By Lou Hirsh
May 20, 2024
CoStar News
Developer Builds on Growing Trend of Residential Expansions Aimed at Repurposing Unused Space
Simon is planning to add 850 apartments to its Fashion Valley mall in San Diego, as one of the nation’s largest mall operators expands on the industry’s growing mixed-use strategy aimed at repurposing underutilized or unused space.
A Simon spokeswoman told CoStar News the Indianapolis-based mall owner plans to invest “several hundred million dollars” into what is planned to be among the biggest redevelopments in the 55-year history of Fashion Valley, San Diego’s largest regional mall at more than 1.7 million existing square feet.
A Simon statement said the company is partnering with apartment developer AMLI Residential to build upscale apartments on the mall property to create “a vibrant, diverse and exclusive residential enclave” adjacent to one of the region’s highest concentrations of luxury retailers.
The project also includes the addition of 100,000 square feet of new retail and dining, and is expected to replace the mall's JCPenney store that's slated to close at the end of 2025. Construction is expected to wrap by late 2026, according to Simon. The developer has not released renderings or a list of upcoming new tenants that will be part of the redevelopment.
Mark Silvestri, president of development at Simon, said the San Diego project is among the latest in the company’s move toward “the strategic transformation of key properties across the country,” and is one of at least seven projects nationwide where Simon is planning to add mixed-use residential elements to existing malls.
Such projects have been particularly embraced in parts of the country where new apartment construction has lagged behind demand, especially in Southern California where space is limited, and other areas where mall operators have encountered challenges filling vacated retail space.
“I think that this will be a path used by mall operators with empty anchor space as we have already seen at several malls across the region,” said Joshua Ohl, senior director of market analytics for CoStar Group in San Diego, noting the latest Simon project will "add much-needed inventory that is trolley-adjacent and centrally located.”
Drawing Shoppers, Residents
Fashion Valley has undergone several redevelopments in the past 20 years, and the latest reinvestment seeks to “add a walkable, livable lifestyle community that is intertwined with handpicked luxury brands that can only be found here," according to Silvestri.
Fashion Valley is home to the San Diego region’s only Bloomingdale’s and Neiman Marcus locations, among other high-end chains. Simon recently announced the pending addition of new luxury tenants at Fashion Valley, including Tudor, Veronica Beard and Zimmerman, all slated to open later this year.
Company leaders said Simon is looking to draw new shoppers and prospective residents from a large trade area that includes San Diego and Tijuana, Mexico.
The Simon spokeswoman said the mall developer has similar redevelopments in various planning and construction phases at properties, including Phipps Plaza in Atlanta; Northgate Station in Seattle; Brea Mall in California’s Orange County; Southdale Center in Edina, Minnesota; Briarwood Mall in Ann Arbor, Michigan; and Coral Square in Coral Springs, Florida.
Simon competitor Unibail-Rodamco-Westfield previously added apartments at its upscale Westfield UTC mall in San Diego as part of its own billion-dollar redevelopment.
Other developers with similar projects completed include Centennial; the firm added apartments to its MainPlace mall in Santa Ana in neighboring Orange County.
Such projects in California and other states have deployed unused retail space or other adjacent property formerly devoted to parking lots.
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