Road Logistics

Struggling East Bay mall to become mixed use site for housing and a logistics

The world’s largest industrial landlord has purchased struggling Hilltop shopping center in Richmond, setting the stage for a massive development project that will include a logistics center as well as a mix of retail and housing.

In a statement, San Francisco’s Prologis said that the acquisition of the 78-acre property “marks the beginning of our efforts to pursue a mixed use development that includes residential, retail, and modern logistics facilities, which will spur further reinvestment, job growth, and economic opportunity.”

Richmond Mayor Tom Butt said while it’s too early to comment on Prologis’ intentions, he welcomes the investment and the $3.5 million in real estate transfer tax that the sale will generate. The property sold for $117 million, he said.

“It’s certainly better news than a dead mall, which is what it is now,” said Butt. “Prologis has a lot of money. Something will be reborn there.”

The deal comes as shopping malls across the country are quickly losing the department stores that have anchored them for decades. In January Macy’s announced that it would shutter its Hilltop store, which had been there for 44 years. That left Hilltop 85% vacant, with only Walmart left to serve Richmond shoppers. In recent weeks the owners of the Stonestown Galleria in San Francisco and the Northgate Mall in San Rafael unveiled plans to convert vast mall parking lots into housing.

Meanwhile Richmond has increasingly become a draw for logistic centers, as companies like Amazon look for Bay Area warehouse space that can help facilitate “same day” e-commerce. Amazon leases nearly 1 million square feet in Richmond, with industrial space at 6015 Giant Road and 2995 Atlas Road.

Macy's closed its location at the Hilltop mall in Richmond in March.

Macy’s closed its location at the Hilltop mall in Richmond in March.

Scott Strazzante / The Chronicle

If Amazon does end up operating at Hilltop, it won’t be the first time its logo is seen there. Often, portions of the mall parking lot are filled up by rows or Amazon delivery vans.

While Butt said he would love to see Hilltop come back as a sales tax-generating shopping center, that is not realistic, he said.

“The problem is that mall retail is dead and it’s not coming back, not in Richmond and not in cities all over the country,” he said

The seller was Newport Beach-based LBG Real Estate Companies, which bought the mall for $24 million in 2017. LBG explored various uses, including housing, biotech, entertainment and a collection of Asian restaurants. None of those plans panned out, Butt said.

The two-story, 1.1 million square foot Hilltop Mall was built in 1976 by redeveloping what was previously to be a Chevron oil tank farm. In addition to Macy’s the mall previously was home to The Emporium, JCPenny and Sears.

In February the city looked at converting a portion of the parking lot into a RV “safe parking” site for homeless people, but that idea was scuttled after opposition from neighbors.

Read More: Struggling East Bay mall to become mixed use site for housing and a logistics

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