San Francisco’s premier retail destination, the San Francisco Centre, is experiencing a dramatic decline, with its valuation plummeting and occupancy rates reaching critical lows. This downward spiral, marked by a 25% drop in value over the past year and a staggering 93% vacancy rate, underscores significant challenges facing the urban retail landscape, particularly in cities grappling with high operating costs and security concerns.
A recent appraisal has significantly devalued the 1.4 million-square-foot San Francisco Centre, now valued at $195 million. This represents a substantial 25% decrease since August 2024 and stands in stark contrast to its peak valuation in 2016, which exceeded $1 billion. The mall’s owner is reportedly engaged in discussions with the landowner, the San Francisco Unified School District (SFUSD), regarding potential lease violations, signaling further complexities in the property’s future.
The exodus of retailers from the San Francisco Centre has been ongoing, with recent closures including six restaurants this past summer. This follows the earlier departure of anchor tenant Bloomingdale’s in April. Other notable departures from the previous year include J. Crew, Madewell, Aldo, and Lucky Brand, which collectively contributed to a pre-existing low occupancy rate of just 25% at the time of their closures.
In stark contrast to the struggles of San Francisco Centre, neighboring areas and other retail formats are demonstrating resilience. Union Square, for instance, has attracted new businesses such as Nintendo, while a new Ross Dress for Less store has opened in close proximity to the struggling mall, highlighting a divergent trend in the city’s retail sector.
The financial distress at San Francisco Centre culminated in former owners Westfield and Brookfield ceasing mortgage payments on a $558 million loan shortly after Nordstrom’s exit in 2023. The property’s foreclosure auction has been postponed multiple times, with the latest scheduled date set for September 18th. This situation reflects broader shifts in consumer behavior, including the accelerated growth of online shopping, amplified by the COVID-19 pandemic, alongside localized pressures such as elevated rents and concerns over retail crime in San Francisco.
David Thompson earned his MBA from the Wharton School and spent five years managing multi-million-dollar portfolios at a leading asset management firm. He now applies that hands-on investment expertise to his writing, offering practical strategies on portfolio diversification, risk management, and long-term wealth building.