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$500M Mall Bet

Shopoff Realty Investments is moving ahead on plans to turn a large portion of Westminster Mall into a mixed-use hub with more than 1,200 apartments and homes, as well as other commercial uses planned as part of a $500 million project, one of the Irvine-based real estate investor and developer’s largest in Orange County to date.

In the summer of 2022, Shopoff paid roughly $95 million for a 26-acre parcel of the mall, bookended by Macy’s and the old Sears stores.

Last month, the company revealed its proposal for the site, dubbed Bolsa Pacific.

The project near the intersection of the San Diego (405) Freeway and Bolsa Avenue, will include three multifamily buildings totaling 1,065 rental units with 102 additional for-sale townhomes; a 175-room hotel; 25,000 square feet of new retail uses including a food hall; and 2.5 acres of green space including an amphitheater, dog park, pickleball courts and food kiosks.

It promises to be the largest residential project in years for OC’s 10th-largest city, with a population of 90,195 as of 2021.

“The city of Westminster has taken the initiative to implement new zoning that allows for a development framework,” Shopoff Executive Vice President of Real Estate Brian Rupp told the Business Journal.

“It’s irreplaceable real estate, and we are excited to have this opportunity in our backyard.”
Combined with plans underway for the remaining 64 acres of the mall by other property owners, the overhaul of the nearly 50-year-old shopping center could run a project cost topping $2 billion, sources indicate.

Shopoff, whose other local projects include the Uptown Newport housing development along Jamboree Road in Newport Beach and the Magnolia Tank Farm project near the ocean in Huntington Beach, expects to begin construction on its portion of the Westminster Mall redevelopment in 2025.

Partnerships

The Westminster Mall opened in 1974 and at its peak counted 1.2 million square feet of retail on 90 acres. It is OC’s 14th-largest mall based on revenue, with $167.4 million in sales in the year ended June 2022.

A decade earlier, it brought in closer to $270 million and was OC’s eighth-largest mall by sales, according to Business Journal data.

The mall’s Target store will be the only one to remain in operation as part of the developer’s plans.

“Target is one of the uses that will thrive as part of the redevelopment, and will help generate interest in the nearly 1,200 new homes we have planned,” Rupp said.

Shopoff expects to bring on real estate partners for part of its redevelopment, or it may sell entitled components to specialty builders, such as residential or retail developers.

It has already entered into negotiations with a national hotel developer and operator to build and manage the 175-key hotel planned along Bolsa Avenue.

“The townhomes and at least one of the apartment buildings, as well as the hotel, are likely to deliver in the first phase of construction,” Rupp said. “Pending the market conditions for residential real estate, we may sell that portion to a homebuilder or develop it ourselves.”

It will be a similar call for the retail portion, though Shopoff will likely tap a food hall operator.

“The existing mall is underutilized and underperforming, so we are looking to create meaningful retail uses with specialty retail tenants and dining opportunities,” Rupp said.

Public, Private Effort

Orange-based architecture firm AO and landscape architect MJS in Newport Beach are heading design, with plans to create “contemporary buildings that reflect the city’s diverse culture and heritage while blending with the existing retail to seamlessly transition from old to new,” Shopoff said in a statement.

“Together with the city of Westminster, we are envisioning a vibrant center where housing, hospitality, retail and nature come together,” Bill Shopoff, president and CEO of Shopoff Realty Investments, said.

Shopoff’s proposals, currently in the preliminary phase, support the city’s specific plan submitted at the end of 2022, which provided an overview of its goals for the mall’s redevelopment.

“We are over-retailed in Orange County, and we need more housing,” Rupp said. “Cities are becoming more creative and willing to source malls as a means to address that need while creating new community hubs.”

Shopoff expects to get full entitlements by the end of 2024.

Nixed Plans

The remainder of the mall is owned by Washington Prime Group (WPG), which filed for bankruptcy in 2021. It is in talks to be planning its own redevelopment of the mall, while sources indicate the owner may be scouting additional development partners to oversee the addition of new uses.

“They have plans that are in alignment with ours,” Rupp said.

In 2020, WPG entered into a contract to sell a 43-acre portion of the mall to homebuilder Taylor Morrison Corp., with initial plans to build nearly 1,000 for-sale homes.
That deal never closed, sources tell the Business Journal.

Also in 2020, Kaiser Permanente spent $40 million for a 10-acre parcel of the mall, with plans to build a new medical office facility. A timeline for that project has yet to be disclosed.

Shopoff’s deal included a $46.3 million acquisition last July for a 14.1-acre parcel including the former Sears store, and a $49 million purchase in August for an 11.9-acre parcel including the Macy’s store, which entered into a leaseback deal with Shopoff as part of the transaction.

Both were among the largest local retail property sales in OC last year.

Nordstrom Plans

Westminster Mall is the latest shopping center redevelopment to move ahead in the county, joining others underway like the former Laguna Hills Mall, Brea Mall and Santa Ana’s MainPlace Mall.

It’s also the latest retail conversion project underway for Shopoff, which has acquired two separate Nordstrom stores elsewhere in California with multifamily redevelopment plans in the works.

It made its first Nordstrom acquisition in 2021 in Santa Barbara with the purchase of the three-story, 175,000-square-foot property at the Paseo Nuevo mixed-use shopping center.

It made a similar acquisition in March, when Shopoff acquired the former Nordstrom building at the Stoneridge Mall in Pleasanton, with plans to redevelop the site into multifamily units.

“You will continue to see malls redeveloped with new multifamily uses, which is often the highest and best use,” Rupp said.

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