Peninsula malls fill vacancies left by large retailer 

It’s a tale of two Mervyns.

Hillsdale Shopping Center won approval this week from San Mateo to subdivide its former Mervyns location — vacant since the anchor tenant went bankrupt in late 2008 — into three smaller stores totaling 79,000 square feet.

Serramonte Shopping Center, meanwhile, opted to hold onto its deserted 75,000-square-foot Mervyns spot and landed JC Penney to fill the space. The new store had its grand opening March 4 at the Daly City mall.

The moves represent different approaches to a challenge facing Peninsula retail property owners: what to do with vacancies left by large stores that fell victim to the recession.

At Hillsdale, the mall is in negotiations to lease the newly split Mervyns to two apparel retailers in spaces of 19,000 and 52,000 square feet and a “family restaurant” of about 9,000 square feet, Marketing Director Christine Kupczak said.

She declined to say whether difficulty in filling the Mervyns space at the mall’s southern end was a factor in Hillsdale’s subdivision request, which San Mateo Zoning Administrator Stephen Scott approved late Tuesday.

“We felt dividing it into three tenants was the most efficient way to utilize it and to make it also more exciting for the shoppers,” Kupczak said. “It offers more variety.”

For Serramonte, keeping the large store and filling it with JC Penney “just made sense for us” to complement fellow large tenants Macy’s and Target, Marketing Manager Cherie Napier said. Filling any vacancy is difficult in the struggling economy, but larger stores are even more challenging because the deals typically involve more terms, Napier said.

“We were very lucky to fill it with a value-oriented tenant that fits nicely into our merchandise mix,” Napier said.

Kupczak said work has already started on exterior improvements around the old Mervyns location at Hillsdale, including new landscaping and sidewalks.

The mall also plans to build interior walls, modernize the external façade, add an external seating area for the restaurant and relocate a SamTrans bus stop about a block west on Hillsdale Boulevard.

Hillsdale is still an important sales-tax generator for the city, contributing $2.3 million to the tax rolls in the 2009-10 fiscal year, Finance Director David Culver said. Out of that, department stores made up about $900,000 in sales taxes.

Senior Planner Julia Yeh said there was no opposition to Hillsdale’s plans for the Mervyns store, which she said will make it fit in better with the modernized Trader Joe’s shopping center across the street.

“Most people are actually happy there’s finally going to be some change there,” she said.

sbishop@sfexaminer.com

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Shaun Bishop

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