By VICTOR A. PATTON
Central Valley Journalism Collaborative
Sept. 26, 2023
MERCED (CVJC) – Weeds sprout up from the hollow shell of steel beams, scaffolding and stripped stone walls that have replaced the Sears department store which, until it closed nearly five years ago, was a bustling anchor for the Merced Mall.
Ambitious plans to renovate the landmark property appeared in question in the aftermath of the COVID pandemic, which disrupted retail operations everywhere. But, finally, it looks like that’s about to change.
Sage Investco, the Newport Beach-based owner of the old Sears property, has a business permit application pending with the City of Merced. It would transform the building near R Street and Olive Avenue into a number of smaller spaces to accommodate a variety of retailers.
Ralph Deppisch, Sage Investco’s director of development, told CVJC the company’s in the process of lease negotiations with potential clients – some of whom include Ulta, Five Below, Petco, Burlington and Mattress Firm.
“These national retail tenants will provide value and additional services that the community deserves and wants,” Deppisch said.
The application will next go through a plan check review with the city. If all goes as planned, Deppisch expects construction on the renovation project could start in early November, with work continuing for nine to 10 months.
The estimated cost of the 91,174 square foot construction project is $4.5 million, according to the building permit application.
Merced’s Sears store closed after the company announced Chapter 11 bankruptcy in 2018. Sage Investco announced in April that it had bought the property, formerly owned by Seritage Growth of New York. While talk of renovating the building has been ongoing since 2019, the building permit application filed on Aug. 9 signals the project is finally moving forward.
The old Sears building at the old Merced Mall is shown. Plans are underway to develop the building into several spaces expected to house new businesses. Credit: Victor A. Patton|CVCJ
What’s happening with the rest of the mall?
What will become of the rest of the Merced Mall is still unclear.
While Sage Investco owns the former Sears site on the west end of the mall, the majority of the property is owned by a different company: Codding Enterprises of Santa Rosa.
Earlier this year, Codding put its part of the mall up for sale with an asking price of $32.2 million, according to The Registry, a Bay Area real estate publication.
Kaylee Stock, a spokesperson for Matthews Real Estate Investment Services, the company involved in the sale, told CVJC a buyer for Codding Enterprises’ property has been selected. Stock did not reveal the name of the potential buyer and it does not appear a sale has been finalized.
CVJC made multiple calls to Lois Codding, vice president of leasing for Codding Enterprises, to get clarification on where the mall’s renovation plans stand. Those calls were not returned.
Despite the COVID slowdown, plans for the mall renovation project seemed to be going full steam ahead in June 2021 when mall representatives said a lease had been executed to build a Cinemark Theater. In theory, that theater would fill the gap left after Regal UA Theater just east of the mall shut down in December 2021.
In January 2022, the mall had posted on Facebook the first phase of the renovation had begun, along with photos of construction workers putting up chain-link fences and orange traffic cones.
The eastern section of the mall next to the Kohl’s store – an area that once housed a CVS store – remains closed. The other half of the mall remains open for business, including the food court and a variety of shops and retailers. According to Matthews, the mall has a 67 percent occupancy rate and features 44 tenants.
Officials with the City of Merced say they haven’t received word of where the mall renovation stands.
Back in July, Deputy City Manager Frank Quintero told CVJC that underground and utility work has been done on the renovation project.
Quintero speculated the renovation on the Codding Enterprises side of the mall probably will not move forward until the sale has been completed.“They probably are not going to put any capital into improving the mall right now, on the expansion, until they find a buyer,” he said.
Once the construction at the old Sears site is complete, the businesses that move in will be among others to have opened recently in the mall vicinity.
Back in March, a new Olive Garden opened at the former site of Hometown Buffet along West Olive Avenue.
In June, a Chilli’s Bar & Grill also opened near the mall, the second of that franchise to open in Merced County (the other restaurant is in Los Banos).
What are mall retailers saying?
CVJC went to the Merced Mall recently to speak with local retailers about the potential sale and the renovations.
None of the shop owners who spoke wanted to be identified, fearing what they say might land them in hot water with management.
Of the shop owners CVJC spoke with, all said they hadn’t been informed by management about where the renovations stand, or what the potential sale will mean for the mall’s future.
“People don’t say much here,” said one shop owner who spoke with CVJC.
That shop owner said many retailers are concerned that the mall being partially closed for renovations has hurt their business.
He said some shoppers and residents might not realize there are still businesses open inside the mall, because the renovations just seemed to suddenly stop. Plus because part of the mall is closed, it gives the perception there is no activity.
“It’s not just me. It’s all the businesses. Everybody is not happy,” the shop owner said. “They promised something and they haven’t done it.”
The shop owner said, although his business is staying afloat, others in the mall are having a tough time. He and others would like to see more advertising by the mall to assure the public it’s still open for business, despite the pending renovations.
“I am still above ground. Little by little, I am starting to get new customers. Little by little I have seen my store is growing. But I am pretty sure that if the whole mall was done, everybody’s business would grow,” he added.
Victor A. Patton is the engagement editor for the Central Valley Journalism Collaborative, a nonprofit newsroom based in Merced. Sign up for CVJC’s free Substack list cvjc.substack.com and follow CVJC on Facebook.
This story was published in partnership with the Central Valley Journalism Collaborative, a nonprofit and nonpartisan community newsroom. To get regular coverage from the CVJC, sign up for CVJC’s free Substack list cvjc.substack.com and follow CVJC on Facebook.