Remaining Tenants at San Francisco Centre Ordered to Close

The owners of San Francisco’s biggest mall are kindly telling tenants to take a hike, signaling the beginning of the property’s last days as a functioning shopping center.

The few remaining retailers at San Francisco Centre have received notices from mall management’s legal counsel ordering them to “immediately vacate and surrender the premises” and that their leases were “extinguished” by a recent ownership change, the San Francisco Business Times reported. Last possible days of operation range from Dec. 31 to Jan. 31.

San Francisco Centre’s imminent demise comes after a foreclosure auction last week shifted control of the 5.9-acre, two-building complex to a mortgage trust owed nearly $600 million by previous owners Unibail-Rodamco-Westfield and Brookfield Properties. The pair defaulted and abandoned its ownership post in 2023. The mall’s new owner is an LLC known as DBJPM 2016-SFC Emporium.

The trust, advised by special servicer Midland Loan Servicing, was the only one to submit a minimum bid of $133 million, or 70 percent of the property’s assessed value of roughly $195 million, per the Business Times. The sales price was a far cry from the more than $1.2 billion value the property boasted in 2016.

Tenants have been voluntarily fleeing San Francisco Centre in droves over the past two years. Occupancy collapsed to roughly 9 percent after Nordstrom and Bloomingdale’s walked away from their anchor leases at the shopping center in 2023 and earlier this year, respectively, helping trigger a cascade of store closures. Only two restaurants remain open after several restaurants and retailers closed this summer.

CBRE has been tapped to market the 1.2-million-square-foot property for sale, and a sales brochure is framing the site as a chance to transform the existing structure or pursue a large-scale mixed-use redevelopment on Market Street. It can’t, however, be turned into housing in its current form, as nine of the shopping center’s floors don’t get enough sunlight legally required for new housing units.

By emptying out a retail property this large, with few profitable tenants inside, the mall’s owners could lower the daily operating cost of maintaining the site, the San Francisco Standard reported. At the same time, prospective buyers would have a clean slate to do whatever they want with the mall. JLL is staying on as the manager of the property under its new ownership.

— Chris Malone Méndez