The Sears at South Coast Plaza in Costa Mesa, CA, on Wednesday, Oct 31, 2018. The store is among 142 closing across the nation — 15 in Southern California. (Photo by Jeff Gritchen, Orange County Register/SCNG)

Exterior of South Coast Plaza in Costa Mesa, on Tuesday, March 14, 2017. (Photo by Nick Agro, Orange County Register/SCNG)

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The Sears at South Coast Plaza in Costa Mesa, CA, on Wednesday, Oct 31, 2018. The store is among 142 closing across the nation — 15 in Southern California. (Photo by Jeff Gritchen, Orange County Register/SCNG)

A couple walks by directional mosaic at the renovated Bella Terra Mall in Huntington Beach. (File Photo, Orange County Register/SCNG)

A $200-million expansion at the Irvine Spectrum includes new furniture throughout the shopping center in Irvine, CA, on Wednesday, August 15, 2018. (Photo by Jeff Gritchen, Orange County Register/SCNG)



A scene from the Laguna Hills Mall on Tuesday, July 10. (Photo by Jonathan Lansner, Orange County Register/SCNG)

Henry Segerstrom poses with sign announcing the construction of South Coast Plaza. (Courtesy of South Coast Plaza)

The Sears at South Coast Plaza in Costa Mesa, CA, on Monday, Oct 15, 2018. The retailer filed for Chapter 11 bankruptcy protection Monday, hurt by falling sales and its massive debt. (Photo by Jeff Gritchen, Orange County Register/SCNG)

Louis Vuitton has unveiled a remodeled, 14,000-square-foot luxury boutique at South Coast Plaza, the largest single-level retail space for the brand in the U.S. The store, which opened Wednesday, July 11, comes with a lot of “only one in the U.S.” exclusives. (Photo courtesy of Louis Vuitton)

The fashion boutique Aritzia opened Feb. 2 at South Coast Plaza. The Canadian brand was founded in 1984 and has more than 75 locations in North America, including Vancouver, Toronto, Montreal, New York, San Francisco and Chicago. (Photo courtesy of Aritzia)



A tourism report ties $3 billion in spending by out-of-town visitors at both local eateries and retail stores. And tourism supports one-third of all local food jobs and 8 percent of retail employment. Seen here, window shoppers pass by the Gucci store at South Coast Plaza. (Photo by Nick Agro, Orange County Register/SCNG)

Porsche Design Group has relaunched its retail concept at South Coast Plaza. VIP attendees at the grand opening included actor Jesse Metcalfe. The high-octane boutique is a collaboration with Porsche Cars North America and includes a shiny Porsche. The car will change out seasonally, the company said in a statement. (Courtesy of Porsche Design Group)

Quiksilver store in South Coast Plaza

Din Tai Fung, an international chain known for its Shanghai-style soups and steamed dumplings, opened its doors at South Coast Plaza to long lines of enthusiastic dumpling eaters. The celebrated chain currently operates 82 restaurants worldwide. (Photo by Ana Venegas, Orange County Register/OCR)

OCJ Stars won the Canstruction Orange County 2018 award for Structural Integrity with its entry titled “Ganesha – Blessing the Beginning of a Hunger-Free World.” It took 3,000 cans and is on display at South Coast Plaza. (Courtesy of Hector Campos)



A projected $6 million renovation of the Bella Terra shopping center in Huntington Beach will include a beer and wine garden and a concert stage. (Artist rendering courtesy of DJM Capital Partners)

Unique scuplture is found around the fountains of Bella Terra.

DJM also created the Bella Terra mall in Huntington Beach. PHOTO BY ANA VENEGAS

The largest H&M on the West Coast is scheduled to open in the new expansion at the Irvine Spectrum in Irvine, CA, on Wednesday, August 15, 2018. (Photo by Jeff Gritchen, Orange County Register/SCNG)

A new $200-million expansion, anchored by the largest H&M on the West Coast, in the new expansion at the Irvine Spectrum in Irvine, CA, on Wednesday, August 15, 2018. The area is scheduled to open on Saturday. (Photo by Jeff Gritchen, Orange County Register/SCNG)



