Dive Brief:
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After more than two decades operating San Francisco Centre, Westfield is handing over the mall’s keys to its lender, a spokesperson for shopping center operator Unibail-Rodamco-Westfield said by email Tuesday.
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Annual sales at the mall plummeted from $455 million in 2019 to $298 million in 2022, per the email. In that time, sales at Westfield’s Valley Fair mall in nearby San Jose rose 66% and the company’s overall U.S. flagship sales rose 23%.
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Also in that time, foot traffic declined 43% to 5.6 million visits from 9.7 million, while the U.S. portfolio saw a 98% recovery. Occupancy also fell some 55% — including the recent closures of Nordstrom and Banana Republic — while the portfolio averages about 93%, the spokesperson said.
Dive Insight:
In its statement, Westfield said that in the past 20 years operating San Francisco Centre, it has been “investing significantly over that time in the vitality of the property.”
“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,” according to the statement. The action has no impact on the rest of URW’s debt, the company also said.
When Nordstrom announced the upcoming closure of its San Francisco Centre flagship and a nearby Rack, the department store similarly noted that “the dynamics of the downtown San Francisco market have changed dramatically over the past several years, impacting customer foot traffic to our stores and our ability to operate successfully.”
In fact, those dynamics have been in flux for quite a while now, according to Nick Egelanian, president of retail development firm SiteWorks. Volumes at the Nordstrom full-line store were declining before the pandemic, and both Nordstrom and Westfield were contemplating exiting the area before then as well, he said by video conference.
“These things don’t happen overnight,” he said.
Last month, URW noted in a press release that, with the sale of a mall in Brandon, Florida, for $220 million, it has made progress with its plans to exit the United States. The company has now generated $1.6 billion “in total proceeds from the planned radical reduction of its financial exposure to the US,” per its release.
