LaguanHills.com – The tired Laguna Hills Mall will get a few hundred new neighbors in a sweeping renovation that will turn the aging retail center inside-out and add 350 new apartments to the site.
Merlone Geier, the mall’s owner, has submitted to the city its initial plans for the site renovation. If the plans are approved, the remodel will begin next year and the new mall, renamed Five Lagunas, will reopen in 2017.
The mall will nearly double in size, according to the plans, mostly due to the addition of luxury apartments and a six-level parking structure.
“The addition of residential use provides vibrancy and a true walkable village,” said Scott McPherson, executive managing director of Merlone Geier, in an email.
The renovation can’t come soon enough. Last year, the mall reported a 32 percent vacancy rate in its fourth quarter, according to CoStar, a commerical real estate data provider. The mall also got a B- grade in Green Street Advisors’ 2015 U.S. Mall Outlook, putting it at the lower end of Orange County malls, half of which scored A’s.
The renovation will steer the mall toward a lifestyle center, a concept seen in other Orange County retail centers. The Irvine Spectrum, Bella Terra and The Outlets at Orange are all examples of developers tapping a wide range of options – including residential units, dining, retail and entertainment – to lure more customers.
The plan for Laguna Hills Mall would gut 40 percent of the center – a stretch of space between the former Sears building and JCPenney. The retail space will grow only slightly by 8,831 square feet – to 878,183 square feet from 869,352 square feet – due to the aforementioned razing, records show. A six-story parking structure will be added on the southwest side, along Calle De La Louisa.
The renderings show a trendy makeover for the mall built in 1973. Details include:
• Opening up the indoor mall to the outdoors, with the addition of a one-acre “Sycramore Park” near JCPenney. The park will include a river-like water feature and a boardwalk effect between retailers near Macy’s. Living plant walls will be added to exterior walls.
• Wood, metal and glass give an updated look to the exteriors – including a luxury movie theater, which will overlook Sycamore Park.
• Retailers and dining establishments will have varying designs and architecture – lending itself to a downtown feeling rather than a uniformly designed mall.
• Merlone Geier is also considering a market/food hall, similar to the Anaheim Packing House.
To get people back to the center, Merlone Geier will have to secure unique tenants – especially since it’s sandwiched between two powerhouses, the Irvine Spectrum and the Shops at Mission Viejo, said Greg Stoffel, a retail analyst in Irvine.
“There’s some formidable competition,” he said. “You can’t duplicate too much between those centers, or you end up at the end of the day being smaller and not as good. They need to get a variety of tenants who aren’t in either of those centers.”
The owners said they’ll get as many as 40 new tenants but are keeping some familiar names, such as anchors Nordstrom Rack, Macy’s and JCPenney. Many of the outlying dining and retail spots, such as BJ’s Restaurant, will stay as well.
Judging by the site plans, there are plenty of spots for new tenants with the addition of seven unattached buildings in the surrounding parking lot and nine on the mall property, the latter of which includes four new anchors.
The size of the new anchor spots ranges from about 30,000 square feet up to 80,000 square feet. Stoffel suggested that medium box retailers – such as T.J. Maxx – could snatch up the spaces in the 30,000- to 50,000-square-foot range.
The center will need to have a regional draw, since Laguna Hills Mall demographics aren’t quite the same as its neighbors, Stoffel said.
The neighborhood’s average household income within three miles is $96,200. At the nearby Shops at Mission Viejo, the income average jumps to $128,000, and Irvine Spectrum is at $106,000, Stoffel said.
The average age within 3 miles of the center is 43 – the second highest behind Westfield Palm Desert out of 75 major centers Stoffel follows between San Diego and Ventura.
Merlone Geier agrees tenant mix is key.
“Our goal is to create a village with a mix of tenants that can only be found at Five Lagunas,” McPherson said.