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Property owner releases statement about Normandy Park Towne Center

Tom T. O’Keefe, the CEO & Principal Owner of O’Keefe Development, owners of the Normandy Park Towne Center, released the following statement about the property and its tenants on Tuesday, May 7, 2019:

I thought it would be wise to send an overview on the various items of interest about Normandy Park Towne Center. In that regard here are a few bullet points.

We completed a lot line adjustment for the north parcels. There where 3 tax lots there when I bought the property from the bank who had foreclosed on it but they were not logical to any buildings. Neither the Executive Center/Ale House building or what is now the former grocery building. In fact, one of the lot lines ran right thru the grocery building which didn’t make any sense. The lot line adjustment remedied this.

The south 4 buildings I also bought from a bank after their foreclosure (different bank than the north parcels) and those 4 buildings sat on only one tax lot. The short plat we completed gives each building a separate tax lot, which is more typical for a shopping center. Anchor buildings, shop buildings and pad buildings are normally on their own tax lots.

Notwithstanding the above the “common areas” (parking, landscaped areas, etc.) are joint use and will have a recorded agreement in place to share parking, access (ingress and egress) and other rules and regulations typical of a shopping center.

When we bought the south 4 buildings from the bank years ago we had mostly vacant buildings. The wonderful tenants I did inherit (The NP Athletic Club, Papa Johns, BK Nails, Desert Sun and Rose Pho) all had, in my opinion, above market rent leases. I actually reduced ALL of their rents significantly. I cut the NP Athletic Club rent by 50% and reduced the others by an average of 44%. These were not leases that they had originally signed by me, but the former owner. As I stated to all of them back then, my goal was to give them a fighting chance to stay in business and prosper while I leased the balance of the shopping center.

Shortly after buying the south 4 buildings I subsequently purchased the Executive Center/Ale House building and land. The land sat vacant for a while we determined what was best to build on it to compliment the rest of the project.

I was told that there was formerly an XL Super grocery store where the Ace Hardware building now sits. The prior developer made the decision to not build a new building to lease to XL Super. I found out that they did a solid business notwithstanding. Based on this information we subsequently made the decision to seek a grocery store for the vacant land rather than build the planned townhomes and apartments on it that the previous developer had planned.

We spent the next 2-3 years trying to find a grocery store (chain or independent) that we could lease a new building to and address the needs of the community.

We had false starts with many, and even had a hand shake deal with QFC where we would take over the Manhattan Village lease and the Des Moines lease and build a new 40,000sf+ store for them attached to what is now the north end of the Ace Hardware building. That deal fell apart, as did one we worked on with PCC, for a variety of reasons. That’s when the Haggen’s Grocery debacle happened and we were back to square one looking for an operator as the grocery store segment recovered.

We eventually found an operator that Unified Grocery supported (but not financially) and built what became known as Normandy Park Market. While it was a beautiful store it became known as “overpriced” even though grocery experts tell us that their pricing was no higher than QFC and in many cases lower. That owner/operator lasted less than a year and never paid a nickel in base rent or triple net charges.

Incidentally, we spent approximately $8,000,000 building and outfitting (Inventory and FF&E) that store for that operator.

When the operator failed we had a decision to make as owners of the shopping center. Do we find another operator or convert the space into a different use. Based on advice of those in the grocery industry, it was recommended that it is better to sell a store while it is open. We then made the decision to keep the store open and we hired a professional grocery management team to operate the store while we searched for a buyer. Retrospectively this was a mistake as we should have converted the space to other allowed uses. Not doing cost us millions more over the next 3 ½ years in operating losses and lost rent.

Let me clarify that last statement regarding lost rent. TO THIS DAY we have never received a nickel of rent for the space that is/was known as the Normandy Park Market. ZERO!

I reiterate this so you now know that we obviously didn’t drive the market out of business because the rent was too high. Plain and simple, the neighborhood didn’t support the market, and it doesn’t really matter at this time what the reasons were.

We have numerous users (none grocery as of now) interested in the former market space and we are working thru plans and details to fill the space as quickly as possible.

We also have leases signed for some the few vacancies (including the expansion of existing tenants whose businesses are thriving) remaining in the sopping center.

We have also worked hard to be a contributing member of the community. Whether it be thru city sponsored events at our property or by making direct and numerous donations to the schools and other community activities. We will continue to do so.

Part of real estate ownership is dealing with the uncertainties associated with tenants, especially in the retail business. This is because while many are wonderful entrepreneurs they are not necessarily experienced business owners.. Notwithstanding, we continue to work hard, and creatively, to keep the mix of tenants at Normandy Park Towne Center both healthy and meeting the needs of the community.

I hope this sheds some additional light on past and current activities. Please feel free to pass this along to anyone and let me know if you have any questions.

PS Empire Coffee just opened this last weekend…and to rave reviews. I highly recommend everyone in the community stop by and support this wonderful business venture…and everyone else in the Normandy Park Towne Center as well.

PPS We found out, when everyone else did, that the NP Athletic Club was considering closing. After meeting with ownership it is my understanding that the notice of closing was posted erroneously by a former employee and that the club is being sold to new owners. I have no verification that has happened however.

Thanks
Tom T. O’Keefe
CEO & Principal
O’Keefe Development