Santa Ana’s MainPlace Mall, a long-standing retail landmark in Orange County, California, is undergoing a transformative $500 million redevelopment that is reshaping not only the mall itself but also the surrounding real estate landscape. This ambitious project, spearheaded by Centennial Real Estate Company in partnership with Montgomery Street Partners and USAA Real Estate, aims to convert the 63-year-old shopping center into a vibrant mixed-use destination. By integrating residential units, entertainment venues, office spaces, and modern retail, the redevelopment is poised to have a profound impact on Santa Ana’s real estate market, influencing property values, housing demand, commercial opportunities, and community dynamics. This blog post explores the multifaceted effects of this transformation on the local real estate ecosystem, drawing on recent developments and expert insights.
A Shift from Retail to Mixed-Use: Redefining MainPlace Mall
Historically, MainPlace Mall has been a retail hub, anchored by major department stores like Macy’s and JCPenney. However, the retail landscape has shifted dramatically in recent years, driven by the rise of e-commerce and changing consumer preferences. The mall faced significant challenges, including the departure of Nordstrom in 2017 and a $54 million drop in gross sales between 2016 and 2018, alongside 35 store closures during that period. These struggles reflect a broader trend affecting malls nationwide, where declining foot traffic and store closures have prompted owners to rethink traditional retail models.
To address these challenges, Centennial Real Estate launched a comprehensive redevelopment plan, approved by the Santa Ana City Council in June 2019. The project, initially budgeted at $300 million but later expanded to $500 million, seeks to transform MainPlace into a “live-work-play” destination. Key components include:
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Residential Development: The addition of up to 1,900 residential units, with the 309-unit Paloma apartment complex already completed in late 2023 on the mall’s southwest parking lot. A second apartment community is planned on the site of the former Nordstrom store.
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Commercial and Entertainment Enhancements: Plans include a 40,000-square-foot food emporium, a 58,000-square-foot concert venue with a 4,000-person capacity, and an outdoor plaza to replace the central retail space, fostering a community gathering space.
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Additional Amenities: The redevelopment envisions a boutique hotel with 175 rooms, up to 750,000 square feet of office space, and potentially a grocery store, alongside modernized parking with EV charging stations.
This shift from a retail-centric model to a mixed-use development aligns with a national trend where malls are repurposing underutilized spaces to include housing, offices, and experiential attractions to attract visitors and residents alike.
Impact on Residential Real Estate
Addressing Housing Demand
Santa Ana, like much of Orange County, faces a critical housing shortage, with apartment vacancy rates surging in recent years. The addition of 1,900 residential units at MainPlace Mall directly addresses this demand, offering a mix of efficiencies, one-, and two-bedroom apartments. The Paloma apartments, a 420,000-square-foot, five-story complex, feature modern amenities such as a rooftop deck, pool-spa area, dog run, and bike storage, catering to a diverse demographic, including professionals working in nearby retail, healthcare, and government sectors.
This influx of housing is expected to alleviate some pressure on Santa Ana’s tight housing market. By repurposing underutilized parking lots, the project maximizes land use in a city where developable land is scarce, given the high barriers to entry for new construction in Orange County. However, concerns have been raised about affordability. Community members like Kevin Olivarez have expressed skepticism, noting that the new apartments may target upper-middle-class residents, potentially pricing out lower-income households. While the project does not explicitly include affordable housing mandates, its scale could still contribute to stabilizing rental prices by increasing supply, though the extent of this impact remains uncertain.
Boosting Property Values
The transformation of MainPlace Mall into a mixed-use destination is likely to enhance property values in surrounding neighborhoods. The addition of luxury apartments, modern retail, and entertainment venues creates a more desirable urban environment, attracting higher-income residents and increasing demand for nearby properties. The mall’s proximity to major freeways (I-5, SR-55, and SR-22) and attractions like Disneyland Resort and the Anaheim Convention Center further amplifies its appeal, making the area a magnet for both residents and investors.
Real estate experts suggest that mixed-use developments like MainPlace can act as economic catalysts, driving up home prices and rental rates in adjacent areas. Scott Wild, a senior vice president at John Burns Real Estate Consulting, noted that malls with significant infrastructure, like MainPlace, are ideal candidates for such transformations, as they leverage existing parking and accessibility to create vibrant communities. This could lead to a ripple effect, where nearby single-family homes and condominiums see increased demand, particularly in neighborhoods like Park Santiago, located a short walk from the mall.
