is busier than Chief Executive Bill Shopoff ever dreamed possible.

With a development pipeline totaling nearly $4 billion, the company counts projects in a variety of sectors in the works, both in and outside of Orange County.

“I never thought we would get to where we are today,” Shopoff, the company’s president and chief executive, told the Business Journal. “It feels remarkable.”

On Tap

Locally, the company counts notable housing and mixed-use projects in Newport Beach, Huntington Beach, Westminster and Fountain Valley.

Outside of Orange County, Shopoff this month broke ground on what could end up being its most prominent development to date, a $550 million hotel going up along the Las Vegas Strip.

Plans for the hotel—the company’s first, and part of a new push into hospitality announced in early 2020—were disclosed just a few weeks before COVID-19 was declared a pandemic, essentially stopping the tourism industry in its tracks.

That didn’t stop Shopoff.

“We never really slowed down,” Shopoff said.

In fact, the project went from a 450-key hotel with an estimated $300 million project cost to a 531-key project with a cost running another $250 million.

“We refined the design to better make use of the space and create the best possible project,” Shopoff said.

Hotel Dreams

Shopoff is working with Costa Mesa-based Contour Real Estate, a boutique development firm, for the 20-story Dream Las Vegas.

The duo, which has partnered together in the past on smaller deals, paid $21 million, or $4 million per acre, for the 5.3-acre development site in February 2020.

New York City-based Dream Hotel Group will manage the hotel, which will include seven dining and nightlife venues, 12,000 square feet of meeting and event space—including a 90-seat live entertainment theater—and a 20,000-square-foot casino led by Peninsula Pacific Entertainment.

Food and beverage venues will include a third-level resort pool and day club; two bar and lounge concepts on the gaming floor; a lobby bar; a café and gelateria; a sporting club; boutique nightclub; signature restaurant; and a 24-hour diner on the third floor.

“Our food and beverage program is what will make us unique, and drive a lot of the business,” Shopoff said.

The property is located on the southern edge of the Vegas Strip, across the street from Mandalay Bay Resort and adjacent to the private aviation terminal at Harry Reid International Airport.

“We didn’t want to try and compete with the existing hotels along the strip, we wanted to create a different opportunity for consumers to experience Las Vegas. Not everyone wants to stay at a 4,000-room hotel,” Shopoff said.

The hotel is expected to open in late 2024.

“The great thing about this development is that it helps us finish off an important part of the boulevard that all of us have seen undeveloped for so many years,” Clark County Commissioner Jim Gibson said in a statement following the July 8 groundbreaking.

“Finally, we have an opportunity to complement all the little things that have been going on and this is enormous for us. The economic value of this project far exceeds the $550-million-dollar investment.

“This is a reset on the development of Las Vegas Boulevard to finish the work that needs to be done, and Dream is the leader of that reset.”

McCarthy Building Companies is the design-builder contractor for the project; DLR Group is the architect; and interior design is led by AvroKo, Rockwell Group and DLR Interiors.

Dream Hotels counts 15 properties, including the Dream Hollywood which opened in 2017.

Mall Redevelopment

Shopoff this month joined a collection of builders looking to redevelop Westminster Mall from an outdated shopping center into a mixed-use hub.

The company paid $46.3 million for a 14.1-acre parcel of the 90-acre shopping center just off the San Diego (405) Freeway, next to Bolsa Avenue. Its portion of the mall includes the former Sears store which closed in 2018 after more than four decades in business.

Shopoff bought the parcel from Seritage Growth Properties as the Sears Holdings Corp. affiliate looks to sell real estate assets to pay off debt.

Shopoff will pay an additional $50 million or so in a separate deal slated to close next month for another 13-acre portion of the mall that includes Macy’s, sources tell the Business Journal.

Redevelopment plans are still in the early stages, but the company is expected to add housing and commercial components to the site including “niche retail” concepts.

“We think the world is over-retailed, and I don’t believe a mall is the best use of this site,” Shopoff said.

The mall, which at its peak counted some 1.3 million square feet of retail space, has been rezoned to include up to 2,550 housing units, 425 hotel rooms and commercial uses including offices and retail.

