Two of Westfield San Francisco Centre's biggest tenants will soon have their leases expire, which raises further questions about its future as anchor tenant Nordstrom is preparing to close and its owner looks to sell its U.S. assets.
Century Theaters' lease, which occupies more than 52,000 sq. ft. on the top-floor, will expire in September. According to a final report for a commercial mortgage-backed security loan linked to the property, H&M's lease, which occupies 25289 square foot, will expire in January.
According to the CMBS report, the lease of Bespoke, a large tenant that occupied 40,000 square foot of flexible event and office space, expired on January 20, 2023. Uncertain if this lease has been renewed or the tenant quietly moved out. Bespoke has not responded to any requests for comment in the past week.
CMBS reports indicate that Century Theaters Bespoke, and H&M have all extended their leases for a short time after they expired in December 2020 (Century Theaters Bespoke), and January 2022 (H&M).
The lease for Nordstrom at Westfield Mall expires on October 20, 2023. Last week, the Business Times reported that the retailer was not renewing their 312,000 square foot commitment. The retailer will also close its 45,000 square-foot Nordstrom Rack across the street in this year.
CMBS loans linked to the retail and offices center have been on the industry watchlists at least since 2021. However, the mall owners remain current with payments.
Westfield Mall spokesperson declined to comment about the status of leases. The company previously stated that it does not publish occupancy statistics for specific retail centers.
According to a CMBS report the leasing situation of the mall has dramatically declined since 2016, when its occupancy rate was 95.6%. The mall had a 52.8% occupancy rate last year, compared to 73.9% occupancy at the end 2021.
This decline is attributed to two major tenants leaving the mall at the end 2021, Crunchyroll (71.614 square feet) & Trustarc (28.117 square feet). San Francisco State University terminated its lease of 125,000 square foot of office space in the mall at 2021. It relocated its downtown campus to 160 Spear Street, the fifth floor.
The borrower has other large vacant spaces, as well. The report also included a comment from an analyst. As you may know, the San Francisco mid-market is facing a major challenge in office leasing due to an excess of vacancies and little demand. "There have been few tours and very little activity."
Cinemark, the owner of Century Theaters declined to make a comment via a representative.
The website of Bespoke has not been updated since at least 2020. Three of the companies listed as Bespoke tenants for San Francisco are either out-of-business or not active in that market.
H&M representatives did not respond to a comment request. The clothing retailer closed its large downtown San Francisco shop at 150 Powell St., in February 2021.
Westfield's parent company, French conglomerate Unibail-Rodamco-Westfield, has told investors it plans to shift its focus to European properties and hopes to sell most of its U.S. properties by the end of 2023.
Last week, mall representatives were outspoken in their criticism of street conditions and the "lack enforcement against rampant crime activity." The Mayor's Office told me in a conversation with the city that the mall representatives had expressed doubts over the long-term viability and potential of the Nordstrom store. They wanted more space for office tenants.
Zara has a lease for 27,579 sq ft that runs through March 2027. The other two largest tenants in the mall are Bloomingdale's and Zara. Burke Williams Day Spa is the next largest tenant according to CMBS's document. It has 15,841 sq. ft. leased until May 2025.
Macy's Inc. (which owns Bloomingdales) has closed over 100 Macy's in the past few years, but has taken a new approach with Bloomingdale's. The company claims that Bloomingdale's achieved its highest ever sales volume last year. Bloomie's, a new format for Bloomingdale's that emphasizes a smaller footprint and a "highly curate experience," according to company executives, is growing rapidly.
Charles Anderson, Director of Stores at Bloomingdales, stated in a release that the second Bloomie’s store opened in Illinois last year, "the new concept is authentic to the Bloomingdale’s brand, yet reinterprets on a smaller-scale, infused with excitement and ripe for exploration."
The retailer closed a Bloomingdale's department in Skokie's Westfield Old Orchard shopping center and opened a Bloomie store in a new location. Bloomingdale's opened the smaller format at Fairfax, Virginia. It is also about to open a third Bloomie's, less than 20,000 sq. ft., in Seattle's University Village shopping center.