TMG Partners Buys Metreon Mall in San Francisco

San Francisco’s Metreon mall is set to come under new ownership by the end of the year.

TMG Partners is set to take over the South of Market shopping center, the San Francisco Standard reported. San Francisco-based TMG and the mall’s soon-to-be-former owner, Miami-based investment firm Starwood Capital Group, are still negotiating a price on the 312,592-square-foot property at 135 Fourth Street. The building’s assessed value by the city was $150.7 million.

Metreon continues to bring in foot traffic in the often-struggling downtown area, thanks in part to the city’s only IMAX movie theater at the mall’s AMC outpost and downtown’s only Target being on site. The shopping center is more than 90 percent leased and the Target and AMC comprise 60 percent of the property’s total income.

In addition to the big-box and theater anchor tenants, Metreon is mostly home to food and beverage businesses such as Chipotle, Super Duper Burgers, and Lemonade. Leases at the property average about eight years.

While TMG is buying the property, it isn’t buying the land it sits on, as it’s owned by the city and county of San Francisco. That lease expires in 2082.

The Metreon deal marks the second major retail property that TMG has moved to add to its portfolio this year. The company is reportedly in negotiations to purchase a stake in Macy’s Union Square store as the retailer struggles to keep its doors open at the property, according to the Standard.

Sony developed and opened Metreon in 1999 with the goal of creating an interactive theme park with arcades, toy stores and a whimsically designed play area. The Tokyo-based tech giant abandoned the property in 2006 and sold it to Westfield and the now-defunct Forest City Enterprises, which turned it into a traditional shopping center. Westfield then sold it to Starwood Capital in 2012.

— Chris Malone Méndez