The old Sears store at Laguna Hills Mall will be razed to make way for the property’s transformation into Five Lagunas, an open-air center with apartments alongside retail, dining and entertainment venues.
Merlone Geier Partners in San Francisco paid $110 million in May 2013 to buy most of the 68-acre mall from Indianapolis-based Simon Property Group Inc. The real estate investor about a year later purchased the 15 acres that hold the store and an adjacent parking lot from Sears Holdings Corp., the Hoffman Estates, Ill.-based parent of the retailer, “to allow for expanded redevelopment opportunities,” according to city of Laguna Hills documents.
“They are proposing demo-ing everything south of JCPenney,” said Julie Molloy, senior planner with the city, adding that the project is still about a year away from getting final approval from the city’s planning department.
Plans for the old Sears property call for a luxury movie theater, retail shops and an apartment complex, a portion of which would be completed in the summer of 2018 during the first phase of development.
“We envision a town center village offering unique retail, entertainment and dining options,” Merlone Executive Managing Director Merlone Scott McPherson said in an email.
Perkowitz + Ruth Architects in Long Beach developed plans for Five Lagunas that show extended “walkways for strolling or exercise, outdoor dining options, ample parking and a nearly one-acre park that is central to the design,” according to Merlone.
The center would feature 878,183 square feet of retail space, with anchors Macy’s, Nordstrom Rack and JCPenney on long-term lease agreements. That’s up from the 846,885 square feet of leasable space it now has.
The redevelopment plans also call for four midsize retailer locations ranging from 30,000 square feet to 80,000 square feet.
No dibs for the spots as of yet, according to McPherson.
The redesign also aims to inject new life into retail spaces between Macy’s and the JCPenney store at the other end of the mall.
Nady Quzah, owner of the Damaceen home decor and furniture shop, is looking forward to the upgrades with some reservations. Quzah opened the store about six months ago, and business has been slow.
“We are hoping that when they finish renovation, that will help our business, but also we need to know what their lease terms will be, because that will also affect our decision (to stay),” Quzah said. “We need to see if the rate stays the same or they’ll be crazy about it.”
A multiscreen cinema with full-service dining and reserved seating would be on the second floor of the shopping center.
“We are in negotiations with a theater operator but do not have any binding agreements in place,” McPherson said.
Atul Desai, owner of Laguna Hills Mall Cinemas, has a lease on 13,166 square feet across from the Sears space until 2025.
A six-story parking structure would be on the western portion of the property and oriented to provide parking for retail, restaurants and the theater, McPherson said.
King’s Fish House, California Pizza Kitchen, BJ’s Restaurant & Brewery and Ruby’s Diner will stay, eventually joined by a food hall with “an eclectic, healthy and spirited collection of eateries and restaurants,” according to Merlone.
“Orange County residents are craving areas scaled to foster a sense of community,” McPherson said. “Our vision is that residents of Five Lagunas will be able to park their cars on a Friday and fulfill all their weekend plans right there in the mixed use village.”
The mall was built in 1973 and is in “dire need of a major redevelopment,” which is “anticipated to generate an increase in property tax and sales tax revenues to the city,” according city documents.
It also “serves as the backbone of the Laguna Hills Urban Village Specific Plan and will help guide the area toward a mixed-use downtown space that provides not only shopping, but also a pedestrian experience and public gathering space.”
“It will be great to have the mall and the area revitalized,” Molloy said. “We are very excited.”
The mall had a 74% occupancy rate in the first quarter of this year; 23 of its 89 spots were available for lease in January. Its taxable sales for the 12 months ending last June were $140 million.
Competition
The mall’s draw area overlaps with The Shops at Mission Viejo and Irvine Spectrum. It will also go up against $100 million Outlets at San Clemente, which will have more than 60 stores and restaurants and is scheduled to open in September, plus AgoraArts District—Downtown Laguna Niguel, a smaller center with a similar mixed-use concept that’s also planned.
The Agora project got a nod from the city council late last month when the governing body decided to initiate a General Plan amendment and zoning change to allow for the inclusion of 200 apartments in the project. Agora will also feature pedestrian plazas, specialty retail stores, restaurants with outdoor patio dining areas, and outdoor performance areas.
The county of Orange, the land owner, in November selected LAB Holdings and Griffin Realty to develop the former South County Courthouse next to Laguna Niguel City Hall. Lab Holdings developed and operates The Lab and The Camp, both in Costa Mesa, and the Anaheim Packing House, among others.
