Project Description
In late 2025 the City was entertaining two possible projects that would provide more than 350 rental housing units in and around the Paseo Nuevo shopping center in downtown Santa Barbara. The concept for these projects was first presented to council in 2023.
One of the proposed projects would retrofit the former Nordstrom department store building at the corner of Chapala and Canon Perdido Streets to accommodate approximately 120 rental units within its shell.
The other proposed project would occupy the site of the former Macy’s department store at State and Ortega Streets. This project would entail the construction of a new eight-story residential facility accommodating approximately 233 market-rate rental units; at street-level, below the residential units, there would be sufficient commercial space to accommodate a supermarket. In sum, the proposed structure would rise 75 feet above the street. This proposal calls for the demolition of the former Macy’s building and associated parking garage areas.
In addition to new construction in that southwest corner of the mall, the proposal calls for a new building for a site along Chapala Street near Canon Perdido. This building would occupy one-third of the square footage of the existing parking garage, Lot #2, and hold approximately 80 affordable rental units in three stories. On one side, a solid wall would separate the new building from the remaining portion of the parking garage, and the other frontage would face the back of the Canary Hotel at the corner of Chapala Street and Carrillo Boulevard.
Current Status
Macy’s Site and Lot #2
The Macy’s building and the single-story retail units constituting the mall are subject to a lease contract with Alliance/Bernstein (AB), a financial organization. AB financed the operator of the mall, a company which has since declared bankruptcy. AB cannot sell its interest while disposition of the bankruptcy is in process. AB, not being a development company itself, has therefore hired a Washington D.C., firm, Georgetown Development, which in turn has hired Gensler Architects, a renowned worldwide architectural and planning firm, to develop a concept design for site reuse, as described above. During a presentation by AB, Georgetown Development, and Gensler to City Council in December 2025, council members questioned several assumptions and offered criticism of the proposed plan, including the overall design, the placement of the 80 affordable-unit building, and the failure to place housing units atop the current retail space in the center of the mall. As a result of the December 2025 meeting, AB has ceased expending funds for the project while exploring possible acceptable alternatives to the initial concept plan.
Nordstrom Site
Although the developers of the Nordstrom building do not have the same property ownership conditions as AB, they are waiting to submit their proposal to retrofit that building for 120 housing units in the event that it will need additional design work once the Macy’s project is approved.
SAGE-SB Supports Housing Projects
SAGE-SB’s board of directors submitted letters to the City Council and to the City’s Planning Commission encouraging them to continue to pursue projects which would provide housing in the downtown core, particular in and around Paseo Nuevo. SAGE-SB will continue to support these types of effort in downtown Santa Barbara where high and more densified housing units will fit within the fabric of our city.
