San Francisco officials are plowing ahead with an idea to overhaul a downtown shopping center into a soccer stadium in an ambitious effort to kick-start a battered local economy.
After floating the possibility of transforming Westfield San Francisco Centre into a sports arena several months ago, Mayor London Breed said momentum is building around the notion that some real estate stakeholders initially dismissed as far-fetched. City leaders enlisted help from global architecture firm Gensler to study the feasibility, with the mayor saying the San Francisco-based firm will ultimately try to "develop some preliminary design work on what potentially is possible."
Breed told a recent San Francisco Chamber of Commerce meeting that "when we are able to share that with the public, we will — but I'm really excited about what that's going do. We of course want to give people an understanding of what could happen and get a developer and others excited about making investments into the stadium as a way to diversify what happens in the downtown area."
The meeting was intended to provide the city's business community with a look at how Breed's administration is trying to revitalize downtown, an area awash in record vacancies, store closings, lower foot traffic and lack of tourists and office workers. In and around the Westfield mall, retailers including Nordstrom, Old Navy, Saks Fifth Avenue, Anthropologie, Gap, Crate & Barrel and Williams-Sonoma have pulled the plug on their long-standing flagship outposts.
What's more, Unibail-Rodamco-Westfield, the owner behind the Westfield San Francisco Centre, said this summer it would stop making payments on its $588 million loan as foot traffic to and around downtown San Francisco has fallen, and concerns of crime, homelessness and other socioeconomic issues have made a challenging situation even worse.
San Francisco is now contending with an office vacancy rate that has skyrocketed to as high as 30% in some areas, according to CoStar data, a sharp increase compared to the roughly 7% reported in late 2019. Absorption, or the difference between the amount of space leased versus vacated, has been in the red by about 7.5 million square feet over the past year, a sign that the market continues to be overwhelmed by available space that tenants would rather give up than take over.
Early Stages
As the concerns have piled up and the city faces a budget shortfall nearing $800 million, San Francisco legislators have approved packages of ordinances to reignite the economy and aid the downtown area's recovery. The city has already secured funding for 220 new police officers and new shelter beds, Breed said, and San Francisco is reporting a 10% increase in office demand in the second quarter of the year due in part to a tax credit that was extended to new business looking to plant a stake in the city.
Legislative strategies have included changes to the city's zoning rules to widen the mix of business types that are allowed to operate in and around Union Square, the city's central shopping district, as well as a streamlined approval process for building owners looking to convert existing commercial buildings into housing or alternative uses that includes, Breed hopes, the downtown soccer stadium.
"We hope to be able to share that information with the public fairly soon and potentially get the ball rolling," Breed said of details such as development costs, stadium capacity or how it would navigate the city's planning process. "We want to give people an understanding of what could happen and get a developer and others excited about making investments into the stadium as a way to diversify what happens in the downtown area."
To be clear, a conversion plan of any nature is expensive and arduous, and it can take a while before talk turns into action. For example, some office buildings are less adaptable to residential use than others, and any change of use is a bet that current economic realities will withstand future changes. Potentially overhauling the downtown mall into a sports arena is an even bigger endeavor than other smaller property types, especially considering factors such as cost, traffic and any community opposition.
A Gensler spokesperson confirmed in a statement to CoStar News that the firm was working on "feasibility studies for a stadium in that area" but said the studies were "early conceptual work."
While acknowledging that the stadium plan would not be an "instant" fix for downtown San Francisco, Breed said there has also been a lot of interest in the Westfield mall property as well as in various hotels, including Hilton Union Square and Parc 55, which are expected to be surrendered to their lenders after owner Park Hotels & Resorts stopped making payments on its $725 million loan for the properties.
“I am optimistic about the future," the mayor said. "What we’re seeing in San Francisco is something like we’ve never seen before."