It's not all doom-loop and gloom if you talk to retail real estate people in San Francisco right now. And while it's perhaps just their job to be cheerleaders even in sorry-looking times, at least a few say that empty storefronts are just opportunities for foreign and domestic brands that haven't set foot in this market before.
Yes, the Westfield people are walking away from SF's big, 17-year-old downtown mall, and it will soon be in the hands of a bank. Yes, the Nordstrom is shutting down next month and will leave a major vacancy to fill in the mall. And, as we learned yesterday, the Century Cinema upstairs — which has long been a pretty quiet, not-well-attended theater — is closed, effective immediately. But that doesn't mean the mall will close, and the place is still in pretty nice shape, all told.
"We’ve told tenants that it’s a buyers’ market," says Kazuko Morgan, executive vice chairman at Cushman & Wakefield’s San Francisco office, speaking to the New York Times this week. "Never in my career — and I’ve been doing this for a while — have we seen this type of quality real estate available. San Francisco is one of the top global cities and obviously has some challenges at the moment. But we’ll get through it. Look at how New York has turned."
Ali McEvoy, a retail partner at local firm Maven Commercial, tells the SF Business Times that retailers, especially those with prime spots at the Westfield Centre, do quite well in that mall. "A lot of people don't understand how powerful that center is for generating sales," McEvoy says. "For the right vision this could be an enormous opportunity."
And, McEvoy adds, "There are hundred-thousand-square-foot users who haven't even entered the U.S. market. There are uses that are non-traditional that could fill up a lot of space that could become interesting attractions."
"I mean can you imagine what you could do with an entire city block in San Francisco?" says Laura Tinetti, executive vice president at real estate firm JLL, speaking to the Business Times. "If the price of the basis point of the real estate gets to a point where an acquisition happens, and the metrics are there, you can start getting really creative about what you can imagine for [that mall]."
Others are a bit more cautious in their predictions, and cheerleading.
“I don’t think we’re in the upswing yet for San Francisco,” says Vince Tibone, managing director at the real estate firm Green Street, speaking to the NY Times. “I would say we probably haven’t even reached bottom yet.”
And regarding the Westfield Centre property, John Cumbelich, CEO of the Walnut Creek-based firm John Cumbelich & Associates, tells the Business Times, "The only buyer class or profile that I would identify with an asset like this would be a grave dancer. Somebody who's willing to pick up the pieces of a complete shipwreck at a huge discount."
The Times points to troubled times for other downtown malls around the country, including Chicago’s Water Tower Place, where have the stores are vacant, and where there is still a big abandoned anchor space that used to be a Macy's.
And, Tibone's firm Green Street tells the times that "Since 2016, malls in the United States have lost 50 percent of their value." Which is exactly why Westfield has been planning to divest itself of its American mall assets.
When will things look lively again downtown? It's likely going to be at least a year before a lot of the currently vacant properties find tenants. The city's effort to create some activities and pop-up attractions downtown may or may not pan out, but that doesn't get going until the fall.
Some experts tell the Chronicle this week that in the case of the Westfield, one scenario we may see is that empty spaces in the mall get leased up very quickly — with a receiver providing incentives to tenants in the hope of having a more attractive property for resale in six, eight, or twelve months.
But no doubt, as the Times says, there is "significant pain" ahead for much of downtown, and any recovery is going to be slow.
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