The Cadillac of Deals

Apr 27, 2024

Singles hitters drive Fords. Home-run hitters drive Cadillacs.

Pete Rose

Q. What’s better than owning the most productive shopping center in the United States?

A. Owning the land underneath the most productive shopping center in the United States.

Rick Caruso is the Walt Disney of developers and The Grove is his consumer Disneyland. It’s filled with fountains and trolleys and street lamps and trees and beautiful people. It’s wholesome, American, and wildly profitable - if Taylor Swift was a shopping center, she’d be The Grove.

If The Grove isn’t the most productive shopping center in the country, it’s at the very top - generating over $1.4 billion in sales out of 575,000 square feet.

The Grove sits next door to the Original Farmer’s Market, a smaller, homespun complex that’s 90 years old - the Willie Nelson of shopping centers.

The Farmer’s Market is a wonderful collection of over 85 vendors - produce, meats, prepared foods, restaurants, and gifts - everything from donuts to pickles to stickers.

Cranberry lamb, caviar, calzones, and caprese sandwiches.

There’s an entire store devoted to hot sauces.

Neighborhood institutions.

The Farmer’s Market isn’t for pikers - be prepared to dust off your wallet.

But there’s still cheap beers to be found.

The Farmer’s Market sits at the corner of 3rd Street and Fairfax Avenue in one of America’s best neighborhoods.

Tucked away at the edge of the property are the offices of the Gilmore family, the Farmer’s Market owners. Their oasis compound sits behind a private wooden gate, like the entrance to a California cattle baron’s headquarters office.

It looks like a ranch because it once was.

A. F. Gilmore bought the property, then a ranch, in 1880.

Twenty years later he struck oil there.

The Farmers Market opened in 1934.

The Grove opened in 2002 on land leased from the Gilmores.

The Gilmore offices remained.

It took 120 years but the Willie Nelson of shopping centers now sits next to the Taylor Swift of shopping centers.

I like to imagine the Gilmore family, relaxing in their hacienda of an office, being approached by Mr. Caruso, the retail maestro, about the idea of building The Grove.

He would do all the work, bringing all his formidable skills to bear to finance and build the project and then run the place.

Every day at The Grove would be a performance - valets, concierges, day porters, gardeners, security, repairmen, event managers, and property managers all choreographed to orchestrate happy customers past shiny shopfronts.

Mr. Caruso would handle all that hassle and make it wonderful. And better yet - he wouldn’t buy the land - he would rent it. He would pay for all the improvements and at some point in the far-off future, the lease would end and all the buildings and goodwill Mr. Caruso created would revert to the Gilmore heirs.

The Cadillac of deals. A blue chip developer improving your property, paying rent and then down the road handing it all over to you.

I then imagine a Gilmore, feet propped on a big wooden desk replying to Mr. Caruso: “if you’ve got the money, I’ve got the time”.

Rents at The Grove are now pushing $350 per square foot. Multiplied by 575,000 square feet that’s a Cadillac of a deal, for everyone involved.

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