Distressed San Francisco Centre Can’t be Converted to Housing

San Francisco Centre is nearly empty, but don’t expect the troubled shopping mall to be converted into housing.

The sheer size and setup of the enclosed mall is a hurdle that housing developers won’t be able to legally overcome, the San Francisco Chronicle reported. Nine of the shopping center’s floors don’t get enough sunlight legally required for new housing units.

“The floorplates are way too big,” Oz Erickson, chair of the housing development company Emerald Fund, told the outlet. Soaring construction costs and high interest rates make the idea of housing at the mall dead on arrival.

The mall contains dozens of storefronts — largely vacant now — in its interior that have no windows to the outside. In addition to building kitchens and bathrooms, in order to get light inside the building, a developer would have to create large lightwells, which would present an impossibly high development cost, Erickson said.

The location at Fifth and Market Streets might also repel interested renters, he said.

“It’s not the greatest neighborhood in the world at all,” he said.

At least six restaurants and eight retailers have closed their doors at the mall in the past few months, including Sunglass Hut, a Razer electronics store, a Steve Madden store, and clothing stores Oak + Fort and Zara. Nordstrom closed its flagship at the mall in 2023. Bloomingdale’s announced the exit of its flagship in January.

Previous owners of the mall Unibail-Rodamco-Westfield and Brookfield Properties were sued by lenders including JPMorgan and Deutsche Bank over an unpaid debt of $558 million. The lenders are in negotiations with the San Francisco Unified School District, which owns part of the land that the mall sits on and is in negotiations with the school district over a ground lease default, according to Morningstar Credit.

The lenders plan to foreclose on the property as soon as possible. A foreclosure auction has been scheduled and delayed several times but now appears to be “imminent,” per Morningstar.

The San Francisco Centre mall was most recently appraised at $195 million, marking a drastic drop from its $1.2 billion estimated value in 2016.

— Chris Malone Méndez