Hello Kitty Cafe is due to open Aug. 18 at the newly expanded Irvine Spectrum Center. (Nancy Luna, Orange County Register/SCNG)

Signs tell visitors to the Irvine Spectrum that their new expansion is opening soon in Irvine, CA, on Wednesday, August 15, 2018. (Photo by Jeff Gritchen, Orange County Register/SCNG)

Spaces is a new VR experience located in the Irvine Spectrum Center. (Photo courtesy of Spaces)

When the Hello Kitty Grand Café Sanrio opens on Sept. 14 at the Irvine Spectrum Center, it will be the first and only permanent café in the U.S. that offers two different experiences, a sweets stop with grab-and-go items and a private room for high tea and cocktails by reservation only. (Photo by Jakob N. Layman)

Construction workers are seen working on the expansion and renovation project at Five Lagunas, formerly the Laguna Hills Mall, in Laguna Hills on July 19, 2017. (Photo by Leonard Ortiz, Orange County Register/SCNG)



Laguna Hills Mall was built in 1973 as part of the build-out of the inland South County cities but in recent years has grown tired. There have been only minor upgrades, which have left the mall with high vacancy rates. (Nancy Luna, Orange County Register)

Temporary signs the that anchor stores, Macy’s and JCPenny, remind visitors the stores are open during the construction on the expansion and renovation project at Five Lagunas Mall, formerly Laguna Hills Mall, in Laguna Hills on Wednesday, July 19, 2017. The renovation will include luxury apartments, a movie theater, a park and indoor and outdoor shops. (Photo by Leonard Ortiz, Orange County Register/SCNG)

Steel beams to be used for the new movie theater as part of the the expansion and renovation project at Five Lagunas Mall, formerly Laguna Hills Mall, are piled up in the parking lot until ready to use in Laguna Hills on Wednesday, July 19, 2017. The renovation will include luxury apartments, a movie theater, a park and indoor and outdoor shops. (Photo by Leonard Ortiz, Orange County Register/SCNG)

The Sears at South Coast Plaza in Costa Mesa, CA, on Wednesday, Oct 31, 2018. The store is among 142 closing across the nation — 15 in Southern California. (Photo by Jeff Gritchen, Orange County Register/SCNG)

The Sears at South Coast Plaza in Costa Mesa, CA, on Wednesday, Oct 31, 2018. The store is among 142 closing across the nation — 15 in Southern California. (Photo by Jeff Gritchen, Orange County Register/SCNG)



The Sears at South Coast Plaza in Costa Mesa, CA, on Wednesday, Oct 31, 2018. The store is among 142 closing across the nation — 15 in Southern California. (Photo by Jeff Gritchen, Orange County Register/SCNG)

In 142 towns across the nation — 15 in Southern California — mall owners are plotting their options for a soon-to-shutter Sears or Kmart. Hiring a demolition crew might be a good start.

The bankruptcy of the venerable Sears and its sister chain Kmart is really no surprise as their financial troubles have been well-chronicled and long-running. Recently filed state documents show Sears and Kmart closing 15 stores in California by year’s end — including a high-profile Sears at South Coast Plaza in Costa Mesa. Liquidation sales have begun.

Mall owners spend many a restless night spooked by the prospect of an empty store – especially when a significant anchor departs. A simple substitution for a Sears or Kmart is an unlikely fix in an era when large-scale, everything-under-one-roof merchants are an endangered species.

All is not lost for mall operators, though, thanks to the region’s relatively few empty stores, shoppers’ desires for new ideas and investors surprising and continued willingness to bet on retail. That’s why dismantling and reconfiguring traditional store sites makes sense.

Take the Sears at the 2.8-million-square-foot South Coast Plaza. It’s long been a bad fit for the trendy shopping center with a global fan club for its smartly-curated selection of ritzy fashion brands.

Thus, creating a collection of smaller pieces might be a better bet than one giant retailer. The plaza’s owner, the Segerstrom family, has not commented on the bankruptcy or its plans for the site after Sears vacates. But you have to think they’re looking at what the competition has already done.

