https://www.sfgate.com/bayarea/article/the-future-of-california-malls-18707741.php SF Gate LogoHearst Newspapers Logo Skip to main content [ ] Newsletters Home * About SFGATE * Contact SFGATE * Newsletters * Classifieds * Standards & Practices * Advertise With Us * Privacy Notice * Terms of Use * Ad Choices * Your Privacy Choices News * Bay Area * California Wildfires * Education * Weather * Health * Sponsored Content * Politics Local * SF History * Sponsored Content Los Angeles Best Of Sports * 49ers * Giants * A's * Warriors * How to Watch Culture * Movies * Streaming * Tech & Social Media * Marketplace * Cannabis * Senior Living * Comics Food + Drink Travel * Tahoe * California Parks * Disneyland * Hawaii * Wine Country * Monterey-Carmel Real Estate * New Homes * (Virtual) Open Homes * Luxury * Rentals * Mortgage Rates * Place a Real Estate Ad * Neighborhood Guides * Home & Garden Obits * Obituaries * Place an Obituary Coupons Shopping Puzzles SF Gate LogoNewsletters BREAKING A major weather shift is coming to the Bay Area News|Bay Area & State California malls as we know them are dying. Here's what comes next. With Westfield exiting America, who takes over all the malls? Inside Stonestown Galleria mall in San Francisco, Monday, March 18, 2024. Charles Russo/SFGATE By Tessa McLeanApril 3, 2024 The American mall is in a quandary. Stores are papered over and echos bounce around mostly empty halls. In the past decade, online shopping has taken a considerable bite out of in-person retail, leaving empty, palatial wastelands in its wake. Gone are the days of happy shoppers gliding across glossy floors with wide, stiff paper shopping bags in hand, while the smell of buttery pretzels wafts tantalizingly by. * The "dead mall" (also known as a ghost mall or a zombie mall) has even become a sort of local fascination. When Unibail-Rodamco-Westfield -- one of the country's most recognizable mall operators thanks to the word "Westfield" emblazoned on dozens of mall exteriors -- announced in an earnings report in 2021 that it was effectively shutting down operations in the U.S., these institutions hit yet another tipping point. So what comes next for these giant mausoleums of the American dream? Development companies are gobbling up beleaguered retail complexes across California, rethinking the very blueprint of what a mall should look like. Their ideas are lofty, from towering new structures that include housing, elevated dining and even hotels to more subtle shifts like added entertainment offerings and offices. Some are pushing for more radical changes, adding senior housing, pickleball courts and trampoline parks, and even local library branches. Westfield signage has been removed from the exterior of the former Westfield San Francisco Centre, as seen on Tuesday, June 25, 2023. Charles Russo/SFGATE The Westside Pavilion in Los Angeles, sold in January 2024, is set to be transformed into "UCLA Research Park," a biomedical research center owned by the university. That's a lucky break for the 1980s-era mall -- only 25% of vacant malls reopen for other purposes, according to a recent study. San Francisco Mayor London Breed has made a similar plea to the UC system for downtown San Francisco, though she didn't call out the declining Emporium Centre San Francisco directly (for that, she suggested a soccer stadium). Advertisement Article continues below this ad Some malls in California have already been transformed. The former Mayfield Mall in Mountain View was transformed into offices in the mid-1980s. A redevelopment of Laguna Hills Mall is under construction to include 1,500 new housing units, offices and retail. Stonestown Galleria, located in the southwest corner of San Francisco, is on a long journey to convert empty parking lots into 3,500 housing units, new green space, offices, bike and pedestrian pathways and even a central "main street." But they're all part of the lucky few: 87% of large shopping malls may close over the next 10 years, according to the same study. An exterior view of Stonestown Galleria mall in San Francisco, Monday, March 18, 2024. Charles Russo/SFGATE Newer malls already exist as an example of what the next generation may look like. The Americana at Brand in Glendale, a property owned by real estate company Caruso (led by billionaire businessman and former LA mayoral candidate Rick Caruso), is thriving. The mall opened in 2008 and includes hundreds of luxury apartments, retail tenants, high-end dining, a movie theater, and even sprawling lawns where families picnic and ride its dedicated