Tipping Point

It was a prosperous Sacramento suburb. Then its mall started dying. Is a comeback possible?

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A generation ago, Sunrise Mall in Citrus Heights defined culture in Sacramento, serving with nearby Birdcage Walk as the region’s gathering spot for shoppers, diners and cinema-goers. On Friday nights, thousands of car-cruising teens flooded the area.

That magnetic force has long since waned. The once dominant mall that practically gave birth to a Sacramento suburb is in need of a major reinvention, Citrus Heights officials acknowledge.

Undermined by online shopping and by more modern nearby shopping areas, Sunrise’s retail sales have plummeted 50 percent since 2006, and more than a quarter of its store sites are vacant, according to city data. The mall now seems forbidding, a fortress-like edifice surrounded by acres of empty parking spaces. This week, plywood covered a broken entrance door.

“Anyone who remembers it back when, and looks at it now, can see that the mall in its current model is not sustainable,” City Manager Christopher Boyd said this week.

With its economic future at risk, Citrus Heights last month launched an effort to prepare the 100-acre mall block for redevelopment. The city is asking the mega-block’s five separate private ownership groups to work with it to turn the site into into a master-planned downtown of sorts, possibly with a mix of housing, retail, dining, entertainment and offices.

It would be a historic move. And an ironic one.

Sunrise Mall, which opened with fanfare in 1971, was a key player during a region-changing era when population and money moved to the Sacramento suburbs. Sacramento central city leaders even tried to refashion their own struggling downtown into an ersatz suburban mall in an effort to keep up.

Now, it’s Citrus Heights’ turn to make a pivot. The city was formed in 1997 in part to gain more local control of revenue from Sunrise Mall. The mall’s vitality has been directly tied to the city ever since. Citrus Heights has slid economically in recent years as other nearby suburbs with space to grow, notably Folsom and Roseville, prospered. The land-locked city’s population has barely budged in 20 years.

The median household income, among the highest in the region in the 1970s, is now just $54,000, well below the regional average of $64,000. Median home prices trail bordering communities such as Carmichael, Fair Oaks and Orangevale.

Economic Development Manager Meghan Huber said the city is focused on adding new development in the parking lot area adjacent to the mall. That may include construction to retrofit the mall, and change uses in parts of the mall. Officials say they are keeping an open mind about possibilities, but believe the mall will remain in some form, possibly with fewer stores.

The city will spend the next 18 to 24 months working on an estimated $700,000 visioning process with consultants, the site’s ownership groups and city residents. The goal is to be ready to put shovels in the ground within two years.

“This is exciting,” Huber said. “We feel lucky to be able to do this.”

For now, city officials are reminding people that the mall is still open, and that Macy’s and JCPenney are still there, as well as many other retail and food outlets.

Municipal finance expert Michael Coleman of the League of California Cities said Citrus Heights is facing a situation many retail-reliant cities are dealing with, requiring them to become more active in writing their city’s next chapter. The city budget for police, parks, road repair and other services and amenities is based on sales tax and property tax revenues, a financial stream that has flowed largely from Sunrise Mall.

“Many cities just see what development comes to them, and you get what you get,” Coleman said. “But because the retail sector is changing so dramatically ... this is a wise thing to do, to partner with developers, otherwise everybody is just thinking in their individual boxes.

“The people of that community may have a vision for how they want to see the community grow, to make sure it is a community that fits with where they want to live and work.”

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About this story

The fate of Sunrise Mall and the community it helped build, Citrus Heights, have been linked since the suburban mall opened in the 1970s. Once a prosperous bedroom community, Citrus Heights is struggling. And so is the mall.

Now, city leaders are reimagining Sunrise Mall as a new “downtown,” with housing, offices and retail. Can a new Sunrise lead to a new prosperous future for Citrus Heights?

What's next in Tipping Point

Another team of journalists are organizing community forums to open a conversation about how we avoid the mistakes of San Francisco and Seattle, where progress for a few came at the expense of so many.

We also remain rooted in our commitment to holding the powerful accountable.

Commercial broker Ken Noack, Jr. a Newmark Cornish & Carey director, called the Sunrise Mall rethink both “visionary and necessary.” Sunrise Mall once was the only game in town, he said, but now “has become the victim of competing retail in every direction. It makes all the sense in the world for Citrus Heights to rethink the land use for such a strategic piece of property.”

Brick and mortar retail is not dead, Noack said. The Galleria in Roseville and Arden Fair in Sacramento remain healthier than Sunrise. “Customers will always want to go in and feel and touch and see,” he said.

But the question is: What is the right reinvention recipe in a fast-changing retail world? Developers in Sacramento recently ripped down most of downtown’s struggling mall, Downtown Plaza, and replaced it with an arena, hotel, condo tower and a smattering of stores and restaurants, creating what is sometimes called a lifestyle and entertainment district.

But that recipe likely is unique to downtown. The region’s business community will be watching Citrus Heights’ steps closely for lessons learned.

The city’s modernization of Sunrise Mall will not be easy. The various ownership groups will have to find a way to work together to meet the city’s vision, or some will have to be willing to sell their stake to an entity that can consolidate the site for development.

Currently, a New York-based investor, Namdar Realty Group, owns the largest chunk of the mall, including two rows of smaller stores that sit between Macy’s and JCPenney. Namdar, which spent $26 million in December for its share, has been buying older malls around the country in recent years. Sunrise was its first California purchase.

SAC_RCB_2019013_SUNRISEMALL230.JPG
JC Penney and Macy are two major department stores still open at the Sunrise Mall on Tuesday, Aug. 13, 2019 in Sacramento. “I want to make sure people know that the mall is not closing,” said Meghan Huber, Economic Development Manager for the city of Citrus Heights. Renée C. Byer rbyer@sacbee.com

Namdar is the third new owner of the main lineup of mall stores in 10 years. Two previous owners had development plans, but gave up. Those experiences, and Namdar’s arrival, created the jolt that sent Citrus Heights into a proactive mode. Mayor Jeannie Bruins, City Manager Boyd and Economic Development Huber flew to New York in May to seek out Namdar’s intentions and let the new company know the city’s goals.

Boyd said Namdar officials told them they would like to build drive-through restaurants and a gas station along the mall’s perimeter. Boyd said that looked like a piecemeal development approach, and not in the best interests of the city.

“We told them in no uncertain terms that we were going to go in a different direction,” Boyd said.

“After meeting with them we had a pretty good idea that we really needed to get involved and be sitting at the head of the table with the property ownership groups and make some decisions, and take control of the future of this property by pulling the ownership together.”

Boyd said Namdar and the other owners, which include the Macy’s, JCPenney and Sears groups, are in talks now, and the city hopes that they can work together on the reinvention.

Namdar representatives did not respond to Sacramento Bee interview requests this week. Mayor Bruins, however, sees the moment as an opportunity.

“We became a city because we decided to take charge of our future,” she said. “We are applying that same philosophy to Sunrise Mall. We have taken leaps forward in the past and we’ll do it again.”

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Tony Bizjak has been reporting for The Bee for 30 years. He covers transportation, housing and development and previously was the paper’s City Hall beat reporter.
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