Impact on Commercial Real Estate
Revitalizing Retail and Attracting New Tenants
The redevelopment aims to reverse MainPlace’s declining retail fortunes by reducing retail space and focusing on experiential elements. The planned outdoor plaza, food emporium, and concert venue are designed to draw crowds, boosting foot traffic for remaining and new retailers. In 2024, MainPlace announced five new tenants, including FYE, Express, and local business Flowers on Wheels, indicating renewed interest from retailers in the revitalized mall.
By diversifying its offerings, MainPlace is adapting to the e-commerce challenge, as noted by Centennial CEO Steven Levin: “Retail got very boring in the United States and it lost its experience. Today, entertainment is much broader than what shopping used to be.” The addition of entertainment anchors like a multi-screen movie theater and a KidZania family entertainment center is expected to make the mall a regional destination, benefiting smaller retailers and restaurants. This shift could stabilize commercial property values within the mall and attract new investment in nearby commercial spaces.
Office Space Potential
The inclusion of up to 750,000 square feet of office space in the redevelopment plan positions MainPlace as a potential hub for creative and medical offices. This is particularly significant in Santa Ana, where the demand for professional workspaces is growing due to its proximity to major employment centers in Orange County. However, the office market faces challenges, including high vacancy rates post-pandemic and uncertainties around financing, as noted in broader commercial real estate trends. The success of this component will depend on the ability to attract tenants in a competitive market, but the mixed-use environment could provide a unique selling point, offering office workers access to residential, retail, and entertainment amenities within walking distance.
Economic and Community Impacts
Economic Driver for Santa Ana
City officials view the MainPlace redevelopment as a significant economic driver. The project is expected to generate millions in annual tax revenue, helping offset anticipated declines in Measure X, a 1.5% sales tax approved in 2018. Councilman David Penaloza emphasized the job creation potential, stating, “There’s going to be a lot of economic drive for this city once this is all said and done. It’s going to bring hundreds and hundreds of jobs to the area.”
The redevelopment also aligns with Santa Ana’s broader revitalization efforts, enhancing the city’s appeal as a destination for residents, tourists, and businesses. The addition of a concert venue, public art murals, and green spaces will create a vibrant community hub, potentially attracting visitors from beyond Orange County. This could spur further investment in nearby commercial properties, such as restaurants and service-oriented businesses, as the area becomes a more dynamic place to live and visit.
Community Concerns and Challenges
Despite the optimism, the project has faced scrutiny from some community members and labor unions. Residents like Jose Rico have expressed concerns about increased traffic and parking challenges, noting that Santa Ana’s existing traffic flow is already strained. Labor unions, such as the International Brotherhood of Electrical Workers Local 441, have opposed aspects of the project due to the lack of contracts for their members, highlighting tensions between economic development and local labor interests.
Additionally, the project’s focus on luxury apartments raises questions about inclusivity. While the redevelopment promises to create a “sense of place” for the community, as articulated by Centennial’s Kevin Connell, some residents worry it may cater primarily to higher-income groups, potentially exacerbating socioeconomic divides in Santa Ana. To address these concerns, Councilman Bacerra has advocated for community benefits, such as a new community center in Ward Four, to ensure the project serves a broad range of residents.
Challenges and Future Outlook
The MainPlace redevelopment is not without risks. Financing remains a hurdle, as evidenced by the venture’s recent negotiations to extend the maturity of a $140 million mortgage. High construction costs and economic uncertainties could delay or scale back components of the project, as noted by real estate experts studying mall redevelopments. Additionally, the success of the mixed-use model depends on sustained demand for apartments, office space, and entertainment in a post-pandemic world where remote work and online shopping continue to reshape consumer behavior.
Looking ahead, the project’s phased approach—starting with the Paloma apartments and followed by the food emporium, concert venue, and additional housing—provides flexibility to adapt to market conditions. The planned completion of the second apartment community and food district by 2028 signals a long-term commitment to transforming MainPlace into a cornerstone of Santa Ana’s urban landscape. If successful, the project could serve as a model for other aging malls in Orange County and beyond, where similar transformations are underway in cities like Brea, Westminster, and Laguna Hills.
Conclusion
The redevelopment of MainPlace Mall represents a bold vision to reimagine a struggling retail center as a dynamic mixed-use community. Its impact on Santa Ana’s real estate market is already evident, with the Paloma apartments addressing housing demand and new tenants revitalizing commercial spaces. The project promises to boost property values, create jobs, and enhance the city’s economic vitality, but it must navigate challenges related to affordability, traffic, and financing. As MainPlace evolves into a destination where people can live, work, and play, it underscores the potential of adaptive reuse to breathe new life into urban spaces, setting a precedent for the future of real estate in Orange County.
