A group of real estate investment and development firms announced Monday they have acquired the 14-acre City Place shopping district Downtown, with plans to develop multiple residential buildings.

The district encompasses six blocks of prime real estate Downtown, including many large stores such as Walmart, Fresh & Easy and Big 5 Sporting Goods that have sat vacant for months or years. The new development company wants to transform those spaces into mixed-use buildings with retail and residential units.

“Big-box retail stores are not the highest and best use for this site,” said John Drachman, co-founder of Waterford Property Company, one of the firms involved in the purchase. “It’s better suited for more density.”

Drachman noted the impact that the COVID-19 pandemic has had on retail, with more consumers shifting to online shopping.

Existing service-based retail, including the area’s various restaurants, will remain, according to Drachman.

Walmart’s current lease does not end for about 20 more months and the new owners intend to hold them to it, Drachman said, noting the retailer does have extension options it could enact. The timing of the lease’s current expiration date in late 2022 and the process for designing and permitting residential developments should line up well, he added.

The new owners intend to begin working immediately to stabilize the area by working with its existing tenants as they try to recover from the pandemic. Sean Rawson, Waterford’s other founder, said they have been in contact with several business owners but plan to sit down with each tenant individually to determine how best they can assist.

The Downtown retail district has a long history of failure and rebirth. The enclosed Long Beach Plaza Mall was built in 1982. It was demolished in 2002 to make way for the outdoor shopping district that exists today.

Tony Shooshani purchased City Place in 2005, but last year defaulted on a $63 million loan, leaving the future of the district in flux. The loan was recently sold through a bidding process, and purchased by a partnership that includes Waterford, Turnbridge Equities and Monument Square Investment. The purchase price was not disclosed.

When Shooshani purchased City Place he had big plans to reinvigorate the area. However, those plans were put on hold once the Great Recession struck.

Eventually, Shooshani was able to follow through with some of his plans to re-energize City Place through various improvements, though plans for a 22-story tower called CSULB Village that would have had 800 student housing units and 50 faculty and staff units were scrapped in July 2020 when Shooshani, its developer and property owner, ran into problems with financing and other financial challenges brought about by the COVID-19 crisis.

In 2017, Shooshani rebranded the area as The Streets, a moniker that the new owners are abandoning in favor of the former City Place name until it unveils its own rebranding campaign.

“Shooshani did a great job improving retail at Third Street and The Promenade and we want to carry that through the rest of the project,” Drachman said. “We want to connect the Promenade better and have it all flow.”

Shooshani did not respond to request for comment.

Shooshani still owns a 20-unit residential development under construction at City Place.

Waterford is the owner of the World Trade Center in Downtown and spearheaded a multi-million renovation of the building. The firm also has acquired and repositioned 15 multifamily projects in Long Beach since 2015.

“This is an important project and we take that responsibility seriously. We’re really excited. We are big believers in Long Beach,” Drachman said. “Downtown still has lots of great potential. Once we get out of this pandemic, it will continue its upward trend of being a desirable place to live, work, play and eat.”

Editor’s Note: This story has been updated to correct that the lease was won through a bidding process, not an auction, and that Walmart has lease extension options.

Brandon Richardson is a reporter and photojournalist for the Long Beach Post and Long Beach Business Journal.