Lenders have once again postponed the sale of San Francisco Centre, as the city’s largest mall continues to bleed tenants.
The downtown mall was set to be sold in a public foreclosure auction last November in order to recoup some $625 million owed to debtors, but it has been postponed three times by lenders. The most recent proposed sale date is March 27, according to the San Francisco Chronicle, which cited the website of First American Title, one of the companies managing the sale.
While some have expressed hope that the property, formerly considered a prime piece of urban real estate, could be reimagined and redeveloped, it is currently stuck in limbo.
The reason for the delays isn’t clear, but the distressed mall’s debt is currently tied to a complex web of lenders including Deutsche Bank, JPMorgan Chase and other stakeholders in the mall’s commercial mortgage-backed securities. These financial institutions would effectively assume ownership if a buyer fails to materialize, but most lenders would generally prefer to avoid a solution that would entail becoming a landlord overseeing a 1.2 million-square-foot mall.
Meanwhile, the once celebrated mall has become a symbol of the challenges plaguing downtown San Francisco in recent years, as office buildings have remained half empty following the end of the COVID-19 pandemic, and businesses have battled with growing concerns about crime and disorder on the streets.
The saga began in 2023, when the mall’s previous owners, Unibail-Rodamco-Westfield and Brookfield Properties, walked away from the iconic property at 845-865 Market St., blaming the city's deteriorating retail market, which left it under the care of a receiver, Trident Pacific. Nordstrom’s flagship store there closed in 2023 after 35 years in business, setting off a string of departures that most recently included another anchor tenant, Bloomingdale’s, which is set to vacate the five floors it has occupied for some 20 years in the spring.
Yet another longtime tenant, the Burke Williams Day Spa, said earlier this month that it was leaving after two decades on the fifth floor since its clients no longer felt safe in the neighborhood, or walking through an empty mall.
San Francisco businesses have battled with growing concerns about crime and disorder on the streets as downtown's tech-heavy office buildings emptied out following the popularity of remote work.
“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. He added that “the appallingly bad perception" of an area hit by crime is keeping shoppers away.”
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%.