The former Macy’s building in the Paseo Nuevo mall in downtown Santa Barbara could become home to a tech tenant.
The former Macy’s building in the Paseo Nuevo mall in downtown Santa Barbara could become home to a tech tenant. (Joshua Molina / Noozhawk photo)

A year after announcing on social media its intended arrival in Santa Barbara, it turns out that Aloha Fun Center will not open inside the former Macy’s building in the downtown Paseo Nuevo mall after all.

A series of problems proved more than the San Jose-based company could overcome, and it let its lease expire on the building at State and Ortega streets, Noozhawk has learned.

Meanwhile, the owners of the mall are looking at leasing the space to office tenants, and sources told Noozhawk that Sonos is in talks to take over the third floor.

Jason Harris, the city’s economic development manager, said Aloha Fun Center was under the impression that it could open “as-is” after it entered a lease agreement with the former owners of the mall, Paseo Nuevo Owners LLC.

Aloha Fun Center had proposed a roller rink and laser tag inside the former department store.

Harris said those changes required compliance with the state’s building code, and among the most significant challenges was the need to add bathrooms. He said Aloha Fun Center had proposed portable bathrooms to meet the requirement, but that didn’t fly.

“The code doesn’t allow for that,” Harris said. “They had been misinformed by Paseo Nuevo owners.”

Since the initial lease was signed a year ago, the building’s owners handed back leases to its lenders in lieu of foreclosure, according to Santa Barbara County public records. The company had fallen significantly behind on loan payments.

Harris said the previous use was a department store, but that offering roller skating and laser tag would “put a lot more people inside,” which required different structural permits.

“They were misinformed that they could use the space as-is,” Harris said.

Aloha Fun Center seemed eager to open over the course of the past year, making social media announcements and holding a job hiring fair. It even decorated portions of the inside and placed signs that could be seen through the windows.

Now, the place is empty.

“We were equally frustrated because we wanted that use for downtown,” Harris said.

Aloha Fun Center officials have not returned calls for comment.

The former Macy’s building is being marketed by Hayes Commercial Group.

“Amazon, PayPal, Sonos and 65 other tech companies have offices in downtown Santa Barbara, where the coastal city lifestyle will help any tenant attract top-tier talent,” the Hayes listing states. “Unique to the Santa Barbara metro market, the Ortega Building offers floor plates of 42,500 to 45,000 square feet in an urban setting packed with amenities, yet blocks from the beach. The three-story structure is undergoing complete renovation for delivery in 2022.”

A representative from Hayes told Noozhawk that the company could not comment “regarding any lease negotiations.”

“I have heard that name being thrown around,” Harris said of Sonos, which sells wireless speakers and home sound systems. “When you think of large, downtown employers, Sonos is that. They are a big target, in a favorable sense. As far as I understand, it is just conceptual.”

Sonos, which has its headquarters in Santa Barbara and has employees at multiple sites, did not respond to Noozhawk’s inquiries on Wednesday.

The future of the Macy’s building, which has been recast as the “Ortega Building,” has been in question ever since the department store left five years ago. On the other side of the mall, Nordstrom, which is owned by a separate company, has demolished its interior and is looking for office tenants.

Paseo Nuevo, built in 1990, is downtown’s most iconic property and was responsible for the revitalization of the area from surf and T-shirt shops and liquor stores on State Street.

But with the rise of online retail, the mall’s purpose and future have been clouded in controversy.

There’s both a philosophical and economical debate over whether the mall, at 739 State St., should continue in its current form as an open-air shopping center with occasional outdoor entertainment activities, or whether the city should require the mall’s owners to take bold and dramatic steps to reinvent the area to create a contemporary mashup of housing, experiential activities, small retail, art and vendors.

Noozhawk staff writer Joshua Molina can be reached at Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.