Downtown San Francisco’s Shuttered Megamall Tests Adaptive Reuse Limits
San Francisco Centre, a 1.5-million-square-foot downtown mall that generated more than $1,000 per square foot in sales before the pandemic, is back on the market with bids due this week. Brokers expect the property to sell for no more than $130 million, down from a $1.2 billion valuation a decade ago. The mall closed earlier this year after its owner, Unibail-Rodamco-Westfield, stopped making loan payments in 2023 and turned the property over to lenders owed $558 million. A proposed $130 million sale to two local firms collapsed in July after the buyers determined the project was too complicated to redevelop.
Crime and homelessness drove shoppers away after the mall reopened from pandemic closures, with 2022 sales falling 35% below 2019 levels. Nordstrom’s 2023 closure announcement triggered an exodus that included Bloomingdale’s, leaving the nine-level complex 93% vacant by last year. One potential bidder, Urban Land Development, is exploring a multilevel sports complex in the former Nordstrom store featuring volleyball, soccer, and a basketball training program founded by NBA assistant coach Phil Handy. A portion of the land beneath the mall is owned by the San Francisco Unified School District, and the former Bloomingdale’s space remains owned by Macy’s Inc., creating a web of ownership interests that contributed to the previous deal’s collapse.
San Francisco’s broader retail market shows strength despite the mall’s troubles, with a new Ross Stores drawing crowds and Uniqlo returning with a flagship after a five-year absence. The school district has agreed to extend the property’s ground lease through 2082 to reassure potential buyers. Mall prices nationally rose 13% over the past year as investors grow more confident in the asset class, according to Green Street. The shuttered center is burning millions of dollars annually in maintenance costs and is expected to run out of cash within months.
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