Yardi’s Plans to Turn Paseo Nuevo Space Into HQ Deemed ‘Immensely Supportable’

After nearly a decade of sitting empty on one of downtown Santa Barbara's most visible corners, the former Macy's building at 701 State Street is finally finding its future — and the city's design gatekeepers are enthusiastic about it.

On Wednesday, August 13, the Santa Barbara Historic Landmarks Commission held a conceptual review of Yardi Systems' proposal to convert the three-story, 141,178-square-foot building into the company's new downtown headquarters. The reception was overwhelmingly positive, with commissioners calling the redesigned plans a major improvement over the building's current state — and urging the team to refine a few remaining details before the project returns for a formal review.

"I think it is an immensely supportable project," Commissioner Robert Ooley said, as reported by Noozhawk. "What a great use of a dead building."

From Anchor Store to Tech Campus: How We Got Here

The Broadway department store that originally anchored Paseo Nuevo was converted to Macy's, which closed in 2017. Nordstrom followed, closing in 2020 during the COVID-19 pandemic. The twin closures hollowed out the open-air mall's retail core and left State Street's busiest block conspicuously stagnant.

Eventually the company that owned the majority of the buildings in the mall defaulted on a loan held by AllianceBernstein — a Tennessee-based global investment firm. In 2022, AllianceBernstein suddenly found itself owning the Macy's building and all the inline shops, and became responsible for all improvements to the property.

In December 2025, the City Council directed AllianceBernstein — operating as AB Commercial — to come back with a plan to build more affordable housing after an unsatisfied reaction to a proposal for 209 market-rate apartments and 24 affordable housing units at the former Macy's site. When that stalled, Yardi Systems entered the picture, starting negotiations with AB Commercial and the city of Santa Barbara to acquire the mall and preserve the retail tenants.

Calling it a "miracle" and a "generational transformation," the Santa Barbara City Council gave unanimous, enthusiastic support to Yardi Systems' plan to acquire Paseo Nuevo mall and move 600 workers downtown. The council officially authorized the development deal to transfer its share of ownership of the Paseo Nuevo shopping center to Yardi Systems, which will take over as majority owner of the mall. The development deal comes with more than $7 million in contributions from Yardi Systems and DSP, the company that will retain ownership of the Nordstrom building.

Yardi Systems plans to invest $100 million into the Macy's building to turn it into a corporate office, along with other mall improvements.

What the Redesign Looks Like

Project architect Brian Cearnal of Cearnal Collective described the effort as a "reinvention" of the building's spirit — one primarily focused on flooding the structure with natural light, according to Noozhawk's reporting. The plans call for exterior and interior accessibility improvements, a new rooftop deck, facade and roof upgrades, and a reconfiguration of the building's interior floor area.

On the State Street facade, most of the existing window openings — which Cearnal noted are largely fake — would be replaced with large French door openings and shallow balconies. The tower at the corner of State and Ortega would receive an opening at its base, a new window between the second and third floors, and fresh detailing at the top. The Ortega Street side would get a redesigned doorway, new windows, and a balcony.

The Spanish-style look is what the commission enjoyed most about the plans. "This is a significant improvement in moving the design toward what's more fitting for the location," Commissioner Keith Butler said.

One culturally sensitive question involves the building's three iconic peacock tile murals. Cearnal said the team has been in touch with the Museum of Contemporary Art to preserve and "somehow" relocate the murals. The museum, which operates out of Paseo Nuevo's Upper Arts Terrace, is a longtime institutional neighbor of the building.

A Mixed-Use Vision for State Street

The headquarters conversion is not a sealed-off corporate enclave. Kevin Yardi, the company's senior vice president, told the commission the ground floor would follow a mixed-use concept, with retail along the State Street frontage and into the Paseo Nuevo walkway — designed to keep foot traffic flowing through the mall. The building would also house a conference and event space that Yardi Systems would use for its own gatherings while making available to nonprofit organizations at reduced or no cost.

Relocation of Yardi Systems' corporate headquarters is expected to bring roughly 600 employees downtown — supporting local restaurants, cafés, retailers, and services. Yardi's events and conferences already draw out-of-town visitors, generating at least 5,000 local hotel room nights last year, boosting the visitor economy.

The redevelopment plan also includes a proposed adaptive reuse housing project of 80 to 112 units to be constructed at the Nordstrom property at the same time as Yardi's retail-to-office conversion. Under the city's inclusionary housing requirements, 10% of those units would be reserved for moderate-income households.

As for the company's longtime home, Kevin Yardi was emphatic that Goleta is not being abandoned. Yardi Systems, founded in 1984, has been headquartered at 430 S. Fairview Ave. in Goleta for decades, growing into a global real estate software firm. Yardi told the commission that he envisions a "very bright future" for the Goleta campus and suggested housing could be part of that site's future as well.

Commissioners Offer Refinements, Not Roadblocks

While the overall reaction was strongly favorable, commissioners offered several design notes for the project team to address. Commissioner Ed Lenvik called the transformation "an immense improvement, just beyond belief," but asked that a large proposed window in the tower be reconsidered, saying it "really destroys a lot of the integrity of the tower." Commissioner Cass Ensberg pushed for more personality in the design — more color, varied window sizes, and what she described as a bit more "quirkiness" — noting the current scheme "feels very formal." She also recommended leaving the tower's existing plaster detailing alone rather than adding new elements at the top.

Cearnal acknowledged that the tower's existing design has long bothered him and indicated he would explore alternatives.

What Comes Next

Development of the project is subject to design review by the Historic Landmarks Commission and issuance of building permits for interior and exterior modifications. Wednesday's hearing was a conceptual step, not a final approval — the project is expected to return to the commission for additional review after the design team incorporates the commissioners' feedback.

For Santa Barbara residents who have watched the State Street corridor struggle through years of retail vacancies, the commission's enthusiasm signals that the most ambitious piece of the Paseo Nuevo revival puzzle is advancing on solid footing. The former Nordstrom and Macy's buildings have been largely vacant for years; complementary corporate offices and housing uses would significantly increase activity on State Street and the surrounding downtown business district, according to the city's own redevelopment project page.

With a $100 million investment on the table, 600 employees headed toward State Street, and the city's design commission now on board conceptually, the corner of State and Ortega may be on the verge of becoming Santa Barbara's most talked-about block for all the right reasons.