Retail’s not exactly around every corner in San Jose — or Silicon Valley, for that matter – but there are local and tourist dollars alike to be spent, with Westfield Corp. keen to capitalize on that as it overhauls its Valley Fair property.
The shopping center, where the mall operator has now turned its attention following last year’s completion of the $1 billion Westfield Century City, is set to be completed in 2019. The developer – which is being sold to Unibail-Rodamco of France in a $15.7 billion deal revealed late last year – is shelling out $1.1 billion to upgrade the property.
Valley Fair is in an interesting position, across from the open-air development known as Santana Row, a 10-minute drive from Apple headquarters and under 25 minutes from the Google or Facebook campuses.
For Westfield, the center’s revamp is not about spinning a lackluster property into gold so much as it is about boosting the entertainment quotient with indoor and outdoor seating, a luxury cinema and more dining options.
Valley Fair, currently totaling 1.5 million square feet and set to grow to 2.2 million square feet, will see about 100 tenants added to the property. So far Bloomingdale’s and ShowPlace Icon Theatre are confirmed additions to the center.
Beth Campbell, executive vice president of design, described the incoming landscaping and greenery at Valley Fair as a mix of natural materials — stones and exposed metals — in addition to skylights. The point was to connect inside and outside environments, she said.
“Silicon Valley’s right down the road. There’s also some affluence, some wealth. So how do you create a space that accommodates that?” she said. “It’s an interesting play because the natural thought is that it’s technology.”
To a certain extent the center is high-tech, but the features are mostly on the back end aimed at making visits easier. That means tech in the parking structure to indicate what spaces are open, facial recognition media screens that will change up ads based on the weather or who is standing in front of it, WiFi and a heightened level of security.
“It’s in a substantial market in the whole of the Silicon Valley marketplace, which is one of the most affluent markets in America,” said Westfield executive vice president of development Peter Huddle. “It’s a huge market. It doesn’t have a huge amount of competition, although we have Santana Row across the way and so it creates an anchor scenario for the marketplace.”
The two properties, while technically competition, are really more complementary to each other in what Westfield executives see as helpful in creating the critical mass needed to establish a true central gathering place for the market.
“Santana Row has a street-based retail offer, which is quite productive and essentially it also has the residential component — the hotel component — and it has the food component,” Huddle said. “Where Valley Fair is complementary is it has that broad-scale retailer offer at a medium- to high-end, which includes the department stores across two Macy’s, a really high-performing Nordstrom, and we’re bringing Bloomingdale’s to add to that luxury precinct.”
Valley Fair, unlike some of Westfield’s other major redevelopment projects on the West Coast — such as Century City or UTC in San Diego — in some ways presents a fresh slate in reimagining a whole new retail corridor for the trade area.
“There’s no town center in Silicon Valley,” said Westfield executive vice president of leasing David Ruddick. “If you said to me, ‘Take me to the heart of Silicon Valley,’ if we were on site today, it’s really interesting. You get on a bus and you see Facebook headquarters or Apple headquarters. There’s a street in Palo Alto and then there’s ourselves. There’s no town center, whereas in L.A., we’ve been able to bring a lot of L.A. together [at Westfield Century City]. At the same time, people were shopping on La Brea or they were shopping on Melrose or they were shopping Rodeo. There’s other places [in L.A.] and we’ve been able to aggregate the best of [that], whereas here [at Valley Fair] you don’t have those other places.”
Valley Fair does not have office workers who will simply walk across a street to have lunch at the center, as is the case for many visiting Westfield Century City in the afternoon. However, workers will get in a car and drive to Valley Fair.
“Even in Palo Alto, there’s a commercial side to Palo Alto, but really it’s about these [office] campuses of Facebook, Microsoft, Google and Apple. Those people actually get into a car and drive to Valley Fair so it’s not uncommon to see people working from there,” Ruddick said.
Ruddick, Huddle and the rest of the Westfield team are all about staying ahead of the game, the greatest challenge being the inability to predict how consumers will behave several years out.
“The most challenging part of our job right now is our need to invent and change more rapidly than we ever have before,” Ruddick said. “We’re very proud of Century City, but our thinking of Valley Fair is elevated beyond Century City only because lifestyles are changing so rapidly and what do I mean by that? I think we’re at the forefront of health and wellness and micro-fitness. It’s really, for us, about what’s next and the consistent theme there is food continues to evolve. Food is the new luxury in the world and I don’t mean luxury at a price. I mean people just want to connect. And the other side to it is entertainment. Entertainment will become a bigger part of developments in the future and it’s interesting in that space who we are currently in discussions with. It’s beyond cinemas because I think that’s the real opportunity for us.”