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Tuesday, November 20 , 2018, 10:18 pm | Fair 50º

Reimagine: Santa Barbara
A Noozhawk Partnership with Shared Mission Santa Barbara, KYET News Channel 3, Montecito Bank and Trust, SIMA, and Community West Bank

Vacant Macy’s Building a Cornerstone Opportunity to Reimagine Downtown Santa Barbara

In considering empty hulk at edge of Paseo Nuevo, professional consensus appears to form around a mixed-use future of retail, office, housing and hospitality

Macy’s Click to view larger
The Macy’s department store, closed since 2017, occupies the corner of State and West Ortega streets in downtown Santa Barbara. It has become one of the lasting images of the challenges facing those who wish to revitalize the downtown core. (Joshua Molina / Noozhawk photo)

At one time, Macy’s thrived in downtown Santa Barbara. It was one of Paseo Nuevo’s anchors, a heartbeat of State Street shopping.

Standing at the corner of State and West Ortega streets, the three-story building didn’t look like a traditional big box department store; it was an architectural gem. But when Macy’s announced that it was closing its doors in early 2017, the decision hollowed out a key shopping pillar of downtown.

What would become of the structure?

More than a year later, just about everyone is still wondering.

The new managers aren’t saying much.

“We are actively working through a number of renovation scenarios that we look forward to sharing with the city and community in the coming months,” said Steven Plenge, managing principal of Pacific Retail Capital Partners in El Segundo.

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In many ways, the Macy’s building symbolizes the health of Santa Barbara’s downtown. It’s large, high profile and well-known in the community.

If city and civic leaders can save the space, perhaps there’s hope for the other two dozen vacancies on State Street, as Santa Barbara looks to rise beyond the retail doldrums and transform itself into a renewed, vibrant downtown marketplace.

Community members have racked their brains wondering what would or should become of the space at 651 Paseo Nuevo. Everything from a Target store to millennial housing to a new police station has been thrown around.

A Target won’t work because of a lack of shopping cart escalators to move the carts between floors. Shopping that offers an experience seems to be the trend of the day.

Ken Oplinger, president and CEO of the Chamber of the Santa Barbara Region, said he is looking forward to the new owner’s plans, but has some ideas and expectations of his own.

“My guess is that we will look at reuse or a new structure that will provide a mixed use of retail/consumer businesses on the ground floor and residential above,” he told Noozhawk.

“The trend toward experiential retail continues around the world and I would expect something of that type in this space, but would not be surprised to also see a full-service restaurant or brew pub, health club, or other larger use in a portion of the space.”

Adam Geeb, director of asset management at Sima Corp., noted that, unlike the rest of the downtown vacancies, Macy’s is in a unique situation.

“There are large retail and quasi-retail users out there,” he said. “Successful brick-and-mortar stores can survive in the online shopping world when they can provide the shopper a unique experience, value or product not easily attained online.

“Gone are the days where you can hang a sign in the window and fill a vacancy.”

But when it comes to Macy’s, the way the national retailer operated its stores in the past needs to change.

“Macy’s is different than the other large spaces downtown due to its multiple stories and unique infrastructure,” Geeb explained. “I can’t imagine a single use for the entire thing, but separating out the multiple levels/sections into a variety of uses would seem to be a feasible direction.”

One of the challenges of reusing the Macy’s building is that it was built specifically for Macy’s. The mall was built in 1989. At the time, it was Santa Barbara’s attempt to clean up State Street, and move away from a proliferation of surf and T-shirt shops, liquor stores and other lower-tier retail businesses.

“I do not see any easy solutions as these buildings were specific purpose-built,” said Michael Martz, a partner at Hayes Commercial Group.

As an example, he said the multilevel building with very few windows will require extensive — and costly — modifications to convert to other uses.

Notwithstanding the conversion expense, Martz said the best use of the building — and other large, vacant downtown buildings — is to convert them to mixed-use properties with retail and office space, housing and hospitality.

“One of the keys to revitalizing downtown Santa Barbara is to bring more people downtown,” Martz said.

He said one of the challenges to State Street’s retail struggles is that housing, in many cases, is too far from the downtown core.

“If we can create more office space, more housing and more hospitality opportunities within the upper levels of the downtown buildings, then we will have a built-in density of workers, residents and visitors who can simply walk out their front door,” Martz suggested.

He said the success of Macy’s and other large downtown vacancies is tied to the city’s parking and zoning standards. He recommended that the city look forward, not backward, when it comes to how people arrive downtown.

Community leaders must be visionary to help solve the Macy’s and other downtown problems, he added.

“I feel that the future of self-driving cars, ride sharing, electric bicycles and scooters will dramatically change the ways our society gets from Point A to Point B,” Martz said.

“Our current habit of everyone driving their own car and then needing to park it while they sit in their office, a restaurant, or while they shop, will rapidly change during the next 10 to 20 years, yet our city leaders continue to base their zoning and parking requirements on the old way of doing things rather than progressively looking toward the future.”

It’s time to plan for future trends, he said.

“It often takes five to 10 years to get large-scale projects of this nature planned, approved and built,” Martz said.

He also suggested that Santa Barbara needs more hotels on State Street downtown. Most of the city’s hospitality options are found along the waterfront or on Upper State Street, which are too far to walk to downtown and, most important, too far to walk back.

“Creating more hotel projects in the retail core would be a benefit to drawing more people downtown,” Martz noted.

The Kimpton Canary Santa Barbara, 31 W. Carrillo St., is an example of a hotel near State Street that works to bring people downtown, he said. Of the dozen top-draw local attractions listed on the Canary’s homepage, the farthest walk among them is four blocks to the Arlington Theatre, which the site says should take nine minutes.

“I believe there is plenty of demand for more hospitality projects like this,” Martz said. “However, to make them economically viable, they need to be able to have enough rooms to justify the building and/or conversion costs.”

In addition, he suggested that Santa Barbara strategically relax its height standard to allow for an occasional taller building. He noted that some of Santa Barbara’s most admired buildings are well above the height limit, including the Arlington, The Granada Theatre and the Santa Barbara County Courthouse.

“I am not advocating to allow all downtown properties to become 10-story buildings,” he said. “But allowing a few properties to go up to four to five stories would make a significant difference in bringing in viable conversion projects downtown.”

Nina Johnson, senior assistant to City Administrator Paul Casey, said the City of Santa Barbara owns the Macy’s property via the since-dismantled Redevelopment Agency, with three retail ground leases for Macy’s, Nordstrom and Paseo Nuevo in place since 1990. Those leases expire in 2065, and there is no annual lease revenue to the city, she said.

Earlier this year, Pacific Retail Partners, the managing entity of Paseo Nuevo, acquired the remaining leasehold interest of the former Macy’s building. In terms of reuse of the building, the lease requires that a minimum of 40,000 square feet of the 135,000-square-foot building be operated as retail use.

As with any commercial property, the city has a role in a redesign proposal that would significantly modify the exterior of the building, Johnson pointed out.

“We are encouraging Pacific Retail Partners to propose a high-quality development for this site and prevent a large building from sitting vacant,” she said.

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Noozhawk staff writer Joshua Molina can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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