As Nordstrom prepares to set sail from San Francisco’s largest mall, other stores may be in its wake.
The departure of the Seattle-based retailer from the Westfield San Francisco Centre this fall at 865 Market Street in South of Market has opened the door for a movie theater and clothing store near the end of their leases, the San Francisco Business Times reported.
The lease of Century Theatres, taking up 52,000 square feet on the top floor, ends in September.
The lease for H&M, which occupies 25,300 square feet, expires in January, according to a CMBS financial report on a commercial mortgage-backed securities loan tied to the property.
The lease of co-working company Bespoke for 40,000 square feet of flexible office and event space ended early this year, according to the report. It’s not clear if that lease was renewed or if the tenant has moved out. Bespoke didn’t respond to requests for comment from the Business Times.
CMBS industry reports suggest that Century Theaters, Bespoke and H&M all exercised short-term extensions after the leases for Century and Bespoke expired in December 2021 and H&M in January.
The Nordstrom lease ends in October and the Business Times reported it would move out of its 312,000-square-foot store. A 45,000-square-foot Nordstrom Rack also will close this year across the street.
CMBS loans tied to the retail and office center have been on industry watchlists since 2021, though the mall owners have kept up on payments.
Westfield San Francisco Centre leases have plunged since the loan’s underwriting in 2016, when mall occupancy was 95.6 percent.
The mall ended last year at 52.8 percent occupancy, compared to 73.9 percent at the close of 2021, when Crunchyroll vacated 71,600 square feet and TrustArc departed 28,200 square feet.
San Francisco State University exited its lease for 125,000 square feet of office space at the property at the end of 2021, moving its Downtown campus to 160 Spear Street.
“Borrower does not currently have potential new tenants to backfill the spaces. Borrower also has other large vacant spaces,” read analyst commentary in the CMBS report cited by the Business Times.
“The San Francisco mid-market area is extremely challenged for office leasing as you probably know due to a surplus of vacancy with little demand,” it said. “There have been very few tours and little activity.”
Westfield’s parent company, Paris-based Unibail-Rodamco-Westfield, said it plans to shift its focus to European properties and hopes to sell most of its U.S. holdings this year.
— Dana Bartholomew
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