Lewis Retail Centers is developing infill retail opportunities in California.
By Randall Shearin
Lewis Retail Centers, a member of the Lewis Group of Companies, got its start by developing shopping centers to serve the single family neighborhood developments the Lewis Group was building in southern California’s Inland Empire in the 1970s. Since then, Lewis Retail Centers has developed over 30 shopping centers totaling more than 9.5 million square feet in California and Nevada. In 2013, the Lewis Group of Companies will celebrate its 35th year as a shopping center developer and its 58th year in business. Lewis Retail Centers operates and manages the shopping center portfolio for the Lewis Group. The company continues to aggressively look for new opportunities and currently has over 20 shopping centers totaling over 6 million square feet in its development pipeline. In addition to shopping centers, the Lewis Group of Companies is also active in developing master planned communities, apartment homes as well as office and industrial parks.
Shopping Center Business recently met with Randall Lewis, executive vice president of Lewis Retail Centers, at the company’s headquarters in Upland, California.
Master Planning
The Lewis Group of Companies is one of the largest master planned developers in California and Nevada. The company buys and banks land for future master planned communities and has over a dozen locations slated for development over the next several years. Most of the company’s master planned communities are between 200 and 500 acres, though some contain as many as 3,000 acres. The master plans usually have multiple components including single family residential neighborhoods, apartment communities, shopping centers and office parks as well as recreational and civic uses. Lewis typically develops the commercial and apartment components and sells lots to homebuilders to build the single family residential portion.
Focus on Retail
Many of Lewis Retail Centers’ earlier shopping center developments were part of Lewis-developed master planned communities. The success of these shopping centers led to a strong reputation for Lewis Retail Centers. The company was able to leverage that expertise to expand their retail operations and started developing shopping centers apart from the planned communities. Today, Lewis Retail Centers’ development opportunities are derived from three key areas: 1) Acquiring retail sites for ground-up development in new growth or in-fill markets; 2) Developing centers within Lewis-
Lewis Retail Centers is developing Apple Valley Commons, a 469,000-square-foot community center in Apple Valley, California. The Super Target-anchored first phase opened in 2007, and Lewis has been adding retailers to the project ever since.
developed master planned communities; and 3) New site development opportunities provided by major/anchor retailers.
California and Nevada were both hit hard on the residential side during the Great Recession, which impacted the growth of retail.
“Recently, however, many of our key anchor tenants have shown increased interest in opening stores in 2013 and 2014 in California,” Randall Lewis says. “They see California as a strong market long-term.”
During the recession, Lewis Retail Centers took a close look at its portfolio and made some improvements to its centers to add value. The company does not do third-party management, so it increased its efforts on its management of existing centers by looking for ways to improve operations and working with retailers to increase their sales.
“We are in the business, first, of providing sites for retailers,” says Lewis. “Secondly, as we operate our shopping centers, we are in the business of doing all we can to help our retailers be profitable.”
One way the company is able to support the retailers in centers where the Lewis Group has nearby residential communities is with cross marketing events between the residential and retail.
“We do a lot of co-branded events such as health fairs, food events and educational lectures featuring merchants from Lewis centers. We also promote our shopping centers to our residents by providing discounts from participating retailers,” says Lewis.
A recent promotion gave residents of a Lewis-developed apartment community the opportunity to go to the movies in a Lewis-developed center for the discounted price of $5, which included admission, a soda and popcorn. “It’s truly a win-win for our retailers and the residents of our communities. We are providing an opportunity to generate sales and increase awareness of their business to the retailer and, at the same time, the resident is receiving a great discount,” says Lewis.
Long Term Hold
Another facet that sets Lewis Retail Centers apart is that it rarely sells its shopping centers. Lewis estimates that the company still controls about 90 percent of the retail it has developed.
“Most of what we have built, we still own,” he says. “That doesn’t mean that strategically, we won’t sell an asset.”
“We build everything with the intent to be a long-term hold,” says Lewis. “The reality is that we do occasionally sell properties for business reasons.
Financial Independence and Strong Relationships
Lewis Retail Centers is a bit of a contrarian player in the shopping center industry. It doesn’t merchant develop, and it rarely sells retail properties. As well, because of its size and strong financial position, the firm self-finances its developments, only applying permanent financing after construction.
“That has always been a big advantage to us for land acquisitions, and it helps with the retailers as well, since they don’t have to worry about financing,” Lewis says.
Lewis Retail Centers developed High Desert Gateway, a 349,000-square-foot community center in Hesperia, California, anchored by a Super Target, Ross Dress For Less, Marshall’s and JoAnn Fabrics. Because of its financial independence, Lewis Retail Centers was able to continue development during the recession, and has even been provided opportunities by other developers to step into projects that became challenging to develop as a result of the economic downturn. Over the years, Lewis Retail Centers has developed the reputation as the go-to developer in the Inland Empire for power, neighborhood and community centers. Today, many retailers are bringing land parcels to Lewis to develop.
