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CASE STUDY: Tanforan Turnaround

The site of the new Shops at Tanforan in San Bruno, Calif. was a retail developer's dream.

Located five miles south of San Francisco, in an area where the average household income is $90,000, it housed an underused mall known as the Tanforan Shopping Center — a real fixer-upper.

Even though the mall was more than 30 years old and half-dark, its Sears anchor was ranked in the top five performing stores nationally, says Greg Wattson, senior vice president of the mall's redeveloper, Wattson Breevast LLC. “We knew that the customers were coming to the mall anchors,” says Wattson. “Our challenge was to make them stay longer and spend time in the mall proper.”

But Tanforan presented a redevelopment challenge: When Wattson Breevast bought the mall from the Hapsmith Co. in 1999 for an undisclosed amount, it was unable to buy the three anchors surrounding it — Sears, JCPenney and Target. Therefore, it couldn't just bulldoze the whole area. “The fixes were that you had three department stores in place you couldn't demolish,” says Ronald Altoon, a partner at architectural firm Altoon + Porter, which redesigned the mall. “Then you also had the BART. [Bay Area Rapid Transit] station to the east. These were the constrictions we had to work with.”

What followed was a $140 million redevelopment that included a two-year lawsuit and a 20-month renovation process. When it came time to redevelop the mall, everything, except for its four walls and the three departments stores was gutted — even the roof. Then, working carefully between the three anchors, a new mall was constructed that increased the number of stores and added a food court and cinema.

The Shops at Tanforan is an example of how much hard work goes into redeveloping a sickly mall. “When you build from the ground up, you know you'll need so much steel,” says Wattson. “But when you do a redevelopment, you are using older materials, and until you uncover the drywall, you don't know the costs.”

That's why it's necessary for developers to do their homework and try to predict hidden costs. Wattson Breevast, however, got the $140 million initial price estimate right on the first try, despite an initial snag.

Before it could even begin to gut the mall, the company had a lawsuit to settle. BART's governing body had for years wanted to build a transit station east of the mall, a move that would obviously benefit its new owners. However, the transit authority needed to condemn land owned by Wattson Breevast, Sears and Target under the rules of eminent domain. All three refused BART's initial offer and the dispute led to two years of litigation and a nine-week jury trial. By 2001, the retailers and landowner had won and were awarded $34 million for their property. The money was used to pay for a three-level parking structure, while the BART station opened in 2003.

With that hurdle cleared, the developer had to get design consent from the three anchors that would share the space. It took about a year for approval to move through the corporate bureaucracy, says Wattson.

Then, the owners had to get rid of the existing tenants. Luckily, for them, Hapsmith had been waiting years for redevelopment. Co-founder, Fred Nicholas, had hoped to revive the property and had kept the majority of the tenants on a month-to-month lease for several years. “He [Nicholas] was getting older and he didn't have the resources to do the redevelopment that the mall needed,” says Wattson.

So when Wattson Breevast bought the mall, it was already about 40 percent vacant with most of its tenants on monthly leases. In fact, when the tenants were removed in early 2003, the new owners only had to buy out six that held long-term leases. Some of the center's old tenants, including Foot Locker, Lane Bryant, Urban Home Furnishings and Hallmark, will return, along with such new ones as Barnes and Noble, Victoria's Secret, Old Navy and Forever 21.

For a new look, the company hired Altoon + Porter which had redesigned such malls as Arden Fair Mall in Sacramento, Calif., and Simon Property Group's Shops at Mission Viejo, Calif. While land constraints made the architects decide to keep the old shell, the 35-year-old water-saturated roof was replaced. Then, the walls were stripped of their drywall down to the concrete.

“One way that reusing the old structure helped the project was that you didn't have the noise, debris and the incursion into the street of demolition trucks that you normally have,” says Altoon. The demolition trucks would just drive into the mall to take materials away. And there was plenty of material. Every day for four months, small working vehicles — used in an effort not to disturb the anchors — emptied out 750,000 pounds of debris. Demolition took twice as long as expected because of state regulations that required materials be separated and recycled, says Wattson.

Surprisingly, the anchors, which remained open during reconstruction, still benefited from active traffic. “Typically, anchors lose some business, but according to the managers, business picked up because of curiosity,” says Wattson. “The community had wanted this project for about 10 years.” As a result, Wattson did not have to compensate the stores for lost business.

One of the first changes was to give the building an appealing entrance on its west side along El Camino Real and Interstate 380. “It was really just a dark, forbidding entrance,” says Altoon. “It was a bland, bronze, glass passage you couldn't see through from the outside. It was more like walking into an industrial building than a shopping center.”

In order to convey the message that Tanforan was a different mall, the developers wanted to make a bold statement. “It's a large glass entry so that the energy inside the building could be seen from outside as well,” says Altoon. Where once there was a blank wall, the developers created a bright, transparent entrance that jets out onto El Camino Real like the front of a ship. One challenge for the architects was how to keep the building aesthetically fresh, even considering architecture trends that may come in the future. “You look at lessons from classical architecture and take a close appraisal of the cultural context,” says Altoon. So they made the entrance with a nautical shape to tie in with the nearby San Francisco Bay.

The new center also adds colorful facades to what were once blank walls by bringing in streetscape elements. For example, along the El Camino Real entrance from JCPenney's to Sears, colorful facades were added to Barnes & Noble and restaurants like BJ's Chicago and Brewhouse.

The mall's inside space was also transformed with a new arrangement that added two leasing corridors for a total of four wings. The configuration only increased the gross leasable area of the interior mall by 10 percent to 326,000 square feet. The number of storefronts jumped from 70 to about 110, however, by reducing the average size of each store. The entire mall, including the department stores, totals about 1.1 million square feet.

In addition, sight lines were improved by moving escalators and stairs from the middle to the sides. “We had to fix the view because anytime you looked down the corridor, you see stairs and not stores,” says Wattson.

By October, the newly renovated Shops at Tanforan will be open in the Bay area. The mall, 90 percent pre-leased as of August, is applying to be the first regional mall with the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) certificate partially for its use of recycled materials such as the steel structure of the original mall.

“This center is a really great location that is getting a much needed facelift,” says Jeff Mishkin, regional sales manager for Marcus & Millichap's San Francisco office. “I think this should be a successful job.”



How do you take a more-than-thirty-year-old mall and revive it, while preserving the three ongoing department stores built around it and making way for a BART station?


Very carefully. Wattson Breevast hired architectural firm Altoon + Porter, which had redesigned other California malls, to gut the existing mall, rebuild the interior and replace the rain-soaked roof with a new one recycling as much material as possible in the process.

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