Escondido Extends North County Mall Ground Leases
City Council approves 28-year lease extensions for four parcels at the North County Mall, tied to a potential Costco move into the former Sears site.
Updated on Nov. 10, 2026 in Commercial
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The Escondido City Council voted 3-1 on Nov. 4 to approve amendments extending four ground leases at the 83-acre North County Mall from June 30, 2053, to June 30, 2081. The approval is linked to Mershops' agreement to approve Costco's lease for the former Sears site, contingent on the amendments taking effect.
Why it matters
The ground lease amendments give Mershops and Costco what they need to finish negotiating with Transformco over terminating its lease. For Escondido, the deal could reshape one of the city's largest commercial properties.
The city owns all but Parcel 6 of the 83-acre site, which Macy's Inc. owns, and Mershops leases Parcels 2, 5, 7 and 8. Councilmember Consuelo Martinez cast the only dissenting vote, and Mayor Dane White was absent.
The players
Mershops
Mershops is the company that bought Westfield's mall interests in 2023 and leases several parcels at North County Mall.
Costco
Costco is the national warehouse retailer seeking to lease the former Sears site at the mall.
The details
Mershops will be responsible for capital improvements including elevator and escalator upgrades and HVAC replacement under the amended leases. Costco would occupy Parcel 1 only if its current lessee, Transformco, agrees to terminate, and leasing the former Sears site would require approval from all mall lessees and one property owner under a reciprocal easement agreement.
Timeline
June 30, 2053: original expiration date of the four ground leases
Nov. 4: City Council voted 3-1 to approve the amendments
June 30, 2081: extended expiration date of the four ground leases
Commercial Context
The lease extensions follow Westfield's 2023 sale of its mall interests to Mershops, a shift that has left the property's future tied to long-term ground leases. The approval reflects how large suburban malls are being repositioned around anchor tenants like Costco as traditional department stores such as Sears have departed.
Shoppers at North County Mall may see a Costco location if Transformco agrees to terminate its lease and the required approvals are secured. The extended leases also mean the mall's current configuration and rent structure are set for decades, with rent increases capped at 2.5% annually.
The takeaway
Long-term ground lease terms can determine whether a large suburban mall is redeveloped or held in place, so tracking lease amendments offers insight into a property's future direction.
Further reading
Explore more Commercial real estate coverage for context on how mall leases are being restructured.
Source note: This article includes information reported by The Coast News.
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