“We have strong existing relationships with multiple national retailers, and a lot of times these tenants will come to us, especially the larger anchors,” says Lewis. “Retailers can’t afford to make a mistake locating a store today, so it makes them want to do business with a developer who they know can deliver on time.”
New/Recently Opened Centers
In the past 10 years alone, Lewis Retail Centers has developed over 20 centers that will total more than 7 million square feet at build out.
In 2011, Lewis opened Eastvale Gateway South in Eastvale, California. The 164,000-square-foot center includes a Walgreens, McDonalds and Chevron, and was driven by the demand at the adjacent Lewis-developed Eastvale Gateway community center. That 850,000-square-foot center opened in 2004 and has had strong retailer demand ever since (Eastvale is a newly formed city that is between Ontario and Corona).
Eastvale Gateway is a newer center that Lewis has developed for the growing community of Eastvale, California.In 2013, the company plans to open Redlands Village, a 79,000-square-foot neighborhood center in Redlands, California. The deal was brought to Lewis by a regional grocery chain that had a desire to expand in the area. Lewis Retail Centers is also working with the same grocer to develop the 90,000-square-foot Day Creek Marketplace in Rancho Cucamonga, projected to open in 2014.
The company has a long list of success stories working with cities and creating revenue for them. In the city of Hesperia, California, Lewis Retail Centers developed High Desert Gateway, a 349,000-square-foot community center anchored by a Super Target, Ross Dress For Less, Marshall’s and JoAnn Fabrics.
Lewis says it has been a very rewarding project to work on. “This center meant so much to the city and its residents,” he says. “We have heard from many residents who have said that, before the center, the area was starved for restaurants and retail. Residents drove 30 or more miles to do their shopping.” The Super Target store has been a game changer for the community, and the center’s restaurants have become local gathering places.
In Apple Valley, California, Lewis Retail Centers is developing Apple Valley Commons, a 469,000-square-foot community center. The Super Target-anchored first phase opened in 2007, and Lewis has been adding retailers to the project ever since.
Another project Lewis is currently entitling is a new Target-anchored center in Pomona, California. The infill project, Rio Rancho Towne Center, is planned to have 337,000 square feet.
Because it has done so much work in the various municipalities in the Inland Empire and beyond, cities often contact Lewis Retail Centers to ask for its help with retail projects. The City of Cathedral City, California, came to the company with an infill site to develop a retail project for an underserved market. Lewis is working on plans to develop The Marketplace at One-Eleven which will be a 207,000-square-foot community center.
Similarly, the City of Azusa, California, is working with Lewis Retail Centers to develop retail on a site it owns there. “The city needs sales tax dollars, and at the same time it is trying to energize its downtown,” says Lewis. “We are working on plans to develop a 76,000-square-foot center to help the city fulfill its goals.”
Focus on Core Markets
Lewis Retail Centers has concentrated its efforts in California in the Inland Empire, High Desert and Sacramento areas. In Nevada, the company has holdings in the suburban areas of Las Vegas and Reno. The company has made a conscious effort to focus on those markets so that it can specialize in being a credible developer, owner and manager in those areas.
“Right now, in California and Nevada, the cities need sales tax revenue,” says Lewis. “They need jobs. We find that the cities are very happy bringing us in because of our strength and concentration in the market.” 
Lewis developed Sierra Lakes Marketplace, a 395,000-square-foot center in Fontana, California, in 2004. The center is anchored by Lowe’s Home Improvement Centers, Costco, Petco and OfficeMax.
Philanthropic Focus
The Lewis Group of Companies has made itself a part of many communities far beyond developing projects. The Lewis family — and the Lewis Group — gives back its time, money and other resources to many of the communities where it has holdings. The Lewis name can be found on a number of buildings throughout the Inland Empire, and many schools, sports leagues and economic development endeavors benefit from the family’s resources.
“We have a very strong reinvestment program in the communities where we are active,” says Randall Lewis. “We’re not in multiple states and multiple parts of the country and that allows us to be more hands-on in our communities. That helps us to cement our position as a dominant regional player. It gives us some advantage, yes, but it also gives us and our communities a better quality of life.”
It only takes a walk down the halls in the company’s headquarters to see how beneficial the time, talent and funding has been to various organizations across California and Nevada.
Randall Lewis attributes this to his parents, Ralph and Goldy Lewis, who founded the Lewis Group of Companies in Claremont, California, as a homebuilder in 1955.
“My parents always felt that we had an obligation with success to give back,” says Lewis. “They felt that was best done where you were successful. The people who made us successful are those who live here and shop here, and the cities that make that possible. We try to be strategic with our philanthropy so that we are reinvesting in the community.”
The Lewis family prefers to give money to long-term visionary projects, like libraries, wellness clinics, education and performance arts centers.
“They are long term investments for the community and they enhance every citizen’s quality of life,” says Lewis. “We rarely develop just one project in a city; we want to strategically reinvest in these communities to give back and say ‘thank you’ while we create a more fertile place to do our next project.”
— Randall Shearin