Plaza North Finally Filled Its Kmart Space. Now Raley's Is Leaving Next Door.

The long building on North McDowell Boulevard across from Lucchesi Park has its lights back on. Boot Barn sits at one end, Hobby Lobby at the other, and between them is Petaluma's second Grocery Outlet, which held its ribbon-cutting with Mayor Kevin McDonald in late August. The Argus-Courier puts the new store within a few minutes' walk of the Raley's that will close on Jan. 26, 2027.

So the big vacancy on Petaluma's east side has moved next door. The center needed six years, one withdrawn proposal and a plan to split the building into three before the old Kmart space filled. The Raley's space is the next one up, and it faces the same city rules that shaped the Kmart outcome.

Six Years, One Building

The Kmart opened in 1980 as the anchor of the 19-acre center. For four decades it was the store most people meant when they said "Plaza North," complete with a dine-in restaurant and a garden department. Here is how the space went from empty to full.

During those years the only regular use of the space came from Spirit Halloween, which leased part of it for the season some years. The space finally filled once it stopped being treated as one big box. Instead of one large store, the Argus-Courier reported that a year-long renovation divided the building into three separate units. You can see the project file for 261 N. McDowell on the City of Petaluma's project page.

Five Months Apart

The timing at the grocery end of the center turned out tight. Raley's announced its Petaluma closure on Aug. 21, as part of a plan to close at least six stores in California and Nevada by June 2027. Grocery Outlet opened six days later. If Raley's keeps its date, the two stores will have overlapped by five months, and the cluster of grocers in and around Plaza North will lose one store just as it gained one.

The stores themselves are quite different. Raley's, at 157 N. McDowell Blvd., is a full-service supermarket chain based in West Sacramento. A company spokesperson told The Press Democrat that Raley's has 48 employees in Petaluma and will offer transfers to "as many affected employees as possible." Grocery Outlet is an independently operated discount format. The new east-side store is run by Victor Soares, who has worked in grocery stores since he was 13. Michael Billeci runs the original Petaluma store at River Plaza on Washington Street, which is staying open.

In the same Press Democrat report, Raley's Chief Marketing Officer Carol Barsotti said the closures came down to "local market conditions and the long-term financial sustainability of these locations." Onita Pellegrini, CEO of the Petaluma Area Chamber of Commerce, told the paper what she hopes happens next:

"We hope that the location will ultimately bring another strong business or community-serving use to Petaluma."

As of late October, no replacement for the Raley's space has been announced.

The Rule Any Replacement Will Meet

The 2022 zoning change that ended the Home Depot plan still applies to this stretch of town. According to the Argus-Courier's coverage of the withdrawal, Petaluma now requires a conditional-use permit and environmental review for any store over 25,000 square feet.

That rule is why the Kmart story matters for the Raley's space. The old Kmart filled with three mid-size national chains moving into divided suites, which is a different path from one large store going through extra review. Any proposal for the Raley's space will be measured against the same threshold. A single large tenant would mean starting the review and public notice process for a big store from scratch. Divided suites would follow the path the old Kmart next door has just finished.

What Stays on the Block

The shopping trip around this end of McDowell will look different by February, but a lot of it stays put. The Plaza North center has 43 suites, and the Argus-Courier has listed Soban Korean Cuisine, iWashToo and Fruta All-Natural Ice Cream among its tenants. Soban lists its address as 255 N. McDowell Blvd., and Fruta lists its Petaluma shop at 279 N. McDowell Blvd.

Trader Joe's is right next door to Raley's, and Lola's Market, which specializes in Mexican groceries, is close by. Sources disagree on whether those stores belong to Plaza North or to the adjacent Plaza South, but you can walk between them either way.

The corridor has turned over at a smaller scale too. A little south at Deer Creek Village, 441 N. McDowell Blvd., the poke shop Fresh Catch took over the former Mr. Stroopwafel space and held its grand opening on April 18, 2026.

Where the Weekly Shop Goes After Jan. 26

For east-side households that relied on Raley's for a full-service supermarket, the nearest alternatives are spread along the main east-side roads:

• Safeway, 389 S. McDowell Blvd., at Washington Square
• Safeway, 701 Sonoma Mountain Pkwy., at Leghorn Marketplace
• Sprouts Farmers Market, 401 Kenilworth Drive, at East Washington Place
• Lucky, 939 Lakeville Highway, at Petaluma Gateway Center
• Grocery Outlet, both the new Plaza North store and the original at River Plaza on Washington Street
• Petaluma East Side Farmers' Market, Tuesdays year-round at 320 N. McDowell Blvd., just up the road from Plaza North

Across town, the locally owned Petaluma Market on Western Avenue is still the independent option on the west side.

If you fill prescriptions at the Raley's pharmacy, Raley's has a general prescription transfer tool on its website. The company hasn't posted instructions specific to the Petaluma closure, so the pharmacy counter is the place to ask before late January.

Raley's last day is Monday, Jan. 26, 2027, about 12 weeks after this post goes up.

Changes at a shopping center like Plaza North affect how homes nearby fit into daily life, and they come up when people weigh a move on the east side. If you're wondering how changes along North McDowell fit into your own plans, Cozza Team is glad to talk it through with you. Schedule a free, no-obligation home consultation with a local team that follows this corridor closely.