Retail gold mine

Just up the 405 in Huntington Beach is Bella Terra, once the site of the 1960s-era Huntington Center, an enclosed shopping center with J.C. Penney, The Broadway, and Montgomery Ward as its anchors. This mall’s fatal blow came in the weak retail era of the early 1990s.

Most of Huntington Center was torn down by investor DJM Capital Partners. The mall re-emerged in 2000 as Bella Terra, a roughly million-square-foot outdoor shopping venue with a merchant mix of Kohl’s and Burlington (for bargain lovers) to the more costly Whole Foods. Oh, and there’s a Costco, too, some hip eateries and outdoor spaces for visitors to interact. And did I mention the residential complexes next door?

So how has Bella Terra done? Well, look no farther than Edinger Plaza, just across the street.

The 155,000-square-foot shopping center includes Nordstrom Rack, Dick’s Sporting Goods, PetSmart, and Michaels. It just sold for what is said to be the highest purchase price for any Orange County retail property in 2018.

Edinger Plaza was acquired by Stockbridge, a real estate investment firm from San Francisco that manages $13 billion in assets. The seller was Watt Cos. the company that developed the 13.5-acre property in 1976 and retooled it in 2012.

While the companies involved in the Edinger Plaza deal would not disclose the price, industry insiders say the center — 99 percent occupied when sold — went for $65 million.

“Stockbridge acquired one of Huntington Beach’s dominant shopping centers in a dynamic, affluent, infill coastal trade area,” said Jimmy Slusher at CBRE, which brokered the deal.

Let’s politely say Bella Terra’s hot mojo is rubbing off. And to be clear, the Segerstroms aren’t tearing down South Coast Plaza.

The family’s retail executives could look to the south to Irvine Co.’s Irvine Spectrum Center. Since its opening almost a quarter-century ago, it’s been a leader in the modern open-air shopping-dining-entertainment concept.

When Macy’s — one of Spectrum’s few traditional, big-box retailers — was up for a lease renewal, Irvine Co. politely said no thanks. It demolished the old department store and built a new $200 million wing of almost three-dozen stores and dining options. It opened this summer.

Please remember, however, that mall fix-its are by no means a guaranteed win. South of South Coast Plaza and Irvine Spectrum you’ll find the Laguna Hills Mall. A multimillion-dollar renovation project to convert it to the open-air “Five Lagunas” abruptly halted in 2017, mid-construction, after the exit of anchor tenants Sears and Macy’s.

No apocalypse here

The Segerstroms have some tough decisions to make after reportedly spending somewhere near $200 million in 2017 to restore its ownership of the Sears’ property on the mall’s northeast side. The retailer is now simply a tenant.

No matter how South Coast Plaza retools the Sears space, it will do so amid curiously solid conditions for shopping center owners. According to the CBRE brokerage, there’s not a lot of empty stores in Orange County — just 3.3 percent of all space is empty as of Sept. 30. And countywide rents for shopping space are up 3.4 percent in a year.

“If we are in the midst of a ‘retail apocalypse’ as the media would have you believe, it would seem that Orange County never got the memo,” the report said.

So what might South Coast Plaza do? It already has entertainment nearby with Orange County‘s theater/cultural district just across the Bristol Street bridge. If that’s become a walk too far, entertainment options could come to the Sears site.

It’s also not out of the question to foresee a hotel in or near that space — perhaps a good fit for South Coast Plaza’s international draw.

Nor would mixed-use facilities — shopping on lower floors and residential units above — be a surprising alternative.

The Segerstroms struck retailing gold on what used to be their farmland, building a mall that was an early pioneer in suburban shopping a half-century ago. The family deftly reimaged the mall from a local center — perfect for the Sears crowd — into a destination shopping mecca with a global audience that was disinterested in a dying but iconic Sears.

Another recent shopping mall sale suggests the real estate market has confidence in the magic surrounding the Segerstroms’ mall.

Before Edinger Plaza was sold, the biggest Orange County shopping center sale in 2018 was the $46.5 million purchase of Bristol Center. The 165,500-square-foot shopping center — 97 percent full with CVS/pharmacy, Michaels, Staples, Party City, Wells Fargo, Buffalo Wild Wings, Chick-fil-A, Chipotle and Firestone Auto Care — is located in Santa Ana.