A year ago, Palladio at Broadstone's cream-colored stucco walls, lush lawns and palatial arcades were all but deserted. The outdoor mall in Folsom was mostly empty, conceived and built in better times.

Now, though, new restaurants and retailers are opening their doors, and the mall's fancifully named streets – Via Sole, Via Fiori – are bustling. Earlier this month, the center signed leases with two new tenants, children's clothing maker Gymboree and accessories retailer Charming Charlie.

Palladio's success contrasts with the rest of the region's tepid retail real estate market. The Elk Grove Promenade, half-built and abandoned, is a grim reminder of the local boom and the bust that followed.

Parts of Palladio are still being built. Vinyl posters with large photographs of shoppers fill the unfinished stores' windows. Yet 60 percent of the mall is now leased, and general manager Gloria Wright said activity is accelerating.

"We're expecting to execute quite a few more leases and get these folks open before the holidays," she said.

Two restaurants opened new locations in June: the downtown Sacramento eatery Chops and Toby Keith's I Love This Bar and Grill, the well-known country musician's national brand.

It's a change from last summer, when there were only four tenants open at Palladio.

The mall was under construction as stock prices peaked and plummeted in 2008. The first tenant, Palladio 16 Cinemas, opened in December 2009. No other stores opened until last spring.

"We had interest from a very large group of tenants that were very far down the leasing path when the economy changed," Wright said.

"It created a ghost town," said Matt Holmes, a principal at the Northern California real estate firm Retail West Inc.

In response, Palladio's owner, Elliott Homes Inc., slowed construction and renegotiated its sales tax sharing agreement with the city of Folsom.

Councilman Jeff Starsky said that the city waived about $326,000 in fees to encourage Elliott Homes not to abandon the project.

Starsky said Palladio has generated about $1.5 million in property and sales taxes for the city so far.

City officials have wanted a major shopping mall in Folsom for a long time. Starsky recalled discussions when he was first elected to the council in 2000.

"We knew we were losing a lot of shoppers to Roseville. We wanted to keep that money in the city of Folsom," he said.

Folsom residents who want to shop at national-brand retailers might drive to The Fountains or the Westfield Galleria in Roseville, Arden Fair in Sacramento, or Sunrise Mall in Citrus Heights.

Now, those shoppers may be more likely to stay in Folsom, said Folsom Chamber of Commerce President Joe Gagliardi. Whole Foods and home and garden supplier Kirkland's have stores at Palladio. An H&M store is under construction.

Palladio's success will benefit other businesses in the city as well, Gagliardi said. "The more activity there is, the more opportunity there is for everyone," he said.

Part of the reason for Palladio's relative success is the strength of the local economy in Folsom. So far this year, the amount of real estate occupied by retailers in and around Sacramento has increased by about 220,000 square feet, said Garrick Brown, national retail research director at the commercial real estate firm Cassidy Turley.

Of that growth, 160,000 square feet has been in Folsom, Brown said.

"It's the fastest growth market right now," he said. "For me, it's simple. It's low unemployment." In May, the unemployment rate was 5 percent in Folsom and 10.8 percent in the wider Sacramento metropolitan area, according to the state Employment Development Department.

Observers also said Palladio is doing well because Elliott Homes relied on its cash reserves to assemble tenants that would appeal to a diverse group of shoppers.

"They didn't have to do deals when the market was at the bottom," said Mark Engemann, a broker at Colliers International. "They deserve a lot of credit for holding to their guns and waiting until they got a tenant mix that complements their center."

"They just had deep pockets," Brown said.

Wright, the general manager, said that Palladio offers "that nice range of what the consumer might be looking for where they can come to one place and get the shopping done for the entire family." She contrasted an upscale jewelry store at Palladio with Johnny Rockets, the national diner chain, which is also in the mall.

Toby Keith's assistant general manager Scott Lopez said the fact that Palladio was still partly under construction had not slowed business at the restaurant, which seats about 350. "We've been constantly slammed," he said.

The center will be about 650,000 square feet when it is completed, Wright said. Next month, Sports Authority will move to Palladio from a nearby site. Also opening in August are San Francisco Style Sourdough Eatery and Ambiance, a clothing store. Clothing retailer Charlotte Russe and Color Me Mine, a pottery store, will follow soon.

"They're confident they're going to fill that space up, and I think they will," Brown said.

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