CARLSBAD — The Carlsbad City Council authorized staff this month to begin negotiations with the owners of The Shoppes at Carlsbad regarding the potential sale or lease of more than 67 acres of city-owned parking lots surrounding the mall, a move that could pave the way for one of the city’s largest affordable housing opportunities.
The council voted June 9 to establish a negotiating team following a request from mall owners SteelWave and Steerpoint Capital to discuss the future of the parcels.
“We see a meaningful opportunity to collaborate with the City and the community to advance a shared vision — one that thoughtfully integrates much-needed housing while unlocking the highest and best use of this land in a creative and impactful way,” wrote Jonathan Hastanan, managing director of acquisitions and development for SteelWave, in a May 27 letter to City Manager Geoff Patnoe.
Hastanan added that SteelWave and Steerpoint Capital were “excited about the opportunity to reinvigorate the mall and restore it as a premier destination for Carlsbad residents and visitors.”
The city-owned parcels total 67.27 acres surrounding much of The Shoppes near El Camino Real and state Route 78, including 56.97 acres in Carlsbad and 10.3 acres in Oceanside. The properties were acquired by the former Carlsbad Parking Authority in a series of transactions between 1969 and 1981 to support the construction and expansion of the mall.
The first acquisition was in 1969, when the Parking Authority, a now-defunct city agency created to finance and manage public parking, purchased about 30 acres east of the mall and south of Marron Road. Additional acquisitions between 1975 and 1981 included nearly 10 acres in Oceanside and more than 23 acres west of the mall.
The lot purchases were financed through bonds that have since been fully repaid, according to city staff.
While the city owns the land, the properties are subject to operating agreements requiring them to be used as public parking for the mall. The deeds contain restrictions, enforceable at least through 2068, that automatically revert the properties to SteelWave if the city fails to maintain the lots as municipal parking.
The shopping center changed hands in 2025 when Costa Mesa-based SteelWave and Steerpoint Capital purchased the 1.1 million-square-foot mall from Brookfield Asset Management for $71.5 million. The mall includes anchor tenants such as Regal Cinemas, Dave & Buster’s, JCPenney, H&M, Yard House and The Cheesecake Factory.
In 2023, Brookfield Properties, through its ownership entity RPI Carlsbad, requested negotiations regarding a potential lease or purchase of the parking sites.
Before negotiations could proceed, however, the city needed to determine whether the parking lots were subject to California’s Surplus Land Act, which generally requires that surplus property be made available for affordable housing before it is sold or leased for other purposes.
The city subsequently pursued an exemption, and in March 2025, the California Department of Housing and Community Development determined the parking lots qualified as “exempt surplus land.” The City Council formally adopted that designation in June 2025, clearing a path for negotiations.
The parking lots have also become a central component of Carlsbad’s housing strategy. During preparation of the city’s state-mandated Housing Element, the mall parking lots were identified as one of the few sites capable of accommodating large multifamily housing projects.
In January 2024, the City Council rezoned the properties as part of its Housing Element Rezone Program, which was adopted to help meet Carlsbad’s 6th Cycle Regional Housing Needs Assessment allocation of 3,873 units through 2029. The city applied a mix of commercial and residential designations to the parcels, with room for at least 993 housing units across five parking-lot sites.
The rezoning also requires that at least 40% of the units be reserved for lower-income households, making the site one of the city’s largest potential sources of affordable housing.
If built to minimum capacity, the sites could accommodate about 26% of Carlsbad’s total RHNA allocation. And with the city’s 40% affordability requirement, the properties could produce at least 398 lower-income units, or about 10% of the city’s total housing obligations for this cycle.
Housing advocates generally support redeveloping underutilized commercial properties into housing, but cautioned that Carlsbad’s approach could present challenges.
Saad Asad, communications manager for California YIMBY, said the mall parking lots represent an opportunity to add much-needed housing and affordable units in a city where many workers are priced out. However, he argued that concentrating a large share of the city’s housing obligations on a single commercial site, while requiring 40% affordability, could make a future project exceedingly difficult to build.
“Building more homes near shops and services, such as malls, is a good idea, and building more affordable homes in Carlsbad, one of the wealthiest cities in the county, is also a good idea,” Asad told The Coast News. “But concentrating so much of the city’s housing obligation on one hard-to-finance site — while wealthier neighborhoods face no pressure to change — means the teachers and service workers who keep the city running will likely still be unable to afford to live there.
“The 40% affordability requirement, compared with a lower one, makes projects much harder for private developers to finance because they need to secure far more government subsidies,” Asad continued. “That means the housing could take much longer to build — or never get built at all— given today’s market conditions.”
The council’s action this week does not authorize a sale or lease. Rather, it establishes a negotiating team consisting of representatives from the city attorney’s office, community services, real estate division and community development department.
Any proposed deal would return to the City Council for approval.
EDITOR’S NOTE: This story has been updated to include a comment from California YIMBY.
