The owners of Westfield Mall in downtown San Francisco have stopped making payments on a $558 million loan and will transfer control of the city’s biggest shopping center to a receiver this month.
The news, reported by the San Francisco Chronicle, comes after Nordstrom announced it would close two downtown shops, including one in Westfield Mall. Nordstrom occupies 312,000 square feet of the mall, which features 1.3 million square feet of retail space and 300,000 square feet of office space. After Nordstrom’s exit in August of this year, the mall will be only 55 percent leased. Westfield malls throughout the U.S. are 93 percent leased, with the company saying its San Francisco location has experienced a performance so poor that it is “unprecedented.”
“Given the challenging operating conditions in downtown San Francisco, which have led to declines in sales, occupancy and foot traffic, we have made the difficult decision to begin the process to transfer management of the shopping center to our lender to allow them to appoint a receiver to operate the property going forward,” the French-owned company said.
Last month, Westfield blamed “unsafe conditions” and “lack of enforcement against rampant criminal activity” for Nordstrom’s departure, according to the Chronicle.
Sales at stores in the mall dropped from $455 million in 2019 to $298 million in 2022. Foot traffic in 2019 amounted to 9.7 million visits. That number dropped by 42 percent to 5.4 million in 2022. The mall’s loss of business appears to be attributable to more than just the effects of Covid, as other locations have not seen such a negative performance.
Other stores in the mall also have leases that are expiring soon.
Downtown San Francisco as a whole is seeing its businesses struggle. Increased drug use and crime near a downtown Whole Foods that opened just one year ago contributed to the store’s April decision to close its doors.
“If we feel we can ensure the safety of our team members in the store, we will evaluate a reopening of our Trinity location,” a spokesperson for Whole Foods said.
In the past few months, prominent San Franciscans have been attacked, CNN crew members reporting on crime had their bags stolen out of their car, and problems related to homelessness have increased.
Some San Francisco politicians have attributed the problem to a police department that is understaffed. “Whole Foods’ closure — together with many other safety-related challenges we’ve seen recently — is Exhibit A as to why San Francisco can no longer afford NOT to solve our police understaffing crisis,” said Supervisor Matt Dorsey.
A frequent patron of Westfield Mall, Gary Hageman lamented the situation, saying to the Chronicle: “It’s just unfortunate what’s happening here with the economy and what’s going on on the streets.”
San Francisco mayor London Breed had a different view, saying it was simply a factor of the French company’s decision last year to wind down its U.S. operations.
“We’ve had numerous conversations with Westfield about the future of this site, and it’s been clear that they did not have a long-term commitment to San Francisco as they look to withdraw entirely from the United States market,” Breed told the Chronicle.
Aside from street conditions, the city is facing a $780 million budget deficit over the next two years, raising fears of significant economic deterioration in the near future.