Homebuilder Taylor Morrison Home Corp. is leading the largest portion of the redevelopment, paying north of $160 million at the end of 2020 for a 43-acre portion of the mall. The homebuilder said it planned to build 825 for-sale residential units as part of the acquisition for the mall’s JC Penney store.

The purchase trailed a $40 million deal from Kaiser Permanente, which plans to build a new medical office facility on another 10-acre site.

“Together, we will build a nice, mixed-use campus that better speaks to what the community wants,” Shopoff said, adding that construction will begin in three to four years.

For more on other retail redevelopment projects in the works locally, see story, page 1.

Buying for the Future

Shopoff is keeping an ear out for rumblings of a recession, with a cautious approach to new acquisitions.

At the end of last year, the company expected to complete $700 million of acquisitions by early 2022; now, the company is expecting to close anywhere from $400 million to $700 million by the end of this year.

“At one point, I thought we would reach $1 billion in acquisitions this year, but that has shifted along with market conditions,” Shopoff said. “We aren’t feeling a huge need to push the envelope right now.”

The company’s total investment plans are still several multiples of that initial $1 billion estimate, as a result of the various development projects the company is working on.

“It is a tumultuous time in the marketplace, but I’m not buying for tomorrow. I’m buying for five, 10, 20 years from now,” Shopoff said.

Housing Push

That market turmoil includes the housing market, as sales volume slips below pre-pandemic levels. Low inventory and climbing interest rates have impacted sales volumes, as have already sky-high prices.

“While we expect to see some kind of price contraction in the housing market locally, we believe in the market long term,” Shopoff said, pointing to strong consumer demand for new homes.

Home sales have been strong for the latest phase of the company’s $1.3 billion Uptown Newport master-planned development, the Parkhouse Residences. Nearly half of the 30 luxury condominiums going up along Jamboree Road, near the Newport Beach and Irvine city lines, have sold ahead of their delivery starting next year. Units start at $2 million, with some topping $4 million.

Shopoff is also planning to add to its condominium work at the development, currently entitled for 1,244 units in a mix of rentals and for-sale condos, along with 11,500 square feet of commercial space and two 1-acre parks.

After selling a 1-acre parcel at Uptown Newport to Dallas-based USA Infrastructure Investments in 2020, Shopoff said it plans to partner with the developer to build 66 additional luxury condominiums on the site adjacent to Parkhouse Residences.

“We just received design approvals and plan to break ground early next year on what will be another unique offering at Uptown Newport,” Shopoff said.

Shopoff is also planning a mix of for-sale and multifamily units on a 19-acre site in Fountain Valley, where it paid $65 million near the end of 2021 for land long used as a strawberry farm.

Specific plans have yet to be disclosed.

Industrial Pipeline

Shopoff hasn’t forgotten about industrial.

The company is preparing to deliver a 1.8 million-square-foot logistics facility in the Inland Empire this fall; the campus is already sold out.

Outside of the state, the company is in the process of acquiring 270 acres in Mesa, Ariz., for a proposed manufacturing project totaling 3.5 million square feet.

“We are always looking for sites that are hard to replace,” Shopoff said. “Sometimes you just have to buy, regardless of the noise in the market.”

Next Three Decades

Shopoff is looking to its large roster of development projects to set the company up for its next 30 years in business.

“We try to do quality work, and build value for the communities we are in,” Shopoff said. “Whether its housing or hospitality, we are looking to create projects that fulfill a need and create a positive impact.”

Surf City Update

Dream Las Vegas is the first of two hotels to break ground for Shopoff Realty Investment, though plans for the latter project kicked off several years ago.

The company is planning a 215-key property in Huntington Beach as part of Magnolia Tank Farm, a 29-acre former industrial site it bought in 2016, just off Pacific Coast Highway.

“The commonality between the two is they are both in unique locations. Building on the Las Vegas Strip is something I never dreamed of, but when the opportunity presented itself, I had to go for it,” Shopoff said. “I think our plans in Coastal California fit that bill as well, in that it’s a high barrier to entry market.”

Shopoff is still in the entitlement process for the mixed-use Surf City project, which is expected to include up to 250 single-family homes and a 4-acre commercial site that will hold the hotel and 19,000 square feet of retail space. The project got city approval a year ago.

It expects to bring the project to the Coastal Commission before year-end and kick off construction in early 2024. —Katie Murar

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