Merlone Geier Partners hasn’t abandoned South Orange County’s retail scene. In fact, it’s expanding its area presence around the Five Lagunas mall, its best-known property there.
In August, the company acquired Hunter Court, a 127,360-square-foot community shopping center in Lake Forest anchored by a CVS Pharmacy and a Ross Dress for Less.
Terms of the deal were undisclosed. Based on current retail pricing, the Rockfield Boulevard site about a mile from Five Lagunas in Laguna Hills likely sold for more than $30 million.
Hanley Investment Group brokers who worked on the deal at the time of the sale said that the buyer would likely keep Hunter Court largely as-is.
That’s not the case at Five Lagunas, which has been slated for a major revamp for over five years. But getting a read on the San Francisco-based retail investor and developer’s plans for the 68-acre site next to the San Diego (5) Freeway and El Toro Road remains a guessing game.
Even the city is in the dark, according to Assistant City Manager Donald White, who said he plans to meet with the company this week, though he guesses new plans won’t be filed with the city until next year.
It’s been a little more than a year since Merlone Geier indicated it was re-evaluating its long-stated plans to kick off a mixed-use redevelopment project at the shopping center, which it bought in 2013 for a reported $110 million when the property was about 850,000 square feet.
A decade ago, when the center was owned by Indianapolis-based Simon Property Group Inc. (NYSE: SPG), the mall ranked 16th among Orange County shopping centers with an estimated $150 million in annual sales, according to Business Journal data.
A year after the 2013 sale, Merlone Geier reported $142.4 million in annual sales, down 8.7% year-over-year but still good enough to rank it 17th among OC retail centers.
The since-rebranded center no longer ranks among the top 37 shopping centers on the Business Journal’s annual listing, which starts on page 21 and includes malls with at least $40 million in annual sales for the year ended June 30.
Most of the center’s interior retailers—the mall once had over 100 stores and one of the area’s biggest concentrations of jewelry stores—have closed over the past few years, leaving behind a handful of restaurants and mom and pop stores.
The center’s three main anchors were Sears, J.C. Penney and Macy’s. The Macy’s store closed this year, and J.C. Penney was advertising store-closing sales last month. The Sears store closed a few years ago and was demolished to make way for new development, though nothing has been built.
The mall isn’t alone among notable area centers losing their largest anchors.
The Sears at Costa Mesa’s South Coast Plaza—No. 1 on this week’s list with $1.8 billion in sales—is in the middle of a going-out-of-business sale at the glitzy mall and scheduled to close around January.
Irvine Co. recently opened a new section of stores at its Irvine Spectrum Center—fifth-ranked with $396.4 million in sales—formerly occupied by a Macy’s that closed in 2016 and was demolished. The redevelopment cost was estimated at about $200 million.
Last week, Irvine Co.’s Market Place center—third-ranked with $599.7 million in sales—was hit by news of the planned closing of its Lowe’s store, one of two regional locations that will shutter early next year. Along with a Home Depot and a Target, it’s among the largest stores at the shopping center, which straddles the Tustin-Irvine city line.
Neither Irvine Co. nor South Coast Plaza has disclosed plans for their soon-to-close anchors.
Merlone Geier had a plan.
Through mid-2017, the owner said its intent was to turn the indoor mall into a downtown-like environment featuring new retailers, a movie theater complex, a new parking structure and a 350-unit apartment complex.
Renderings of the proposed redevelopment were still posted on the walls inside the center as of last month.
In September 2017, company executives said they were “shifting around portions of the site plan” to “take advantage of a new opportunity” but didn’t disclose specifics.
The developer initially scheduled project completion in late 2019, but Merlone Geier announced this past July that it was taking a step back and reconsidering the project. Its stated reason was the closure of the Macy’s store, which it inferred caught it by surprise and “rendered the original site plans obsolete.”
Merlone Geier Executive Managing Director Scott McPherson said in July the vacating department stores give the developer an opportunity to offer the community more dynamic offerings.
“We are embracing thoughtful planning to forecast what consumers will want and need from the project, taking into consideration the rapidly changing face of retail,” he said in a statement.
New plans haven’t been disclosed since the July announcement. Company wasn’t available to a request for comment on when new plans would be announced but suggested the announcement could come soon.