Westfield To Stop Paying $558M Loan On Namesake Downtown S.F. Mall

Westfield will walk away from its namesake retail property, the Westfield San Francisco Centre, ceasing payments on a $558M loan on the mall and inflicting yet another wound on the struggling downtown San Francisco.

Westfield cited the recently announced Nordstrom closure, declining foot traffic, a decrease in sales volume and concerns about the safety and cleanliness of the streets in proximity to the downtown mall at 865 Market St., according to the San Francisco Chronicle, which broke the story Monday. 

“For more than 20 years, Westfield has proudly and successfully operated San Francisco Centre, investing significantly over that time in the vitality of the property," Westfield said in a statement. "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.”

Nordstrom’s departure, announced last month, is a particularly deep gouge for the mall, as the department store occupies about 300K SF of the 1.2M SF property. Nordstrom’s exit, expected to occur July 1, will leave the mall 55% leased, while most of Westfield's properties are more than 93% occupied. 

Several other retailers, including Abercrombie & Fitch, a Microsoft store, Tiffany & Co. and the Warriors Team Store have also shuttered since the end of 2019, right before the pandemic. Eateries in the mall food court have also joined the exodus. Banana Republic also closed its store in the Westfield mall last month.

Old Navy, headquartered in San Francisco and owned by the same parent company as Banana Republic, is withdrawing its presence from the same area.

A nearby Walgreens was the scene of an April shooting that left one person dead, causing an uproar in the city. Banko Brown was shot by a security guard, and his death added fuel to a growing debate about crime and cleanliness downtown.  

Westfield isn't the only major real estate owner to hand over the keys to downtown San Francisco property as the area struggles to recover from the pandemic.

Park Hotels & Resorts announced it would stop making payments on $720M in loans connected to the largest and third-largest hotels in San Francisco, Hilton Union Square and Parc 55.