Westfield to List Two Office Buildings Next to SF Mall

Unibail-Rodamco-Westfield, which walked away rather than pay the tab for the beleaguered Westfield San Francisco Centre mall, wants to sell the office buildings next door for housing.

The French conglomerate is about to list the 77,000-square-foot building at 814 Mission Street and the 28,000-square-foot building at 818 Mission Street near Union Square for an undisclosed price, the San Francisco Chronicle reported.

Nearly 20 years ago, Westfield bought the side-by-side buildings between Jessie and Fourth streets for a combined $42 million, or $400 per square foot.

The vacant buildings are set to hit the market this month, and could sell for less than half their last traded price. Recent office sales in the area have reset the market at between $100 to $200 per square foot.

“Pricing will be in line with other office buildings that have recently sold in Mid-Market,” broker Darren Kuiper of Colliers, working to sell the buildings for Westfield, told the Chronicle. The listing is shared by brokers Tony Crossley and Robert Gilley of Colliers, and Bruce Carlson of Kennedy Wilson.

Kuiper said Westfield hired Chicago-based SOM to evaluate the combined sites for redevelopment into housing, saying that under current density bonus laws, a 365-foot tower with 400 units was possible.

Brokers said the Mission Street buildings can be sold separately or together and could be paired with the former Westfield mall next door, now operated by a receiver. Its foreclosure auction was canceled last month and is now slated for March 27.

It was in June 2023 that Paris-based Unibail-Rodamco-Westfield and New York-based Brookfield Properties abandoned the city’s largest mall rather than pay its $558 million mortgage loan.

The owners of the nine-story, 1.5 million-square-foot mall with 170 stores at 865 Market Street pointed to a plunge in shoppers and sales post-pandemic.

At the same time, Seattle-based Nordstrom was poised to pull out of the half-empty mall, citing “unsafe conditions” for leaving a 312,000-square-foot hole.

The part of downtown surrounding the mall has been challenged with quality-of-life and safety issues in the wake of the pandemic. A Denny’s on the ground floor of 818 Mission for nearly two decades closed last year, adding to its vacant storefronts.

A purchase of the vacant offices owned by Westfield would be a long-term play, brokers say.

Despite the area’s challenges, it has “a lot of great infrastructure,” Carlson of Kennedy Wilson told the Chronicle, highlighting nearby parking, bus and BART stations, museums and the Moscone Convention Center. “The bones are there.”

“The question is, are people OK with grabbing a big site like this and then waiting?” Kuiper of Colliers posed to the newspaper. “Because it may take five-plus years for the development world to come back, maybe longer.

“But there are not a lot of high-rise opportunities in this kind of location with the ability for the builder to go really tall and do housing.”

— Dana Bartholomew