Santana Row doing better

Santana Row, the large-scale, mixed-use urban center that suffered heavy fire damage just prior to opening in 2002, has stabilized its finances. Developer Federal Realty Investment Trust reports that first-phase earnings are a steady five percent, while phase two, now under construction, is expected to yield 17 percent next year, the San Jose Business Journal reported (see photo on page 1). This counts as good news for Santana Row, which was looking like a potential financial disaster for Federal Realty. In addition to being damaged by fire, the project was conceived and built at the top of an inflated Silicon Valley real estate market, and opened in the aftermath of the dot-com crash. As a result, the Maryland-based real estate investment trust announced that it was moving away from mixed-use projects. CEO Stephen Guttman, who championed Santana Row and other main street projects, resigned under pressure from Wall Street, the New York Times reported. Now the current company CEO, Don Wood, tells analysts that Santana Row could have a positive influence on earnings as early as 2004. The luxury tenants in the project are underperforming, but luxury tenants are struggling in general in this economy, Wood notes. However, restaurants are “hitting it out of the park, and mainstream tenants are doing great, too,” he told the Business Journal. The 40-acre, $445 million grayfield mall redevelopment will eventually include 1,200 residential units, 680,000 square feet of retail space, a hotel, public parks, and plazas.