Laguna Hills Mall redo - now 99% retail free
Posted: March 12th, 2022, 4:27 pm
The mixed use retail-residential redevelopment of the Laguna Hills Mall was going to contain 900K Sq ft of new retail and keep the existing restaurants and Nordstrom Rack.
Per the Orange County Register - this has been revised to only a new build for Nordstrom Rack - all other buildings will be removed except 3 restaurants. It will otherwise be a small luxury movie theater and everything else residential.
So basically going from 900K Sq ft of retailers to less than 50K counting the theater as if it is a retail business.
Once again we have reached the tipping point in California where all retail space is worth at least double if torn down regardless of how successful it is.
Again it is now highly profitable for the owners to pay the multi million dollar lease severance fees. Government doesn't care because the sales tax losses for now will be more than offset by property taxes. (Until the eventual bubble burst then they're going to be screwed for decades as owners are allowed to demand reduced assessments if values decline, but it can only appreciate a small percentage annually.) So it is a slam dunk for the owners because they claim mixed use and pay the old property tax rate AND double the value by removing stores and replacing with luxury high end residential that hardly anyone can afford that just drives up rents in all the surrounding areas.
Yes, this particular mall was a failure for many reasons but everything else nearby is 100% leased and occupied and there is room for growth in the area. Now there will be zero additional retail growth in the area as everything is 100% built out.
Per the Orange County Register - this has been revised to only a new build for Nordstrom Rack - all other buildings will be removed except 3 restaurants. It will otherwise be a small luxury movie theater and everything else residential.
So basically going from 900K Sq ft of retailers to less than 50K counting the theater as if it is a retail business.
Once again we have reached the tipping point in California where all retail space is worth at least double if torn down regardless of how successful it is.
Again it is now highly profitable for the owners to pay the multi million dollar lease severance fees. Government doesn't care because the sales tax losses for now will be more than offset by property taxes. (Until the eventual bubble burst then they're going to be screwed for decades as owners are allowed to demand reduced assessments if values decline, but it can only appreciate a small percentage annually.) So it is a slam dunk for the owners because they claim mixed use and pay the old property tax rate AND double the value by removing stores and replacing with luxury high end residential that hardly anyone can afford that just drives up rents in all the surrounding areas.
Yes, this particular mall was a failure for many reasons but everything else nearby is 100% leased and occupied and there is room for growth in the area. Now there will be zero additional retail growth in the area as everything is 100% built out.