In a sign of the times, San Francisco’s troubled downtown mall is being marketed to prospective buyers for its potential to house uses other than shopping.
Real estate services firm CBRE is calling the city’s largest retail property a “blank canvas” for a mixed-use project with residences, hotels, education and entertainment. It comes as the city sees better business conditions thanks to hiring and commercial property leasing by the artificial intelligence industry.
CBRE released a sales brochure for the city’s largest retail property, now called the San Francisco Centre & Emporium, after lenders took over ownership of the mostly vacant, 1.2-million-square-foot shopping center in a public auction. It includes renderings by global architecture firm Gensler of a futuristic version of the nine-story, 1980s-era mall as a light-filled space with abundant greenery.
The marketing materials pitch the property, one of the largest multilevel urban indoor malls in the United States, as a “unique platform for large-scale reinvention.” They suggest that developers pursue a “Hudson Yards-style” mixed-use redevelopment — referring to the largest U.S. private real estate development that includes the world’s first luxury Equinox Hotel. The San Francisco version incorporates a historic, skylit glass dome built in 1908 that currently tops the mall and a 52,636-square-foot movie theater that shut in 2023.
The nine-story mall in the heart of the city’s commercial center is just 9% leased, said CBRE in the brochure, presenting investors and developers with “a rare opportunity to reimagine a large-scale urban indoor/outdoor campus” in “one of the world’s most dynamic economic ecosystems.”
There are some caveats. For one, a five-level, 300,000-square-foot space once occupied by Bloomingdale’s remains owned by Macy’s and is not being offered for sale along with the mall. Another potentially complicating factor is a 75,000-square-foot lot beneath the mall that’s on a ground lease with the San Francisco Unified School District through 2058. And finally, redeveloping such a property won’t come cheap.
“The challenge for the future owner of this property is that redeveloping it for any use other than as a shopping mall may be prohibitively expensive,” said CoStar Senior Director of Market Analytics Nigel Hughes.
CBRE is handling the sale of the San Francisco Centre & Emporium, as the property is now called, on behalf of Deutsche Bank and JPMorgan Chase. The banks control the mall following its foreclosure last week after a two-year saga of delays while stakeholders haggled over the property and stores shut one by one.
‘Doom loop’
The mall had been struggling for years with the pressures of e-commerce that challenged brick-and-mortar retailers everywhere. But in 2023, then owners Unibail-Rodamco-Westfield and Brookfield Properties walked away from making payments on a massive loan on the property after a 35-year anchor tenant, Nordstrom, said it was closing.
The exodus of stores from the once-bustling downtown shopping center reflected San Francisco’s challenges over the past few years, as the COVID-19 pandemic and the advent of remote work emptied the city’s shops and office buildings, and complaints mounted about crime in the city’s commercial center.
Now downtown San Francisco is enjoying a comeback thanks to the AI boom, with a series of new store openings and a spate of new startups that have brought foot traffic back to downtown.
Officials and stakeholders in the mall are clearly hoping that the good vibes driving a growing number of investors to bet on San Francisco’s resurgence will spread to the beleaguered mall.
It is in the city’s premier retail district, Union Square, which was among the hardest-hit neighborhoods in the hardest-hit city in the country following the pandemic, with a retail vacancy rate that soared from 9% in 2019 to about 22% by early 2025, more than five times the nationwide rate of just over 4%. Mayor Daniel Lurie and upbeat brokers point to a handful of openings that have pushed the neighborhood vacancy rate down to 14.7% in the past few months.
“Amid renewed civic leadership … and surging demand from artificial intelligence and technology firms, San Francisco Centre & Emporium is uniquely positioned to anchor the next chapter in downtown San Francisco’s recovery,” said Kyle Kovac, executive vice president of CBRE’s Capital Markets team in San Francisco, in a statement. Kovac and Mike Taquino are leading the sales process along with Kurt Altvater and Kati Thabit.
It is not the first time the mall has been reimagined. Two years ago, then-Mayor London Breed backed a plan to tear down the mall and build a soccer stadium on the site and hired Gensler to study the idea.
Earlier this year, architecture firm 10 Design released a revamp of the mall as a series of open-air courtyards and pedestrian zones with a central plaza lined with retail and dining akin to the Grove in Los Angeles. Plans have also been floated to turn the mall into a college campus.
According to CBRE, “investors and developers can transform the existing structure or pursue a new mixed-use vision within the existing 400-foot height limit.”
Changing times
Developers elsewhere around the country have rebuilt dead and underused malls as new housing. But despite San Francisco’s dire shortage of affordable homes, developers behind such conversions have generally dismissed the idea as impractical and expensive, noting such factors as the shopping center’s huge floor plates and the indoor mall’s lack of sunlight.
The mall opened in 1988 as a celebrated example of an urban vertical mall, sporting the nation’s first spiral escalators with gleaming brass banisters that whisked shoppers upward to a luxury spa, a Champagne-and-caviar bar or a mirrored room where they could blend custom fragrances. It was expanded and renovated in 2006, when Bloomingdale’s opened a five-floor flagship store there.
The newly redeveloped and expanded mall’s reopening featured aerial ballet, choir and symphony performances capped by a long speech by then-Mayor Gavin Newsom before crowds flooded in.
Twenty years on, retail professionals agree that the age of the big, indoor mall is over. Catherine Yeh, a director for market analytics at CoStar, worked as an asset manager at the mall in 2020, when its owners were already exploring ways to redevelop and reinvent the struggling shopping center.
“No one wants a completely enclosed mall,” Yeh said. “Unless you have amounts of money and are able to completely redevelop it, it is just not feasible.”
Not including the Bloomingdale’s space, the scope of the mall consists of 843,001 square feet of retail, 291,464 square feet of office space and 41,954 square feet of storage. CMBS documents show that the Bloomingdale’s property was not included in the pool of collateral that banks packaged into a big box of commercial mortgage-backed securities in 2016.