Not 'The Store That Westfield Promised': American Eagle Sues Landlord Over Conditions At S.F. Mall
One of the largest tenants of the Westfield San Francisco Centre mall is suing landlord Westfield, claiming that managerial failures allowed the mall to become dangerous for employees and shoppers alike and, in doing so, breached the lease agreement.
The complaint was filed Monday in San Francisco Superior Court by AE Retail West LLC, the company that owns and operates the apparel company American Eagle, the San Francisco Chronicle reported. American Eagle takes up about 13K SF in the mall, according to lease documents submitted with the complaint.
"Westfield is declining to comment because we have not been served the lawsuit," the company told Bisnow via email Wednesday.
AE said between May 2022 and May 2023, its store workers reported over 100 “significant security incidents” at the store, including firearms being brandished at store employees, physical attacks on workers, burglaries and robberies.
The complaint claims that Westfield knew about serious concerns about criminal activity at the mall but “has not taken any reasonable steps to mitigate that activity."
Instead, AE says Westfield closed its on-site management office, leaving AE a phone number to call in the event of emergencies. AE estimates that Westfield only responds to half of those calls.
“In exchange for millions of dollars in rent, Westfield obligated itself to maintain the common areas of the mall and promised American Eagle would have quiet enjoyment of the store for the duration of the lease,” the complaint says. “But Westfield neglected its obligations, allowing the mall to become a lightning rod for, in Westfield’s words, ‘rampant criminal activity.’”
AE's annual rent from the start of the lease term in January 2018 through January 2022 ranged from $13.6M to $15.3M, according to the lease documents filed with the complaint. In the period from February 2022 to January 2023, AE's annual rent was listed as approximately $15.8M.
AE’s lawsuit comes after a June announcement from Westfield and mall co-owner Brookfield Properties that ownership would stop making payments on a $558M loan on the downtown San Francisco shopping center. The company cited the closure of Nordstrom at the mall, which would dramatically affect occupancy and likely cause a drop in foot traffic and sales volume, for its decision, as well as concerns about deteriorating conditions in the area around the mall.
Downtown San Francisco's troubles are well-documented, with residents and business owners complaining of rising instances of theft and drug use, as well as decreased foot traffic due to reduced office usage in the formerly busy area.
But AE challenged the narrative that all problems at the site are the city's fault, alleging that Westfield didn’t do everything it could have to keep shoppers and employees at the mall safe.
Westfield, fully cognizant of safety issues at the shopping center, “considered options to address the security issues at the mall, but ultimately decided not to make that investment,” according to AE's complaint.
AE said it had to step up to fill the void left by Westfield management, giving up key amenities and incurring significant new expenses to try and stem the impact of worsening conditions at the mall.
American Eagle permanently closed its streetfront entrance on the major thoroughfare of Market Street, “significantly altering the store that it bargained for in the Lease” in an effort “to provide greater physical safety to its staff,” and hired additional security at its own expense, “nearly doubling its annual security expenditures from 2022,” according to the complaint.
“Westfield let the mall deteriorate into disarray,” AE’s complaint says. “This is not the store American Eagle paid millions of dollars for, or the store that Westfield promised.”
AE is seeking “all actual and compensatory monetary damages” for the lease, which was set to expire in 2028.
