Bloomingdale’s is closing its flagship store in San Francisco, dealing a new blow to a downtown business district that is still struggling to claw its way back from the aftereffects of the COVID-19 pandemic.
Bloomingdale’s, owned by Macy’s, announced that it plans close its flagship location on Market Street in the spring, shuttering the brand's second-largest store after its New York flagship. The department store occupies five floors at the San Francisco Centre, making it the last anchor and by far the largest tenant at the mall that has bled occupants in recent years.
Faced with declining sales, Macy's is in the process of closing 150 stores by the end of 2026 in an effort to streamline its operations in a difficult retail environment. But the news that the company is closing the Bloomingdale’s in downtown San Francisco came as a shock to many observers. Macy’s has said it plans to use the proceeds from closing underperforming stores to improve the remainder of its fleet and expand its luxury Bloomingdale’s and Bluemercury brands that Chairman and CEO Tony Spring has singled out as “growth engines” for the company.
In December, a group of activist investors called for Macy's to explore "strategic alternatives" for the Bloomingdale's and Bluemercury brands, saying their value wasn't being reflected in the stock price.
“It is surprising to see Bloomingdale’s close a flagship in such an important city, especially as — unlike Macy’s — the Bloomingdale’s brand is in expansion mode,” Neil Saunders, a retail analyst and managing director at GlobalData, said in an email to CoStar News. He added that the decision to close the store was likely connected to the store's "unproductive" location and "a function of wider issues in San Francisco and the mall in which that Bloomingdale’s is located. This is a big store, and if it’s not working then Macy’s will not want to carry it.”
Once a downtown retail destination for shoppers from all over the San Francisco Bay Area, the San Francisco Centre is being managed by a receiver after its previous owners, Unibail-Rodamco-Westfield and Brookfield Properties, walked away from the roughly 1.2 million-square-foot property in 2023, blaming the city's deteriorating retail market. The mall was supposed to be sold in a public auction late last year, but the process has been delayed twice by lenders.
Macy's next?
Bloomingdale’s, which opened at the San Francisco Centre in 2006, is the second anchor tenant to desert the once-popular indoor mall at Fifth and Market streets. San Francisco Centre opened in 1988 to crowds of thousands who lined up outside to see its spiral escalators and retractable skylight and partake in the champagne and caviar bar. Nordstrom’s flagship store at the mall closed in 2023 after 35 years in business. Other stores — including Adidas, American Eagle, J. Crew, Madewell, Aldo and L’Occitane — have since followed suit as the mall becomes increasingly deserted.
There were local press reports in recent days that signs were taped to the doors of the Michael Kors store in the mall informing customers of its impending closure. The store’s parent company, Capri Holdings, did not immediately respond to a request for comment.
Bloomingdale’s occupies nearly 340,000 square feet in the beleaguered mall, according to CoStar data. Its lease was not set to expire until September 2046.
“This vibrant city has been home to the brand for nearly two incredible decades,” a Bloomingdale’s spokesperson said in an emailed statement to CoStar News, adding that the store would close this spring. “We are hopeful to be back to serve the San Francisco community in the future and look forward to introducing new ways to provide enhanced service to our loyal local shoppers.”
San Francisco officials expressed relief earlier this month upon learning that Macy’s iconic store a few blocks away in Union Square — that the company announced in early 2024 it would close but did not say when — was not in the retailer's first round of 66 closures announced by the New York-based department store giant. Two potential buyers, TMG Partners and Prado Group, are reportedly interested in Macy's Union Square store that is valued at between $240 million and $298 million.
U.S. department stores have fallen on hard times as once stalwart American chains such as Sears, Kmart, Lord & Taylor, J.C. Penney and Belk have restructured or gone out of business, while others such as Macy's, Kohl's and Nordstrom have struggled to stay relevant amid competition from e-commerce, the demise of outdated malls and the rise of discount rivals such as Walmart, T.J. Maxx and Burlington.
'Bad perception'
In San Francisco, retailers have battled with growing concerns about crime and disorder on the streets and declining foot traffic as downtown's tech-heavy office buildings emptied out following the popularity of remote work.
In Union Square, “the loss of population during the pandemic, then the loss of office workers and tourists, all reduced activity and retail spending,” Nigel Hughes, senior director of market analytics at CoStar Group, said in 2024. “And the appallingly bad perception caused by crime and drug abuse is keeping shoppers from returning.”
The retail vacancy rate in Union Square, the city’s premier shopping district, has soared from 9% in 2019 to roughly 22% today, according to CoStar data, making it one of the hardest hit neighborhoods in San Francisco. That's more than five times the nationwide vacancy rate of just over 4%.
Officials have struggled to reinvent downtown San Francisco with ideas that range from night markets to free concerts and light shows.
Mayor Daniel Lurie, the Levi-Strauss heir who took office earlier this month, said in a statement in response to the news of Bloomingdale’s closure: “We don’t take this news lightly, but I am confident that San Francisco’s best days are ahead.”