trolley system. Westfield's current divestiture is forcing a look toward the future. In 2023, the company sold off Westfield North County in Escondido, Westfield Mission Valley in San Diego and Westfield Valencia Town Center in Santa Clarita. Their proposed transformations could blaze a trail for the new California mall. Advertisement Article continues below this ad Saying goodbye to the zombie mall Some developers want the average resident to treat the mall like teenagers did in the 1990s -- as places to hang out and spend as much time as possible. If you while away the day there, you're likely to shop, dine and utilize entertainment opportunities. So, they figure: You might as well live there, too. The idea of malls as the renewed town center is exactly what attracted Dallas-based real estate investment firm Centennial to acquire the aptly named Valencia Town Center from Westfield in September 2023 for a reported price of $199 million. Centennial executive vice president Michael Platt told SFGATE he thinks there are three categories of malls in the U.S.: those that are thriving and will continue to thrive, those that need redevelopment, and those that will, and should, shut down completely. High-end malls do seem to be having a bit of a resurgence -- foot traffic at "top-tier" malls (defined by having shoppers with an annual income of more than $200,000 and a mix of luxury retailers and direct-to-consumer brands) was up 12% in 2022 compared to pre-pandemic 2019 levels, according to Coresight Research, and much of it is led by Gen Z. Shoppers walk through the Westfield San Francisco Centre on April 13, 2022, in San Francisco. Justin Sullivan/Getty Images Most malls, though, fall in the middle category, ripe for redevelopment. As California residents flee coastal cities and head inland, malls located near growing cities and suburbs are particularly well positioned for modification. Real estate economist Gary London consulted with Los Angeles-based real estate investment firm Lowe on the acquisition of the former Westfield Mission Valley East in San Diego. He called the mall the best candidate in the entire country for a mall revitalization, given its coveted location in a burgeoning metropolis, near three freeways, with residential and hospitality projects nearby. With the right alterations, he thinks it's poised for success. Advertisement Article continues below this ad The 'live work play' ideal The term "mixed-use" has become a buzzword in commercial real estate. The theory goes: If malls are to succeed, they need a diverse set of offerings that naturally captures visitors' attention for entire days. That includes moving into the mall full-time. Lowe purchased Westfield Mission Valley East last year, with plans to build "a meaningful amount of residential" on vacant parts of the property. Joel Mayer, an executive at Lowe, said we no longer live in a "siloed world." People want to be able to shop, eat and be entertained -- and even live and work -- all in one place. "The concept of 'live work play,' what everyone talks about, we think we'll be able to accomplish it," Mayer said. Advertisement Article continues below this ad BEST OF SFGATE Culture | This California film flopped in the '80s. Now it's a cult icon. Food | SF's famed clam chowder bread bowl has a big problem Travel | This California ostrich sanctuary is surprisingly terrifying History | The mysterious vanishing (and reappearance) of William Hughes Plans for Valencia Town Center, meanwhile is to make the space a "seven-day-a-week, 18-hour-a-day entity" rather than the "three-day-a-week entity" it is currently, Centennial's Platt said. It's tough for retailers to survive with shoppers only visiting a few days each week, and he said adding in diverse offerings -- perhaps also a hotel and/or sports and fitness uses -- would help cement the mall as a daily destination. FILE: An interior view of Westfield Valencia Town Center Mall in Santa Clarita, Calif. Robin L Marshall/Getty Images The Santa Clarita mall, well positioned about 30 miles north of Los Angeles in a growing community full of young families, already has some mixed-use space. The Princess Cruises company office headquarters are on the grounds, as well as a movie theater, but Centennial plans to build out the 53 acres and add additional uses, including residential living. Advertisement Article continues below this ad That's why the company decided to keep the name "Valencia Town Center," with hopes it will become a true "town center" for the area. Platt said that if the name had