By Marisa Kendall
The Mercury News
WWR Article Summary (tl;dr) The heyday of the traditional American mall is long gone, and many of these shopping relics have been left to flounder under the weight of shuttered Sears, JCPenney and Macy’s department stores. But some see these locations as prime targets for new housing developments.
The Mercury News
Taking the traditional shopping trip to a whole new level, Bay Area residents aren’t going to malls just to buy shoes anymore, instead, they’re moving in.
In an attempt to draw new crowds, a growing number of malls are building housing amid their movie theaters and Abercrombie & Fitch stores.
It’s a solution intended to keep malls relevant as many retailers struggle, and one experts say may play a role in easing the region’s housing shortage.
“It’s pretty depressing when you see a lot of these dead malls and desperate malls,” said Ellen Dunham-Jones, a professor at the Georgia Institute of Technology’s School of Architecture. “To me, it’s just a fantastic opportunity for us to now address the 21st century challenges that those properties were never designed for.”
In the Bay Area, housing is at the forefront of that list of challenges. The option isn’t only for dead malls, newer shopping centers that have embraced residential construction include trendy Santana Row in San Jose and Bay Street in Emeryville, both offering modern apartments and condos above bustling retail stores.
More are in the pipeline.
Developers who bought Richmond’s struggling Hilltop Mall last summer have the city’s OK to erect up to about 10,000 residential units there.
Owners of the dead Vallco Mall in Cupertino are considering using housing to revamp the property. And down south, mall giant Westfield, owner of Valley Fair in Santa Clara, plans to open its first residential building in San Diego in 2019, followed in 2035 by a mixed-use development at a defunct Los Angeles mall.
The heyday of the traditional American mall is long gone, and many of these shopping relics have been left to flounder under the weight of shuttered Sears, JCPenney and Macy’s department stores, and oceans of empty parking lots.
But these malls often make prime targets for housing developments, they tend to be located in convenient, transit-accessible areas but aren’t close enough to residential neighborhoods to stoke NIMBY complaints, said urban development expert Richard Florida, a professor at the University of Toronto and author of “The New Urban Crisis.”
And they’re increasingly empty. As many as a quarter of U.S. malls likely will close in the next five years, Credit Suisse researchers wrote in a May report. In those dead malls, Florida sees an opportunity to reimagine neighborhoods as denser, more efficient communities.
“If we think a little bit outside the box, they offer a way (to rebuild) our suburbs, instead of these single family houses on cul de sacs,” he said.
A single defunct mall can become host to thousands of new housing units as part of a mixed-used development, giving residents easy access to stores and other amenities as well as a feeling of community. But homes in revamped or brand new malls still are likely to be out of reach for many workers in the Bay Area. Upscale Santana Row, for example, offers little for less than about $2,500 a month, according to Apartment Finder.
The once-popular Hilltop Mall in Richmond is a prime example of a 1970s-era shopping center that has seen better days. It went into foreclosure around 2013, and then JCPenney, one of the mall’s major anchor stores, shuttered last year. With an occupancy rate of just 75 percent, Hilltop was on the brink of death when it went on the auction block in 2016.
Developers LBG Real Estate Companies and Aviva Investors bought the mall last summer and got busy on a turnaround. They have rezoned the property to allow for up to nearly 10,000 units of housing, which they plan to build in the form of condos and rental apartments on what is now Hilltop’s asphalt ocean of about 6,000 largely unused parking spaces.
The development, which will be renamed Hilltop by the Bay, also will include new retail tenants such as restaurants, a movie theater and a grocery store.
“We’re envisioning really a major, truly mixed-use, walkable community here,” said Doug Beiswenger, managing partner of LBG Real Estate Companies.
In Richmond, where many tenants spend more than the recommended 30 percent of their income on rent and there hasn’t been substantial new housing built in about 15 years, construction of a new residential community is cause to celebrate, said Mayor Tom Butt.
“We need housing, and we need a lot of it,” he said. “We need it as quickly as possible. And anything like this that is planned or in the pipeline is a good sign.”
In Cupertino, developers are attempting to give mostly vacant mall Vallco a similar makeover. In 2016 voters rejected Sand Hill Property Company’s first attempt to build offices and housing on the site, worried the project would flood the city with too many new workers and residents.
Now the city, with feedback from the community, is working with the developer on a new proposal, said Cupertino Mayor Darcy Paul. He’s hoping for a combination of retail and residential development, and maybe a tech startup incubator, with a floor plan that resembles that of Apple’s new spaceship campus.
“I’d love to see that kind of openness and space, that kind of true connection to our ecology,” Paul said.
Long before the region was hit with its current housing crisis, Santana Row was an early pioneer of the residential and retail mixed development, opening its row of ritzy shops in 2002, and adding homes in 2005, 2011 and 2014.
The development, which replaced an old strip mall, includes 615 rental apartments and 219 privately owned condos. The apartments are 96 percent occupied, said Jan Sweetnam, chief operating officer for the western region of Federal Realty, Santana Row’s developer.
And the community, Sweetnam and his colleagues avoid the four-letter-word “mall”, is home to young tech employees, empty-nesters and out-of-town executives who use the space when they travel to Silicon Valley for business, he said.
John French, who has rented an apartment on Santana Row for nearly five years, loves living there. He rents a two-bedroom apartment above trendy Chinese restaurant and bar Sino, paying $3,272 a month.
For nightlife or shopping, French walks downstairs. He always knows when the shops are having sales, and his “resident card” gives him 10-15 percent off in most places. For groceries, he walks to Safeway, pulling a wagon to carry his purchases.
“Sometimes my fiance and I go downstairs, grab a Pinkberry … grab our laptops and just watch the people,” said the 56-year-old, who manages a Jaguar Land Rover dealership. “It’s pretty cool.”