Newport Developer Signs Pact for Discount Centers in Mexico

An Orange County shopping center developer said Thursday that it has signed an agreement with Mexico’s largest construction company to build so-called “power centers” in cities across Mexico.

Donahue Schriber in Newport Beach will provide the leasing, management and marketing expertise, while Mexican partner Grupo ICA will do the construction.

Though Mexico already has shopping malls, Donahue Schriber plans to lure large U.S. discount retail chains that are eager to attract Mexico’s growing middle class.

The agreement will go ahead whether the North American Free Trade Agreement is eventually signed or not. Even without the agreement, company President Daniel W. Donahue said, Mexico has the population and income base to support the discount stores.

They would be arranged in power centers--large shopping areas that combine the open air and easy parking of the 1950s with the high-value retailers of the 1990s. Donahue said Mexico is a natural expansion zone for his company because financing there is easier than in California, where tight lending has brought retail development to a virtual standstill.

“We see tremendous interest by financial institutions to lend money to Mexico, compared to California, where financing is almost impossible to obtain,” he said. “There’s a real belief that this is Mexico’s hour in the sun, the next decade or two.”

The partnership has some specific projects in mind, Donahue said, but cannot announce them yet because of land negotiations still underway. He said the centers will be in major metropolitan areas.