included the word "mall," they would have changed it because "going forward, it's much more than a mall." This isn't the first property Centennial has acquired from Westfield for redevelopment. Centennial dropped the "mall" from the name of a suburban Chicagoland mall it acquired in 2015, adding hundreds of luxury apartments, some already for rent, in addition to new gathering spaces. It took more than eight years for that evolution, but London, the economist, said that timeline will still be faster than trying to revitalize a struggling downtown plagued by massive commercial vacancy centered around offices in big cities like San Francisco and Los Angeles. There's still too much apparel Other developers are betting on a lighter approach for redevelopment in California, switching up retail tenants and improving design and marketing. Steerpoint Capital and Bridge Group Investments purchased Escondido's North County Mall for a reported $57 million from Westfield in March 2023, the fourth in a series of acquisitions of California shopping centers for the group. The suburban San Diego mall is in an area with a growing median household income, and Bo Okoroji, a managing partner at Steerpoint who previously worked for Westfield and Simon Property Group -- the largest mall operator in the country -- said he believes the problem with North County was in how it was run. Advertisement Article continues below this ad FILE: Shoppers ride down an escalator at North County Mall in Escondido, Calif. Sandy Huffaker/Corbis via Getty Images Steerpoint plans to reinvent the structure of the building, transforming the first floor into fewer, larger spaces and focusing the second and third floor on small retail shops. "The mall was overbuilt, and it would be a very healthy mall if it was limited to two levels," Okoroji said. "If the mall didn't have the third level and it had all the tenants it had today, it would be a very vibrant center and it'd be easier to shop." The majority of malls in the country are "over-appareled," he explained, and converting some of those traditional apparel storefronts into spaces that can host food and beverage, entertainment or even spaces that could hold less traditional tenants, like a doctor's office or a real estate office, could boost a mall's success. The next step is marketing. What Westfield did well, which Okoroji saw firsthand, was brand each mall with its big red script. Steerpoint plans to announce a brand name to append to its mall properties later this year, hoping to generate the brand recognition Westfield had and set expectations for customers. The group purchased The Shops at Montebello in Montebello in April 2022, and the Antelope Valley Mall in Palmdale and the Northridge Mall in Salinas in December 2022, each with plans to optimize the current retail scope. Advertisement Article continues below this ad FILE: Shoppers walk inside the Antelope Valley Mall in Palmdale, Calif. Anne Cusack/LA Times via Getty Images Okoroji believes they're one of the only mall buyers looking for well-located retail that may be underutilized and aren't looking to "scrape and start from scratch." Steerpoint hopes to acquire two more mall properties in 2024, with a focus on Texas and California. A long road ahead Platt said plenty of hurdles stand in the way of these redevelopments -- construction costs are high, capital markets are uncertain and simply making the margins profitable is a challenge. Even so, Centennial is still on the lookout for new properties to acquire throughout the country. It helps that in 2022, Newsom signed two California bills to make it easier for commercial land to be converted into housing. Advertisement Article continues below this ad Lowe is also actively looking for more properties to acquire, both in California and throughout the U.S. Mayer said the key to a successful revitalization of Mission Valley East will be figuring out what the community wants and needs -- plus a lot of capital. "There's not any one magic bullet that any one developer can bring. It's listening to the market," Mayer said. "... When we see problems in development is when [developers] build what they hope will succeed. Hope is not a strategy." Editor's note: This story was updated at 1:15 p.m. on April 3 to correct the location of the Mayfield Mall. April 3, 2024 By Tessa McLean Tessa is the California Editor for SFGATE. Before joining the team in 2019, she wrote for numerous publications including Liquor.com, The Bold Italic, 7x7 and more. 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