Housing, theater instead of retail

Developer scraps Costco plans in Marin County

Big box retail is out and big housing is in at Northgate Mall in San Rafael.

Two years after the owner of Marin County’s only enclosed shopping mall announced plans to build the largest Costco in the United States — a 180,000squarefoot store with 30 gas pumps that would have been dwarfed only by the chain’s outlets in Mexico and Japan — the developer has decided to scrap the warehouse retailer in favor of a residential development with a new town center.

Merlone Geier Partners, a real estate investment firm that bought the mall in 2017, is proposing to build 1,345 housing units and a town center for the Terra Linda neighborhood. The mall would be converted to an openair shopping center, while some of the existing retail space, including the former Sears building, would be knocked down to make way for apartments.

Stephen Logan, vice president of development for Merlone Geier Partners, said that the pandemic gave the owner a chance to reevaluate options for the 43acre site in North San

Rafael. It looked at the benefits of holding on to Costco versus seeking a more residential-focused project with a gathering place for the neighborhood — a specialty grocer or food hall and a new expanded movie theater.

“At the end of the day, we wanted to have a true mixeduse project, and we didn’t think a Costco would be conducive for that,” he said

With malls struggling across the country, property owners are increasingly looking at housing as both an alternative to brickandmortar retail but also a way to create a builtin customer base for future shopkeepers and restaurateurs. In San Francisco, the owner of the Stonestown Galleria is planning on building several thousand housing units on surface parking lots. Similar projects are under way at malls in Newark and Richmond, although the pandemic has slowed some of these plans.

“We think housing in these kind of (malls) help bring a synergy that the mall by itself doesn’t bring anymore,” Logan said.

Northgate is in the Terra Linda neighborhood of San Rafael, a district of MidCentury architecture that includes 900 homes built by Joseph Eichler, the California modernist known for glass walls, cork floors, openbeam ceilings and gable windows. Logan said the new buildings would blend into the Eichler aesthetic, with pitched roofs and simple, traditional materials such as metals, woods, glass and brick.

The revised plan is a victory for Responsible Growth in Marin, an organization with 900 members that was created to fight the Costco. Grace Geraghty, cofounder and longtime North San Rafael resident, said Costco had been very unpopular because of fear that it would clog the streets with cars and hurt air quality in the area. The new proposal, on the other hand, includes many elements residents want: housing, community gathering spaces and an improved theater.

“We are thrilled that Merlone Geier Partners listened to the community and our little group’s grassroots efforts,” she said.

Many details still need to be worked out, Geraghty said. The neighbors would prefer a more open space, a mix of rental housing and condos — rather than all rental — and probably a bit less density than the developer is proposing, especially close to the singlefamily homes.

“We are definitely prohousing,” she said. “We are just not sure the infrastructure — traffic, sewer, schools — can handle that much density.”

The plan calls for the mall movie theater to be renovated and expanded to include an Imax theater. Phase one would consist of 896 units in four three and fourstory apartment buildings on the southern and eastern edge of the property. Las Gallinas Avenue would be lined with new restaurants and stores. The second phase calls for building two fivestory apartment buildings with a combined 460 residences. The mall would shrink from about 750,000 square feet of retail to about 250,000, while 1.5 million square feet of housing would be added. Parking would be reduced from 2,908 to 2,311 spaces.

The plan comes at a time when San Rafael will have to triple its housing production to comply with the state Regional Housing Needs Allocation numbers. The current plan calls for San Rafael to produce 3,200 housing units during the next eightyear cycle, more than three times the 1,000 units the city was required to build in the previous cycle.

San Rafael Community Development Director Paul Jensen said the city has been pushing hard to increase housing production, including a downtown rezoning that allows for about 2,000 new units. The San Rafael City Council recently voted to lower the city’s affordable housing requirement from 20% to 10% to spur construction during the pandemic.

“We have been looking at ways to get more housing built faster in order to comply with the tall order given to us by the state,” Jensen said.

Geraghty said that the mall was a regional attraction when it opened in the 1960s, at a time when malls were a novelty and a destination. Those days are gone, but with a walkable mix of shopping, plazas, entertainment and housing, it could once again be a draw. “If done right, it could be an attraction not just for the neighbors but all of Marin,” she said.