At Pacific Retail Capital Partners

A real estate investment company has purchased Palm Desert’s 41-year-old mall and says it is planning to redevelop portions of the property with housing, green space, entertainment and other mixed-used offerings.

Pacific Retail Capital Partners, a Los Angeles company that owns several malls throughout the nation and has recently been purchasing several more with plans for redevelopment, announced its purchase of the mall Thursday. The price and terms of the mall were not disclosed.

The mall, which is currently known as the Shops at Palm Desert after a 2022 name change, had been for sale since last summer when its former owner Unibail-Rodamco-Westfield announced it would be selling its malls nationwide in order to pay down its debt.

It currently has about 100 stores and is the largest mall within 60 miles, according to its website. Current anchor stores include Macy’s, JCPenney, Dick’s Sporting Goods and Barnes & Noble.

After reaching a peak in the 1990s and early 200s, malls nationwide have been in a decline driven by the rise of online shopping that was further hastened by the COVID-19 pandemic. PRCP's website says it is focused on responding to that decline by "redeveloping properties to unlock the value of the underlying dirt.”

The company said in a press release announcing the sale that it plans “to conceptualize, design, and develop an innovative master plan for the 72-acre property that will transform it into a vibrant, mixed-use destination and create an iconic civic gathering place that contributes to the existing character of the Coachella Valley.”While many PRCP projects involve the elimination of some parts of existing malls while keeping others in place, the company did not say if any decisions have been made about how much of the existing mall would remain nor did the company offer a specific timeline for the development.

PRCP currently owns and has redeveloped other malls in Southern California, including the Plaza West Covina and Parkway Plaza in El Cajon, and said its knowledge of the lifestyle preferences of the market and its expectations for the retail experience will allow it to accelerate the redevelopment of the mall.

The company's chief financial officer, Oscar Parra, said in the release that there has been a fundamental shift in the way retail owners and operators approach new markets and that his company looks for communities that understand the retail landscape has changed drastically in the last 20 years.

“Instead of just accelerating goods and services, these cities are asking, ‘What should we be accelerating?” he said. “For many markets, the answer is housing, green spaces and communal areas – or mixed-use destinations – that create an environment of live, work and play for residents, and cities are choosing to partner with us because of our extensive track record of designing viable real estate for the future.”

In a statement, Palm Desert City Manager Todd Hileman said the city welcomes PRCP’s acquisition of the mall and is optimistic about the potential redevelopment.

“We believe that this significant investment aligns with our city's long-term growth goals and reflects the confidence that developers have in the economic vitality of Palm Desert,” he said. “Our team is eager to review Pacific Retail’s forthcoming plans and see how they will contribute to the overall enhancement of our community’s commercial landscape.”

Mayor Kathleen Kelly said Thursday that she was optimistic about the mall’s new ownership, adding it’s still “early in the process” for its redevelopment.

Kelly said the city has continuously monitored activity at the mall, which first opened in 1982, but their efforts intensified about three years ago to make sure any transitions over the next decade are “thoughtful and consistent with other city objectives.”

Kelly noted the city purchased the former Sears property to make sure they "will be at the table” when any major decisions are made.

Last year, the city also commissioned a study to examine the local market demand for new residential, hospitality and retail uses at The Shops at Palm Desert. The study by Streetsense identified some potential for housing at the mall, with market demand expected for 194 apartments by 2031, as well as capacity for some condos, hotel rooms and other retail space.

Kelly said the city was encouraged by the study’s findings, noting other areas have seen similar success already with repurposing their malls.

“Those locations that have mixed in some residential or some hospitality, their entertainment and recreation destinations continue to thrive, because those uses draw additional people to the site to support the existing retail,” Kelly said.

“We certainly are committed to a substantial retail component continuing to be a part of the mall,” she added. “That’s going to be something people desire forever, even when online sales achieve their maximum potential.”

Any plans for new housing or other major construction at the mall will have to go through public meetings with the city council to gain approval, Kelly said, adding the timeline moving forward will largely hinge on broader economic dynamics.

“It's more a function of the economy than it is any administrative hurdles,” Kelly said. “We all know there are widely divergent predictions about what way the economy is headed next year and what way interest rates are headed. Those things are really going to influence the availability of financing for prospective developers.”