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New Nordstrom, other Stoneridge Mall projects delayed
Virginia-based owner seeks buyer, new financing

by Jeb Bing

Multi-million-dollar improvements to Stoneridge Shopping Center are on hold after its owner, Virginia-based Mills Corporation, announced that it is reassessing its proposed projects across the country because of financial difficulties.

The move stalls, temporarily at least, 186,000 square feet of improvements to Stoneridge, the mall's first major change since the construction of the Sears retail store in 1997.

Construction was scheduled to start in January on a new two-story Nordstrom department store totaling 144,000 square feet in front of the current facility. Also affected is a 900-car parking garage planned on Stoneridge Mall Road adjacent to the new Nordstrom building, and new retail stores and a movie theater that were to be built in the old Nordstrom building once it was vacated.

City Planning Director Jerry Iserson said two other parts of the project, a Cheesecake Factory restaurant adjacent to Macy's women's store and a P.F. Chang Chinese restaurant, may be on track. The Cheesecake Factory submitted building plans to the city's Planning Department and P.F. Change has submitted a plan check, but not yet asked for a permit.

"Actually, I think they all are under the Mills Corporation umbrella, so it's uncertain just what might go forward at this time," Iserson said. "Everything was cleared through the Planning Commission last fall, but we still haven't heard anything from Mills."

In January, Mills announced a fourth quarter restructuring plan related to projects being written off that totaled $71 million. At the same time, the company, which is headquartered in Arlington, Va., a suburb of Washington, D.C., said it was reducing its management workforce, with 17 executives expected to take early retirements or leave the company.

Last month, in a second announcement, Mills announced that its board of directors was "exploring strategic alternatives to enhance shareholder value." The report, issued by Mills chairman and CEO Laurence Siegel, explained that the "alternatives" could include selling all or parts of the corporation.

"Domestically, The Mills (as it calls itself) will continue to concentrate its efforts on those development and predevelopment projects which the company believes are most likely to enhance shareholder value," the statement said.

Included in a list of six projects to be continued was Stoneridge Shopping Center.

The 1.3-million-square-foot mall, with sales exceeding $500 per square foot, is anchored by Nordstrom, two Macy's stores, Sears and JC Penney. It was built in 1979 and opened in 1980, but has never undergone a major renovation, which the East Bay Business Times reported as "unusual for upscale retail centers."

Alice Waterman, general manager of the Stoneridge center, did not return telephone calls asking about the building delays. Officials at Mills would not comment on specific property actions.

Representatives of the company who declined to identify themselves said, however, that the Stoneridge project could get back on track if Mills found a financing partner or was sold to another developer. The Westfield Group of Sydney, Australia, which owns a number of major retail malls in the country, has expressed an interest in acquiring Mills. It was also reportedly vying for part or all of Stoneridge at the time Mills successfully bought out General Motors Corporation's controlling interest.