The owners of San Francisco Centre, the city’s largest shopping mall, have issued notices to the remaining tenants instructing them to vacate their premises. The directive follows a recent change in ownership after a foreclosure auction.
According to a report by the San Francisco Business Times, legal counsel for mall management informed tenants that their leases were “extinguished” due to the new ownership. Tenants have been told to leave immediately, with some allowed until between December 31 and January 31 as their last possible days of operation.
The property recently came under control of DBJPM 2016-SFC Emporium LLC after previous owners Unibail-Rodamco-Westfield and Brookfield Properties defaulted on nearly $600 million in debt and relinquished ownership in 2023. The foreclosure auction resulted in the mortgage trust submitting the only bid at $133 million, which is about 70 percent of the property’s most recent assessed value of approximately $195 million. In comparison, San Francisco Centre was valued at over $1.2 billion in 2016.
Over the past two years, many tenants have left voluntarily as occupancy dropped sharply following Nordstrom and Bloomingdale’s departures from their anchor leases in 2023 and earlier this year. This triggered further store closures; now only two restaurants remain open.
CBRE has been selected to market the 1.2-million-square-foot property for sale. Marketing materials suggest potential buyers could either transform or redevelop the complex for mixed-use purposes on Market Street. However, redevelopment into housing is not currently feasible because nine floors lack sufficient sunlight required by law for residential units.
Emptying out such a large retail property with few profitable tenants may reduce operating costs while also making it more attractive to prospective buyers who want flexibility for future plans (https://sfstandard.com/2023/11/17/westfield-san-francisco-centre-auction-foreclosure-market-street-downtown). JLL will continue managing the site under its new owner.
