The beautiful seaside village of Capitola, a gorgeous town just 5 miles south of Santa Cruz, could easily pass for the Italian Riviera. It’s also home to the Capitola Mall, which the county’s website notes is “the only enclosed shopping center in picturesque Santa Cruz County.” Like many malls across America, it has long been in a state of slow decline as shoppers’ tastes and buying habits change. Scrappy locals have been making creative use of the outdated space while waiting for a long-term redevelopment plan to take shape. Now it looks like big new plans are finally in store for the beloved mall that make way for new development without necessarily disrupting current businesses. Zoning changes approved in 2026 have cleared the way for developers to submit new mixed-use plans that include residences, a conference center, and a new hotel.
Mall culture was never huge in hippie-chic Santa Cruz County the way it was historically in Los Angeles, but locals have always loved to shop at the Capitola Mall. Many have fond memories of hanging out at the food court in their teen “mall rat” years. Others remember the mall’s grand fountain with nostalgia. “I totally remember standing around the fountain as a very small child, trying to come up with a way to get at all those glorious pennies without my mom noticing,” one Redditor reminisces.
Today, the mall is still anchored by Macy’s, Target, and Kohl’s department stores, but the Sears closed in 2018 (the space now operates as a Spirit Halloween store a few weeks out of the year). Many of the mall’s small chain retailers have shuttered over the years, like Wet Seal, Anchor Blue, and Radio Shack. This attrition led one Tripadvisor visitor to describe the mall as “experiencing a slow death.”
The big changes coming to the Capitola Mall
In 2026, the Capitola City Council unanimously approved zoning changes that will make way for a radical transformation at the Capitola Mall, including 1,700 new housing units and a new 85 to 120-room hotel. What was once a beloved hangout for local teens now has the potential to become a destination-worthy tourist hotspot. New housing and new hotel rooms would be a win-win for locals and tourists alike, as pressure on housing stock has led Santa Cruz County to place limits on short-term rentals in the past. Neighboring Monterey County, home of Big Sur, placed severe restrictions on vacation rentals recently as well…