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  Hilltop Mall Finally Sells!
July 25, 2017

East Bay Business News

Developers grab Richmond's struggling Hilltop Mall with potential for up to 9,600 new homes

Developers grab Richmond's struggling Hilltop Mall with potential for up to 9,600 new homes

Jul 25, 2017, 12:15pm PDT

LBG Real Estate Cos. and Aviva Investors snapped up Richmond’s Hilltop Mall, an aging 1.1 million-square-foot shopping center.

The new buyers are swooping at a time when malls across the country are losing tenants and shoppers. The 77-acre Hilltop Mall presents an enticing opportunity, the buyers said, as the property is zoned for up to 9,600 homes as well as office and a hotel.

Hilltop Mall in Richmond "has been starved for attention," said Leslie Lundin, managing… more

Todd Johnson | San Francisco Business Times

“It’s an amazing piece of raw clay that we can make into something spectacular,” Leslie Lundin, managing partner for Los Angeles-based LBG, told the Business Times. “That’s kind of a developer’s dream.”

The seller in the deal is a lender that took the property over through a foreclosure. Lundin declined to name the purchase price other than to say it was less than $50 million for about half of the center's retail space and most of the surface parking. Some of the anchor stores own their spaces.

In the short term, the new owners plan to give the mall a makeover with fresh décor and signage to draw in new tenants and more shoppers.

In the long term, the developers want to revamp the property into a project with mix of uses such as retail, housing, office and hotel.

The shopping center is in dire need of a renovation, John Cumbelich, CEO of Cumbelich & Associates, told the Business Times last month.

“Someone needs to take a match to Hilltop and start over,” he said. “No leasing is happening there because the traditional, typical department-store model is dead.”

For the past six years, Hilltop has been either in foreclosure or owned by a lender, Lundin said. Anchors Macy’s, Walmart, Sears and 24-Hour Fitness continue operating, although JCPenneys is in the process of closing. The mall was about 86 percent occupied when it went on the market last year.

The sale is “hopefully the beginning of a great upturn for the mall and the end of a long spiral down,” Lundin said. “We are looking at potential new anchors that would turn it into more of an entertainment-based mall.”

Today’s shoppers are looking for more than shopping when they go to a mall, JLL’s Michael Piazzola, responsible for leasing at Hilltop, told the Business Times last month.

“The Northern California shopping experience, notwithstanding online, is now dominated by thriving downtowns,” he said.
The mall has suffered from not having a dedicated owner for several years, Lundin said, but its foot traffic and vacancy are not “that bad.”

“Unlike the rest of the country, the Bay Area is not over-retailed,” Lundin said.

Hilltop, originally built in 1976, offers expansive bay views in Richmond, an East Bay city 20 miles from San Francisco known for high crime rates and very little new development.

“The Hilltop District has the potential to become the premier East Bay residential mixed-use walkable community of the future,” said Doug Beiswenger, managing partner in charge of entitlements and construction for LBG.

The developers may be in for a battle, as other developers have faced stiff opposition to revamping obsolete malls in the Bay Area.

“The City of Richmond has been extremely supportive,” Lundin said. “They have been begging for the mall to be redeveloped.”

Blanca Torres covers real estate and economic development for the San Francisco Business Times.