Anyone who thinks malls are dying never met Kevin Yardi.
Like a caterpillar emerging from its cocoon as a butterfly, Paseo Nuevo mall in Santa Barbara is headed for a rebirth.
Yardi Systems, the company owned by Kevin Yardi and his family, is set to acquire Paseo Nuevo mall and the retail shop leases in downtown Santa Barbara.
The company plans to relocate 600 employees from its current downtown Goleta headquarters to the former Macy’s building. At the other end of the mall, separate developers plan to build housing inside the old Nordstrom building.
The Santa Barbara City Council on Tuesday agreed to give away the land underneath the mall to Yardi Systems. Separately, the company is working with the current mall leaseholder, AB Commercial, to acquire the leases for the retail shops.
“This is a great day,” said councilman Eric Friedman.
The vote was 6-1, with councilmember Wendy Santamaria abstaining. She opposed a parking discount deal for Yardi Systems and questioned whether the city was extracting enough financially from the company.
It’s a complex deal, but one that Santa Barbara city leaders have embraced.
“We needed a miracle,” said councilwoman Meagan Harmon. “This is our miracle. I am very excited to make it happen today.”
Macy’s left nearly 10 years ago and Nordstrom fled about six years ago. The two retail giants were once anchors for the mall and their departure gave people fewer reasons to shop downtown. The mall, like many retail shops on State Street, was already struggling as buyer habits shifted to e-commerce.
Many of the retail stores hung on, but some storefronts experience frequent turnover, and the open-air mall is hardly the downtown community hub it once was.
But Kevin Yardi hopes to change that.
He says that the company’s tech employees will work in the Macy’s building several times a week. They will shop and eat downtown, which will revitalize the area, he said. Meanwhile at the Nordstrom building, a group consisting of Dune, Shopoff Realty Investments, and Praelium, plan to build 80 to 112 apartments.
Yardi Systems plans to invest $100 million into the Macy’s building to turn it into a corporate office, along with other mall improvements. Yardi also plans to donate $5 million to Santa Barbara’s Local Housing Trust Fund and $700,000 to the city’s Downtown Plaza and Parking Program.
The developers behind the Nordstrom housing project would donate $1 million to improve downtown and $700,000 to Santa Barbara’s Local Housing Trust Fund.
Mayor Randy Rowse said Santa Barbara is lucky for the Yardi family to make the investment into downtown.
“The city’s risk is de minimis compared to what these people have put in,” Rowse said. “It’s $100 million worth of investment. It doesn’t mean everyone is going to have a moonshot out of this.”
Rowse said he has owned commercial property and there is risk, loss and potential with all deals.
“So if someone is coming into the downtown from a building they own in Goleta to be downtown, to have a presence downtown, I really appreciate that,” Rowse said. “I think it’s the best thing that can happen.”
If not for Yardi Systems stepping in, the mall’s current lease owners could have attempted to sell the mall, or let it lay fallow, a claim they made during negotiations in 2025. AB Commercial wanted the land underneath the mall, but the City Council rejected the deal.
Councilman Mike Jordan said the future is clear for downtown.
“You cannot put hundreds of employees downtown five days a week and you cannot put 100 or 120 residents in the 80 apartments there and not guarantee there are positive impacts that radiate from this project,” Jordan said.
Kristen Miller, president and CEO of the Santa Barbara South Coast Chamber of Commerce, backs the deal.
“This major private sector investment signals confidence and certainty in Santa Barbara’s downtown future,” Miller said. “This project is a clear win for the city and all community members.”
