Downtown San Francisco is braced for the loss of yet another longstanding retailer, adding to recent store closings among some of the city's longest running tenants.
The Old Navy flagship store along Market Street will close July 1, parent company Gap Inc. confirmed to CoStar News. That will result in the San Francisco-based retailer pulling out of the downtown area altogether after several decades of operating trophy properties across its brands. The closing will result in another high-profile retail vacancy for San Francisco as retailers and customers are concerned about crime, homelessness and depressed foot traffic.
The Old Navy outpost at 12 Fourth St., which opened in 1999, spans roughly 72,000 square feet. The tri-level store is the retailer's largest location by far. It is nearly three times as much as a roughly 22,000-square-foot outpost it has in the Silicon Valley region, its second-largest store.
A Gap Inc. spokesperson attributed the closing to the company's decision at the Old Navy site not to renew the lease, which expires in July, according to CoStar data.
“Old Navy is always evaluating its real estate portfolio to ensure a healthy fleet of stores that can provide the best possible experience for our customers,” the company said in a statement, adding that it's “already working to identify new locations in downtown San Francisco that will better serve the needs of the business and our customers. Gap Inc. has deep roots in San Francisco and is committed to the city.”
Pack Up And Go
Within the past two months, a slew of high-profile retailers including Nordstrom, Saks Fifth Avenue, Anthropologie and Office Depot have rolled out plans to permanently close hundreds of square feet of space they lease in downtown San Francisco.
Since the start of the pandemic, retailers closing locations in and around downtown San Francisco have included Uniqlo, Marshall's, Amazon Go, Coco Republic, Williams Sonoma, Crate & Barrel, Target, Abercrombie & Fitch, The Container Store, CVS and Walgreens as pandemic-driven shifts drained the city's foot traffic and left nearby office buildings largely vacant.
Shifts to remote work and San Francisco's reliance on a now-weakening tech sector has meant the daytime population is lower and crime rates are higher.
Retail vacancy rates in downtown San Francisco have shot up to surpass 18%, according to CoStar data, and tepid leasing activity hasn't been enough to help fill it. The lack of downtown activity has cut into tax revenue, contributing to San Francisco officials now expecting a nearly $800 million deficit in the city's budget.
For Gap, the Old Navy closing will join other locations the company has shut as a result of severe cost-cutting efforts and a widespread restructuring. The company has struggled to turn around years of losses across its clothing brands, which includes its namesake Gap label, Banana Republic, Old Navy and Athleta.
In the Westfield San Francisco Centre a few blocks away from its soon-to-close Old Navy store, the retailer closed its Banana Republic location in April. It also signed a lease to relocate its Banana Republic flagship to 152 Geary St. in the city's Union Square neighborhood, where it now leases about 8,500 square feet. It was previously located at 256 Grant Ave. where it had leased two floors spanning more than 70,000 square feet for upwards of a decade.
Since 2020, Gap has also closed its flagship location in downtown San Francisco as well as other outposts at San Francisco's Stonestown Galleria and Embarcadero Center.
The retailer also closed a downtown location it leased for its athleisure brand Athleta earlier this year.
Gap recently reported a net loss of $18 million for the quarter ending April 29, a significant improvement compared to the $162 million it lost for the same time last year. The company is also in the final stages of putting some Gap and Banana Republic outposts on the chopping block as part of a restructuring plan to close 350 locations by 2023.