Another signature San Francisco mall is up for sale in the Metreon, but in this case, the sale is not being forced by owners surrendering the property to a lender, and the place has a bustling 92% occupancy rate.

The financial implosion of downtown San Francisco’s former Westfield Mall was the poster-child driver of the “doom loop” narrative, with its ever-increasing vacancies, shoplifting and violence, and most significantly, an owner who had to surrender the property to their lender because of the very San Francisco pandemic-era problem that their debt far outweighed the present value of the property.

And today’s very surprising news from the SF Business Times that the Metreon mall is up for sale will probably end up resurrecting more of that “doom loop” talk. But the Metreon appears to be in very solid shape financially, and is highly unlikely to sell for one of those desperate fire-sale prices that we see so much of SF commercial real estate going for these days. This is a rare SF real estate property that just might sell for the asking price, and quite possibly more.

For one thing, as the Business Times points out, the Metreon is currently 91.9% leased, an absolutely unheard-of figure at a time when the adjacent Union Square has a 20.6% vacancy rate. Yes, the Metreon's occupancy is mostly the Target store and an AMC cineplex, but both seem to be doing brisk business by what my eyes can tell. There are also five 40-foot billboards on the Moscone-facing side of the building that are reportedly pulling pre-pandemic levels of revenue, and every year, you have a shit-ton of guaranteed Dreamforce advertising for which a skilled bargainer could easily overcharge.

"Metreon represents a generational opportunity to acquire an iconic urban retail asset with immediate and long term opportunities to add value and to shape the future of downtown San Francisco," listing firm Jones Lang LaSalle (JLL) says in its promotions for the building.

You can confirm the place is up for sale on JLL’s website.

But about the details: There is not a sale price listed in the brochures which the SF Business Times analyzed, but the current owner is Starwood Capital Group, who bought the Metreon in 2012. Interestingly, the City of SF owns the land on which the 312,592-square-foot shopping center sits, though the rental lease runs all the way through 2082.

Those of us who were here when it opened as the “Sony Metreon” in 1999 remember that despite the hype, the mall had a disastrous run. A PlayStation store and a Microsoft store hoped to bring crowds, but there were days when I would walk some floors and not see one other customer shopping. (Remember that Maurice Sendak Where the Wild Things Are exhibit? Nobody went!) The flagship stores closed and the Metreon was sold in 2006, ironically to Westfield, who then sold it to Starwood Capital.

But the Metreon has shown it can reinvent itself. And heck, it doesn’t even have to reinvent itself when it’s got a near-93% occupancy rate. Throw in a couple buzzy restaurants or bars in some of the vacant ground floor space, and the Metreon is a pretty attractive buy. Or at least, it is to any private investment firms willing to shell out eight or nine figures.  

Related: SF’s Former Westfield Mall Being Rebranded as ‘The Emporium Centre San Francisco’ [SFist]

Image: Jason F. via Yelp