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System Down Again? You’ve Got Company

First New Grocery Store in 5 Years Planned for Valley By SHELLY GARCIA Senior Reporter A local shopping center that has languished for years could get a makeover with a planned addition of a Pavilions grocery store. Safeway Inc.’s Vons division is planning to build a Pavilions unit at the site, Corbin Village in Tarzana. Although plans are in very early stages, Vons officials have already met with city officials as well as some of the other owners of the shopping center, and they are working through the entitlement process. If the development goes through as planned, the store would be the only new grocery built on the San Fernando Valley floor in about five years. “I met with them right when the strike hit,” said Tom Henry, chief planning deputy to Los Angeles City Councilman Dennis Zine, who represents the area. “They want to put in a Vons Pavilions, so it’ll be a nice grocery store.” The 155,000 square-foot center, built in the 1950s, has an unusual ownership arrangement. Three different entities own different sections of the center, which sits along Ventura Boulevard, making it difficult to launch a remodeling effort. But with the addition of Vons, some of the other owners say they expect to be able to coordinate a facelift for the entire center. “We’ve been wanting to tie the center in and have it look as one,” said Dean Cutler, who represents the owners of a 70,000-square-foot section of the property on the eastern end, Vencor Management Co. LLC. “We think ultimately that having Pavilions will achieve that goal.” The Vencor property is fully occupied, but vacancies at the western end of the center, where Vons is planning its 55,000-square-foot store, along with several short term leases, made investing in a major overhaul risky. “If they come in, it’s obviously a long term plan and the center will probably take on a new, permanent long term look and new long term leases,” said Cutler. Vons began looking at the property several years ago, and finally closed the deal last October. Development roadblocks But there are still several hurdles to jump before any construction gets underway. Chief among them is a 99 Cents Only store that sits on the property. “They’ll have to negotiate some sort of lease termination,” said a broker who was involved in the deal. Officials at 99 Cents Only said they had been aware of Vons’ interest, but had not had any contact with officials of the chain. “We haven’t been approached, and we haven’t’ heard anything,” said Albert Lee, who identified himself as information czar for 99 Cents Only stores. “We have a lease and we plan to stay and do business.” Although city officials welcomed the idea of an upscale grocery store to the neighborhood Henry said the council office as well as neighbors will have to weigh in. “This will definitely go to neighborhood council and will end up at public hearings with the planning department for certain exceptions to the Ventura Boulevard Corridor Plan,” Henry said. The Ventura Boulevard Corridor Plan imposes certain restrictions on building over and above city ordinances. Among their likely concerns is the parking configuration. Although the center has an abundance of parking, where it is located and what kind of access is provided is likely to be a sticking point. “I had concerns with circulation and lack of landscaping,” Henry said. “Not necessarily the number of spaces, but the configuration.” Right now, the parking lot for the center fronts Ventura Boulevard, and communities have recently taken exception to such designs, preferring that parking structures be hidden from view of the street. The last new grocery constructed in the Valley was a Ralphs built in Studio City about five years ago. Vons operates about 10 Vons stores and two Pavilions stores in the area, one in Sherman Oaks and another in West Hills. Store churn Although the major grocery chains in the area are currently working through the financial effects of the United Food and Grocery Workers strike that hobbled grocers for about two months late last year and early this year, the churn of new store openings and closures typical of the way groceries operate has continued. As of January, Vons operated 326 stores in Southern California. Safeway opened 40 new stores in 2003, the most recent period for which figures are available, compared to 75 new stores opened in the prior year. The company closed 31 stores, compared to 40 closures in 2002. The company does not release specific data for its divisions. In its most recent financial reports Safeway estimated that the strike (which was still ongoing at the time) would reduce earnings by about $102.9 million in the fourth quarter of 2003. For the 53 week period in 2003 Safeway reported a net loss of $170 million or $0.38 per diluted share, compared to a net loss of $828 million or $0.27 per share in the prior 52 week period. Revenues in the 2003 period were $35.6 billion, compared to $34.8 billion in the prior, 52-week period. Revenues declined on a comparable store basis for the period by 2.5 percent, Safeway said, compared to a 0.7percent comparable store decline in the 52 weeks of 2002.

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