SAN FRANCISCO—Westfield made an announcement on June 12 that it will not keep operating the mall located in downtown San Francisco, following Nordstrom’s planned closure which was announced in May.
The San Francisco Chronicle reported the Westfield Corporation stopped making payments on a $558 million loan, and its partner Brookfield Properties has started the process of transferring ownership to a receiver.
The company said in an announcement, “For more than 20 years, Westfield has proudly and successfully operated San Francisco Centre, investing significantly over that time in the vitality of the property. Given the challenging operating conditions in downtown San Francisco, which have led to declines in sales, occupancy, and foot traffic, we have made the difficult decision to begin the process to transfer management of the shopping center to our lender to allow them to appoint a receiver to operate the property going forward.”
According to Westfield, gross sales of the mall at 865 Market Street plunged from $455 million in 2019 to $298 million in 2022, while other Westfield malls increased over the same period. The company listed a 66 percent increase at Westfield Valley Fair mall in the neighboring community of San Jose, while sales at their California Flagship locations increased by 26 percent, and overall U.S. Flagship sales increased 23 percent.
“Since 2019, foot traffic has decreased to 5.6 million visits (Dec 2022 YTD) from 9.7 million, a 43 percent drop at a time when our U.S. Flagship portfolio has seen a 98 percent recovery,” Westfield’s spokesperson said in the announcement.
Bloomingdale’s, reportedly tied in a long-term lease which doesn’t expire until 2046, announced in May it will close the location within Westfield San Francisco at the end of August.
Bloomingdale’s exit leaves a 312,000-square-foot vacancy spread across five floors in the Westfield mall.
Following the announcement by Banana Republic to shutter its doors, both AMC cinema and H&M have leases expiring in half a year which they will not renew. Westfield has a roughly 45 percent vacancy rate.
San Francisco is the most troubled metro area in the United States following the COVID-19 pandemic. Work-at-home trends, safety concerns, and declined tourism have hit downtown San Francisco hard.
Not just Westfield, nearby stores have also announced closures, including Old Navy’s flagship store on Market Street as well as Nordstrom Rack.
Westfield opened the fully rebuilt mall in 2006, which at the time was billed as the largest mall on the West Coast. Nordstrom has been open since 1989, functioning as the anchor of the shopping center until now.
The shopping center’s co-owner, EU-based Unibail-Rodamco-Westfield, has near-term plans to back out of the U.S. market and sell off most of its U.S. real estate by the end of 2023, according to the Wall Street Journal.
San Francisco Mayor London Breed said in a statement, “This has been something that has been coming for some time. We’ve had numerous conversations with Westfield about the future of this site, and it’s been clear that they did not have a long-term commitment to San Francisco as they look to withdraw entirely from the United States market.”
Yet Westfield’s parent company Unibail-Rodamco-Westfield said in an announcement, “The planned closure of Nordstrom underscores the deteriorating situation in downtown San Francisco.”
“A growing number of retailers and businesses are leaving the area due to the unsafe conditions for customers, retailers, and employees, coupled with the fact that these significant issues are preventing an economic recovery of the area,” the spokesperson said in the statement.
Despite law enforcement patrolling the mall regularly over the past year, emergency dispatchers still received calls concerning hundreds of potential crimes including 118 petty-theft incidents, 64 fights, 41 grand thefts, and 24 burglaries.
From The Epoch Times