Owners of Montgomery Village negotiating sale of Santa Rosa shopping center to Boston-area developer

The owners of the landmark Montgomery Village shopping center in Santa Rosa are negotiating a potential sale of the property to a Boston-area developer that specializes in building and managing commercial projects combining stores, restaurants and offices.

David and Melissa Codding, owners of the east side shopping center, have informed tenants they are engaged in talks to sell Montgomery Village to WS Development Co., after being contacted by the company last summer.

Hugh Codding, David’s late father, opened the neighborhood retail destination 71 years ago on land that had been an orchard. For decades, the outdoor complex has been a popular place for generations of Sonoma County families to shop, eat and gather for musical performances.

The role the Montgomery Village development — the shopping center and its nearby homes — played in Sonoma County was significant, said Gaye LeBaron, noted local historian and longtime Press Democrat columnist.

“It’s like what Rodeo Drive is to Southern California,” LeBaron said. “If you want upscale shops in Santa Rosa, you go to Montgomery Village.”

Hugh Codding, who died in 2010, played a key role in the growth of Santa Rosa when he persuaded the village’s residents in 1955 to vote for annexation into the city instead of incorporating into their own municipality. Santa Rosa's population then increased from less than 18,000 to more than 30,000 after the annexation.

“He had tremendous influence. Those were his people,” LeBaron said of the residents who voted for annexation.

Many of those homeowners had started families in the post World War II baby boom and would fuel the city’s growth through the 1950s and into the 1960s.

Now decades later, David and Melissa Codding are likely to make a significant return on the family investment through a sale. The 300,000-square-foot shopping center could fetch as much as an estimated $90 million based on per-square-foot value in the retail sector, said Thomas Laugero, a partner at Keegan and Coppin, a commercial real estate sales and leasing company locally for decades.

The Coddings wrote to tenants in a March 12 letter that “WS is now conducting their discovery and due diligence regarding the possible purchase of Montgomery Village.”

Jonathan Rauch of WS Development wrote his own introductory letter March 18 to store operators at the Santa Rosa center.

Rauch wrote that any agreement by his company to acquire Montgomery Village was “several months away” but WS Development “was humbled by our selection and excited to take the property into its eighth decade.”

The Press Democrat obtained copies of both letters sent to tenants. Following multiple inquiries from the newspaper in the past couple of weeks about plans for the shopping center, David Codding confirmed Monday in an email to a reporter that he and his wife sent a “heartfelt letter to our merchants so they knew what would be taking place over the next few months.”

“As noted in the letter, should the sale go through, then my wife and I, together with WS Development, would send out a joint news release,” Codding said in the email. “Until the process is complete and final determination is made, there is not a comment that I can add other than what was provided to our merchants, which you now have.”

Rauch did not respond to messages left for him by The Press Democrat.

In their letter to tenants, the Coddings said they have been pondering the past few years what would be best for Montgomery Village when they decided to retire. Their daughter, Alexis, is a senior in college in Southern California who plans to pursue a graduate degree, and ultimately wants to be a marine biology professor, they wrote, rather than taking over management of the shopping center.

“Ultimately, we realize that we could not ask her to give up her dreams and aspirations to come back to Sonoma County and take over the reins of running the Village,” according to the Coddings’ letter.

As they assessed their options, the Coddings told their merchants they wanted a company with ownership and management experience of similar retail properties that “would own and manage the Village that is akin to our own management style we have developed over the past 35 years.”

They wrote that Rauch contacted them “unexpectedly” late last summer and said WS Development was interested in “possibly purchasing our Montgomery Village.”

After long talks with him, including in person when he recently visited the North Bay, the Coddings learned that the Chestnut Hill, Mass., developer owns and operates “open air, lifestyle properties” like their Santa Rosa shopping center, they wrote to tenants.

In fact, from its New England roots, WS Development has developed in 25-plus years more than 100 properties covering 20 million square feet in 11 states, making the company one of the nation’s biggest builders of mixed-use projects featuring retail.

Notable properties in its portfolio include: Boston Seaport, the largest active development project in Boston’s history including 350 companies on 33 acres; Hyde Park Village, Tampa, Fla.; Royal Poinciana Plaza, Palm Beach, Fla.; and Highland Village, Jackson, Miss.

The Coddings wrote that the developer appreciates the “combination of independent merchants with national retailers.”

Should the Coddings reach a final agreement to sell their sprawling retail center to WS Development, the developer has asked and they plan to offer their assistance “to ensure that the transition goes very smoothly” for tenants, according to their letter.

Overall, the Coddings wrote to tenants that “we believe WS can bring in new and exciting additions” to the Santa Rosa shopping center. “Looking at some of their other properties and what they have done to enhance them, it is quite impressive.”

A few merchants interviewed said an ownership change could be good for the future of the shopping mecca. Debra Knick, owner of Sonoma Outfitters, a family-owned sporting goods store, said a WS Development representative visited her son last week to discuss its plans for Montgomery Village.

That official stressed that the development company wanted to maintain a strong presence of locally owned stores that are popular with shoppers, she said. Merchants run the gamut, including Acre Coffee, Copperfield’s Books, Classic Duck, SEA Thai Bistro, Kaleidoscope Toys, J.Jill, See’s Candies, Urban Garden, Patrick James men’s clothier and Village Bakery.

“They also emphasized they do a lot of events and a lot of promotions besides just concerts,” Knick said, noting the representative mentioned some potential redesigning at the shopping center to make it more of a consumer draw.

One longtime tenant who asked not to be named said the sale “could be a shot in an arm” for retailers since WS Development has more financial resources and a national scope tracking new retailing trends.

“A corporation of that size will have contacts with many other retailers and may actually be able to bring something new to Santa Rosa,” the tenant said.

Despite the ongoing pandemic, Montgomery Village has held up much better that comparable regional malls when it comes to retaining tenants, according to a Keegan and Coppin survey. Montgomery Village didn’t have any vacancies in the final quarter of 2020, according to the survey, while the regional average was a 5.2% vacancy rate.

Even though there are now a handful of vacant storefronts, Laugero said they won’t be vacant for long as the Coddings likely are in negotiations with new tenants or have locked in lease agreements.

A reporter’s spot check Tuesday showed a few retail vacancies along Hahman Drive, as well as Tony’s Galley restaurant opening there soon. On Magowan Drive, there were also a few unoccupied storefronts.

“Even in bad times, good real estate is good real estate. Tenants will make moves to improve their positioning in the marketplace,” Keegan and Coppin’s Laugero said. “And Montgomery Village is good real estate.”

Show Comment