Retail rebound: Sahara Pavilion becomes latest major mall to change hands

A view of the Sahara Pavilion shopping center Monday, April 13, 2015, at the northeast corner of Sahara Avenue and Decatur Boulevard.

When Alejandra Valle started working at Sahara Pavilion North early last year, the sprawling Las Vegas retail plaza was laced with empty storefronts and had a dearth of shoppers.

“It was pretty quiet,” she said.

Becky Randall has been working at the plaza since 2009. Walking to her car at night has made her uneasy, even at just 6 p.m.

“You just never know what’s out there in the parking lot,” she said.

Sahara Pavilion, at the northeast corner of Sahara Avenue and Decatur Boulevard, was once a hot spot for Las Vegas retail. But it lost stores and customers in droves and fell into foreclosure, another forgotten shopping plaza.

Today, however, things are slowly getting better at the 29-acre center, and a new landlord is betting big money on the mall.

Joseph Daneshgar, of Beverly Hills, Calif.-based 3D Investments, recently bought the roughly 333,200-square-foot plaza for $33 million from lenders who seized the property almost four years ago.

Tenants include Ross Dress for Less, Sheplers, T.J. Maxx and El Super, a Hispanic supermarket that opened this month in a space that had been empty for years.

Daneshgar’s purchase closed April 2, property records show.

He did not return a call for comment.

His investment comes after years of increased strip-mall purchases in Southern Nevada that often involved out-of-state buyers snatching up struggling properties, at rising but still relatively low prices.

They’re betting the valley’s once-battered economy will further improve, letting them sign tenants, lure shoppers and, for many, eventually sell the malls for profit.

Investors bought 61 shopping centers in Southern Nevada last year, at an average price of about $194 per square foot. That’s up from 27 deals at an average $118 per square foot in 2011, according to Colliers International.

Sales are off to a much slower pace this year, with six plazas trading hands in the first quarter, for an average $186 per square foot, Colliers found.

Daneshgar paid about $99 per square foot for Sahara Pavilion, a little more than half the valley average.

Until recently, Sahara Pavilion was practically a ghost town, less than half occupied. It’s also in one of the worst retail submarkets in the valley.

The West Central area’s vacancy rate for anchored centers is 12 percent, second-highest in Southern Nevada, and the area's average asking rent is the lowest, at $1.04 per square foot, according to Colliers.

In recent years, Sahara Pavilion management would sign a tenant and then lose one, and the mall’s vacancy rate hovered around 50 percent, former listing broker George Okinaka, of Voit Real Estate Services, said.

It wasn’t always that way. The intersection of Sahara and Decatur, three miles west of the Strip, became a retail magnet years ago as fast-growing Las Vegas sprawled farther from downtown. By the late 1990s, the plaza was filled with retailers and shoppers, and “parking was really tight,” said Okinaka, a 43-year-old Las Vegas native.

When Las Vegas’ real estate bubble led to rapid population growth on the valley’s outer rings, residents and retailers fled to the new communities. Business drained out of shopping centers near the valley’s inner core.

The problem only worsened with the recession as strip malls around the valley went into foreclosure, including Sahara Pavilion.

Before the economy collapsed, Sahara Pavilion's owners obtained a $56 million mortgage on the mall in early 2007, Clark County records indicate, but lost the property to foreclosure in June 2011.

A month before the auction, the landlord owed $69.4 million on the loan, according to county records.

Mall worker Randall, manager of the UPS Store, said the plaza still has “too many” empty storefronts. Meanwhile, the new grocery is bringing daily foot traffic, but the center does not have a big anchor such as Target or Wal-Mart, which would bring even more shoppers.

A center of its size often has a big-box retailer like that, but Sahara Pavilion's design is problematic, Okinaka said. Its largest space, now occupied by El Super, is nearly 51,000 square feet, but stores such as Target usually take 100,000 to 200,000 square feet. The plaza also has dozens of small retail shops ranging from about 1,000 to 3,000 square feet, many of which sit vacant. As Okinaka sees it, Sahara Pavilion has more storefronts “than it ever really should have had,” and finding enough tenants to take them all is difficult.

“There’s only so many nail salons you want to put in a center,” he said.

Still, the mall is slowly improving. Discount retailer Dollar Tree opened Nov. 1, and El Super recently opened in the space that previously was occupied by Vons. That supermarket left around July 2011, and the store had been empty since then, Okinaka said.

Retailers have noticed a change. The past few months, it seems like the mall has “picked up” with more shoppers, Napoli Pizzeria manager Babken “Bob” Harutyunyan said.

Valle, who works for instant-coffee distributor Gano Excel, said the new stores were luring customers. El Super in particular has been “pretty busy” since it opened.

“You can already see the difference,” she said of the mall.

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