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Retail project eyed for Mexico border

By Hilary Townsend

SAN DIEGO -- LandGrant Development of San Diego has gotten a green light from both the United States and the government of Mexico to create a binational shopping and cultural district at the San Diego and Tijuana, Mexico border.

The International Gateway of the Americas proj-ect, located at the southwest corner of Virginia Avenue and Camino de la Plaza, will provide Americans and Mexicans with an international village complete with duty-free shopping, cultural arts, dining and entertainment, without ever having to leave their respective countries, according to the developers. Work on the 71-acre project is scheduled to begin in April of next year.

At the core of the more than 1 million-square-foot development sits Plaza Las Americas, the retail component of the project. While negotiations with retailers are at an early stage, LandGrant has disclosed it has letters of intent from the following companies: Borders Books and Music; Wherehouse Records; Magic Johnson Theaters; Cinema Star, a 16-screen regional theater chain; Sammy's Wood Fire Pizza; McDonald's; Brinker International; Burlington Coat Factory; Pep Boys; Ross Stores; Office Depot; Postal Annex, a company providing mailing services; and Home Towne Buffet.

Wherehouse Records will use the location to launch its new Hispanic music store concept, "Tu Musica." The proposed 4,500-square-foot store will gear 95% of its music and video selections to the Latino shopper. Borders Books and Music, and Magic Johnson Theaters also plan to tailor their concepts to the area's demographics.

Additional space will be allocated to: a 60,000-square-foot World Trade Center; a 10,000-square-foot cultural arts center; 45,000 square feet for Federal Inspections Service agencies; 200,000 square feet of office space; a 250-room hotel; and a 40,000-square-foot exposition mart showcasing goods manufactured in the region.

A 725-foot pedestrian bridge linking the two countries across the Tijuana River, along with trolley buses, will help cut traffic.

C. Samuel Marasco, president of LandGrant Development, likens the project to a celebration of NAFTA.

"We're trying to convert the neglected back door of our countries into a celebrated front door," he said. Already one of the busiest borders in the world, more than 55 million people make the San Diego/Tijuana crossing each year, according to LandGrant.

"That number, coupled with 17 million tourists making San Diego their destination each year, is what makes this a golden opportunity," said Mr. Marasco. Mexicans already spend more than $3 billion a year in San Diego, according to a University of California at San Diego economic study of the border region cited by Mr. Marasco.

"People visiting San Diego put a trip to Mexico right behind the world-famous San Diego Zoo and Sea World on their must-see list," he said. The combined population of San Diego and Tijuana, which exceeds 5 million people, would also generate sales, he added.

These statistics dwarf any concerns about the stability of the Mexican economy, according to LandGrant, which is investing more than $192 million in the project.

"Historically, border towns usually don't crash; it's a dollar-based society, and if there is going to be a collapse it is usually in the interior of the country," said Mr. Marasco.

Vehicular congestion and security issues at the border have been a topic of concern for years. When LandGrant secured the property in 1994, discussions began between the two countries to seek a way to address those issues and to revitalize the area.

LandGrant controls 57 acres of The International Gateway of the Americas project, with the remaining 14 acres on the Mexico side of the border.

The entire 71-acre area would be self-contained and monitored utilizing security devices similar to those used in airport terminals.

The site has great potential, agreed Bernie Labowitz, director of real estate for Torrance, Calif.-based Wherehouse Entertainment. "The site has a huge potential for success just based on capitalizing on the number of daily border crossings."

Other retailers, such as Office Depot, seem to share that optimism about the project.

"All indicators show things have leveled off down there and Tijuana is one of the healthiest cities in Mexico right now," said Emmett Albergotti, Western real estate manager of Delray Beach, Fla.-based Office Depot.

Office Depot, which currently operates two stores in close proximity to the project site on the U.S. side, also runs several "Grupo Gigante" stores as a joint venture partner in Mexico.

But convincing retailers of the merits of an unproven market hasn't been easy.

"The challenge will be to persuade retailers to come on board when they are not used to basing the sole viability of a project on an untapped market," according to Jeff Pintar, a senior associate with CB Commercial in San Diego. "Most of the retailers that have expressed interest so far have worked with LandGrant in the past and figure if they're behind the project, that's justification enough that it will be successful."

While the project is complicated because of the number of government agencies involved in the decision-making process on both sides of the border, no major obstacles lie in the path of the projected December 1999 opening date.

Apparently there's no immediate concern about competition, either. Since the project is surrounded by the River Delta preserve on one side, the Pacific Ocean on another, and land that is already developed, LandGrant officials said.