Value of San Francisco's Westfield Centre Drops by $1B

The value of Westfield Centre, the largest mall in downtown San Francisco, has dropped by almost $1B.

The half-empty 1.5M SF Union Square mall has been appraised at $290M, a 75% loss compared to a 2016 valuation of $1.2B, according to Morningstar Credit Analytics.

In October, a San Francisco Superior Court judge appointed a receiver to “take possession, custody and control” of Westfield Centre, which was handed back to lenders by its owners in June.

Mayor London Breed, who has called for San Francisco’s hollowed-out downtown to be “reimagined,” has proposed redeveloping the Westfield Centre into a soccer stadium. The city last summer hired Gensler to launch a feasibility study of a stadium at the site.

Lenders of a $558M CMBS loan backed by the Union Square mall sued affiliates of the mall’s operator and majority owner Westfield on September 29, asking for the mall to be placed in receivership rather than foreclosed so that the property could be potentially sold to rectify debts owed by Westfield affiliates.

The receiver named by the court, Gregg Williams of Trident Pacific, wrote in a declaration filing that security is the “most significant issue” at Westfield Centre.

In September, one of the remaining tenants at Westfield Centre sued the mall’s owners, claiming they failed to address more than 100 “significant security incidents” at its store in the mall between May 2022 and May 2023.

According to AE Retail West, parent company of fashion brand American Eagle, the incidents included threats of violence against store employees-including situations involving customers threatening employees with firearms and, in one case, a machete.

The Westfield Centre is jointly owned by Paris-based Unibail-Rodamco-Westfield and Brookfield Properties. In June, URW disclosed that the mall, located at 856 Market Street, was going back to its lenders after the owner stopped making payments on the $558M loan.

A month earlier, when Nordstrom announced its plans to vacate a 300K SF store that anchored the Westfield Centre, URW issued a statement citing unsafe conditions in the downtown area.

“The closure of Nordstrom underscores the deteriorating situation in downtown San Francisco. A growing number of retailers and businesses are leaving the are 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,” URW’s statement said.

Sales at the Westfield Centre dropped to $298M in 2022 from a pre-pandemic level of $455M in 2019.