• Mon. May 27th, 2024

Downtown San Francisco’s Struggles Deepen As High-Profile Retailers Shut Locations

Bynewsmagzines

May 4, 2023
Nordstrom is closing its longtime location in the Westfield San Francisco Centre, where it has operated multiple floors for several decades. (CoStar)

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The dimming retail outlook in downtown San Francisco has darkened further in the past couple of weeks as more chains give up the effort of maintaining their stores, dealing blows to a city already battered by the fallout of the pandemic.

High-profile retailers including Nordstrom, Saks Fifth Avenue, Anthropologie and Office Depot have rolled out plans to permanently close hundreds of square feet of space they lease.

Pandemic-related shifts to remote work and San Francisco’s reliance on a now-weakening tech sector has meant the daytime population has fallen as crime rates have risen.

In the case of Nordstrom, Chief Stores Officer Jamie Nordstrom said the department store chain decided not to renew leases for its outposts at the Westfield San Francisco Centre and a nearby Nordstrom Rack at 901 Market St. The company has been in the downtown mall with its San Francisco flagship since the 1980s and leased about 45,500 square feet from landlord Hudson Pacific Properties for its off-price offshoot for about a decade, according to CoStar data.

“The planned closure of Nordstrom underscores the deteriorating situation in downtown San Francisco,” a Westfield spokesperson said in an emailed statement to CoStar News. “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.”

Saks Fifth Avenue, which opened its discount Off Fifth location in nearly 42,000 square feet in the same 901 Market St. building in 2015, confirmed to CoStar News that it would be closing the store this fall.

The news of the department store closings landed just days after Office Depot and Anthropologie unveiled plans to permanently shut their downtown San Francisco locations. The women’s clothing retailer confirmed it would will close its longtime store in the city’s Flood Building on May 13, where it has leased space for more than 16 years, according to CoStar data.

Office Depot will close its roughly 6,500-square-foot downtown location at 33 Third St. sometime this year.

About a year after opening a flagship location along Market Street, Whole Foods Market closed last month. The grocer said drug use and crime in and around the store meant operating at that site became a safety concern for both its customers and employees.

“The dynamics of the downtown San Francisco market have changed dramatically over the past several years, impacting customer foot traffic to our stores and our ability to operate successfully,” Nordstrom said. “Decisions like this are never easy, and this one has been especially difficult. We’ve spent more than 35 years serving customers in downtown San Francisco, building relationships with them and investing in the local community.”

The spokesperson said the Westfield mall owner Unibail-Rodamco-Westfield “has actively engaged with city leaders for many years to express our serious concerns, which are shared by our customers and retailers. We have urged the City to find solutions to the key issues and lack of enforcement against rampant criminal activity.”

Since the start of the pandemic, retailers such as Gap, Amazon Go, Athleta, Crate & Barrel, Target, Abercrombie & Fitch, The Container Store, CVS, Walgreens and others have closed their locations in and around downtown San Francisco as pandemic-driven shifts drained the city’s foot traffic populations and left nearby office buildings largely vacant.

Retail vacancy rates in downtown San Francisco have shot up to surpass 18%, according to CoStar data, and tepid leasing activity hasn’t been enough to help fill it. The lack of downtown activity has meant San Francisco officials now expect a nearly $800 million deficit in the city’s budget.

While the challenges facing San Francisco’s downtown recovery appear to be fast-growing, some city officials and state legislators see it as a chance to address other issues such as its severe housing shortage by repurposing some of the now-unwanted office and retail space into residential uses.

Following the latest batch of closing announcements, state Sen. Scott Weiner said on Twitter that the city has to be more creative with its redevelopment plans and step up its efforts to address its arduous permitting process.

“Nordstrom closing…reiterates we must reimagine downtown SF,” he said. “Everything must be on the table, w/ mix of housing, office, retail, nightlife.”

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