San Francisco Mayor: Tear Down Mall, Re-Imagine Downtown

San Francisco Mayor London Breed is doubling down on her strategy to revive the city’s struggling downtown by tearing down empty buildings and re-imagining the space.

At the Bloomberg Technology Summit, held last week in San Francisco, Breed suggested that it might be a good idea to tear down the city’s largest shopping mall, the Westfield San Francisco Centre, and replace it with “something completely different”—like a sports stadium.

Earlier this month, European mall giant Unibail-Rodamco-Westfield (URW) said it stopped making payments on $558M in debt on the 1.2M SF mall in Union Square and will transfer Westfield Centre, which is 55% occupied, into receivership.

URW’s decision to abandon its flagship mall in downtown San Francisco has accelerated concerns that a growing exodus of retailers following the hollowing out of downtown office buildings due to remote work has become a feedback “doom loop” for the city.

Breed, facing a $780M budget deficit that is projected to grow to more than $1B by 2026, said at the Bloomberg summit that the best way to break the downward cycle in San Francisco is to “start re-imagining what downtown can be.”

Breed said the city is focusing on converting empty office towers to housing or tearing obsolete buildings down for new uses, Bloomberg reported.

“Let’s look at what’s possible rather than dwelling on the stories of another store closing—a lot of people may not even shop in those places,” the mayor said, suggesting that online shopping may be emptying the city’s downtown of retailers.

URW and other retailers who are abandoning downtown San Francisco cited deteriorating safety and quality-of-life conditions as primary concerns. In May, when Nordstrom announced its was shutting its 300K SF store at the Westfield mall, URW issued a statement blaming a growing crime problem downtown for driving out retailers.

“The closure of Nordstrom underscores the deteriorating situation in downtown San Francisco,” URW’s statement said. “A growing number of retailers and businesses are leaving the area due to the unsafe conditions for customers, retailers, and employees, coupled with the fact that these significant issues are preventing an economic recovery of the area.”

Breed responded with a statement which said URW’s decision to give the mall back to its lender was “not unexpected”—the European mall giant has been divesting US properties by selling them. The mayor said the city would “pursue a new vision” for the Westfield mall space which could include replacing it with educational institutions.

Sales at the Westfield San Francisco Centre dropped to $298M last year from a pre-pandemic level of $455M in 2019, while foot traffic has declined by 43% in the same period, the company said.

This month, Park Hotels & Resorts announced it has stopped making payments on a $725M CMBS loan backed by two of the largest hotels in San Francisco. Park CEO Thomas Baltimore said in a statement that the company has determined that the prospects for a recovery in San Francisco do not look bright; the CEO said the company plans to divest the two properties.

”Now, more than ever, we believe San Francisco’s path to recovery remains clouded and elongated by major challenges: record high office vacancy; concerns over street conditions; lower return to office than peer cities; and a weaker than expected citywide convention calendar through 2027,” Baltimore said.