Buena Park’s largest mall is poised to receive a mixed-use facelift, via a nearly $650 million project that could add 1,302 homes in the largest housing project the city has seen in decades.
San Francisco-based Merlone Geier Partners, among the more active retail investors in Orange County, will head to the city council this week with plans to redevelop a portion of Buena Park Downtown, a 1.1 million-square-foot regional mall a block from Knott’s Berry Farm.
If passed, the project will see the demolition of the 65-year-old Sears property that shuttered in early 2020—right before the pandemic that further devastated the traditional retail industry—and the construction of a mix of market rate rental units and for-sale townhomes.
Dubbed Village at Buena Park, the proposal is the latest retail redevelopment underway for Orange County which has seen most of its major malls serve as the source for mixed-use renovations over the past five years.
Merlone Geier, which counts local offices in Lake Forest, is also behind the overhaul of the former Laguna Hills Mall, which is further along in the planning process with new approvals to develop retail, a hotel, 1,500 apartments and possibly offices under the Village at Laguna Hills name (see story, this page).
It bought the Laguna Hills site a decade ago; demolition work is now well underway at the site just off the San Diego (5) Freeway.
Housing Focus
Housing is the lone property type on the books currently for Buena Park’s mall.
The shopping center, which is located on about 75 acres along La Palma Avenue, has two other owners, neither of which have major upgrade plans in the works.
“There are good options in the mall as is, and we expect the addition of new homes to only add to that demand,” Merlone Geier Managing Director Jamas Gwilliam told the Business Journal, adding the development is expected to add 2,800 residents to the site.
The shopping center is No. 17 on the Business Journal’s list of Orange County’s largest shopping centers with $139.5 million in taxable sales for the year ending June 2022, up 19% from the year prior.
By leasable square feet, the center is No. 9 in Orange County and has 67 stores.
New Homes
Merlone Geier acquired its portion of the mall in a series of transactions starting in 2019 and culminating in its 2021 purchase of the 25-acre Sears property.
“We initially engaged the city and community in 2021,” Gwilliam said. “Our plans comply with the city’s general plan passed in 2010 which allows for 90 dwelling units per acre to increase the city’s housing inventory.
Our parcel was one of the main areas the city had identified as a potential housing site.”
Another catalyst for the project is Buena Park’s Regional Housing Needs Allocation (RHNA), which mandates the city build north of 8,000 units between 2021 and 2029.
“Our project would be the largest contribution to that requirement,” Gwilliam said.
In the past decade, Buena Park has seen the delivery of just four apartment projects with more than 100 units, according to data from real estate market tracker CoStar Group Inc.
The city didn’t have any such projects under construction as of this month.
Buena Park is Orange County’s 13th largest city with a population nearing 83,500.
Housing Plans
Village at Buena Park, if passed by the city council on June 27, will include 1,176 apartment units and 126 three-story townhomes.
The apartments will include market-rate rents with 15% designated as affordable housing.
Merlone Geier is expected to sell the for-sale portion to a townhome developer, and it will consider either developing the multifamily units in-house, as it has done with prior projects in the state, or partnering with an apartment developer.
The apartments will be spread across four wrap buildings between five and seven stories and will be developed over several phases over the next few years, with construction likely to start next year.
Also planned for the project is a 1-acre public park, 3.5 acres of open space with walking paths and a large surface parking lot to be shared with the mall.
Rightsizing Retail
The largest portion of the mall, spanning roughly 35 acres, is owned by Los Angeles investor Newkoa LLC, while a 15-acre Walmart parcel is owned by an affiliate of Elliot Megdal & Associates.
Sears and Walmart are the largest retail spaces, while other tenants at the mall include a movie theater, T.J. Maxx and 24 Hour Fitness.
Developers like Merlone Geier have tapped housing and hospitality uses to breathe new life into outdated shopping centers, many of which have struggled to gain foot traffic amidst changing consumer trends.
“Orange County has a lack of new housing construction, while retail centers are attempting to rightsize” by shrinking their store footprint and adding new uses, Gwilliam said.
That’s being seen at a variety of shopping center locations across OC.
Construction is underway at Santa Ana’s MainPlace Mall, which will see 309 rental units delivered later this year as the first phase of redevelopment for the shopping center.
Los Angeles commercial real estate developer Lowe is heading the housing project and will break ground soon on the second apartment project planned for MainPlace totaling 410 units.
In May, Irvine Co. received the green light to move ahead with plans to replace several big-box spaces on the Irvine side of The Market Place shopping center with 1,261 apartments.
Westminster, Shopoff Realty Investments is moving ahead on plans to turn a large portion of the city’s 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.
“Our experience is that when these types of projects come in, it causes a shift in leasing activity at the mall in a positive way,” Gwilliam said.
“The retailers are very excited and supportive of what we’re doing.”
Plans Shape Up for Ex-Laguna Hills Mall
Just as some brokers and other market watchers have pointed to Orange County as being over-retailed when considering traditional shopping centers, many are now questioning the future viability of office, with the pandemic and financing concerns prompting new construction for the product type to stall.
That may play a factor in Merlone Geier Partners’ plans in Laguna Hills, where it has demolished the city’s 870,000-square-foot mall and plans to build a new mixed-use entertainment complex in the coming years.
Village at Laguna Hills is approved to include up to 250,000 square feet of retail, up to 465,000 square feet of office space in four buildings, a hotel with as many as 150 rooms, and about 1,500 apartments in five different complexes, including 200 units of affordable housing.
The developer may rethink the office portion or move it to a later phase and wait out the current uncertainty, Managing Director Jamas Gwilliam told the Business Journal.
The project is in the mapping phase with horizontal plans still being finalized.
“It’s one of the best development sites in Southern California, and we continue to be bullish on the project,” Gwilliam said.
Outside of its mall redevelopment projects in Buena Park and Laguna Hills, Merlone Geier owns 500,000 square feet of retail in Orange County across seven projects, including Fullerton Crossings and a Sprouts-anchored shopping center in Lake Forest.
“We are in various value-add stages for our Orange County projects, with some in leasing mode,” Gwilliam said.
Companywide, it has been in selling mode in recent years, disposing of nearly 80 properties since 2019.
