Weeks after San Franciscans bid a final goodbye to the city’s long-suffering downtown mall, a separate shopping center that fared better in the post-pandemic era has sold to new owners that appear to be bullish on the city's rebound.
In the latest evidence of investors’ return to downtown San Francisco, TMG Partners and Bridges Capital closed on a deal to buy the Metreon, the four-story, 320,000-square-foot retail and entertainment center anchored by an AMC Theaters multiplex and the only downtown Target.
They did not disclose the sale price for the property, which was acquired via a deed in lieu of foreclosure transaction from lender Acore Capital. The city, which has and will continue to own the land beneath the mall, last assessed the property at around $150.7 million. It will continue to retain ownership of a long-term ground lease, meaning the new owners will have to pay rent to the city, theoretically through 2082.
The property at 135 4th St was listed for sale by owner Starwood Capital in October of 2024.
Marketing materials at the time noted that the Metreon was more than 90% leased, which was notable given the retail struggles that have gripped downtown San Francisco in particular in recent years. The San Francisco Centre mall, located just a few blocks away, was meanwhile bleeding tenants, having lost its longtime anchor tenant, Nordstrom, and then its owner, Unibail-Rodamco-Westfield, in 2023.
The Metreon, on the other hand, is part of the bustling Yerba Buena district, a micro-neighborhood in the larger downtown South of Market Street area that’s home to the Moscone Convention Center, Yerba Buena Gardens, one of the downtown area’s most popular green spaces, and notable museums and art institutions such as the San Francisco Museum of Modern Art and the Contemporary Jewish Museum. It’s also become a magnet for AI startups and other tech companies that have helped recharge foot traffic and shopping in the area over the past year.
The neighborhood was teeming with visitors in the days leading up to Super Bowl LX, held Sunday in the nearby city of Santa Clara, with Moscone Center and Yerba Buena Gardens hosting an interactive NFL “theme park” with games, branded installations, live music and local food.
'Vote of confidence'
“This investment in the Metreon is a powerful vote of confidence in our downtown recovery,” said Mayor Daniel Lurie in a statement. “The Metreon remains a key anchor downtown, drawing residents and visitors to the heart of our city, and TMG Partners’ investment will help build on our city's momentum. We’re grateful for their partnership as we work to accelerate San Francisco’s comeback.”
The Metreon’s 16-screen AMC Theatres on the third level features the country’s tallest IMAX screen. The second level offers more than a dozen eateries.
Marketing materials for the mall revealed that most of the mall’s income — more than 60% — came from the Target and AMC anchors, with the remaining tenants mostly consisting of food and beverage tenants. The Metreon also has a rooftop event venue, currently called City View, featuring floor-to-ceiling windows overlooking the city skyline.
The space will be “reimagined and renamed” by the new owners with the help of design and development firm Skylight. TMG said it also plans to focus on leasing up the mall’s ground-floor retail.
The Metreon was developed in the 1990s by Sony as a futuristic corporate theme park of sorts with a flagship Playstation store, arcades, a debut Microsoft store and a children’s play area based on Maurice Sendak’s “Where the Wild Things Are.”
Sony gave up on the effort and in 2006 sold the property to none other than the Westfield Group, previous owner of the San Francisco Centre, and real estate company Forest City Enterprises, which turned it into something closer to a traditional shopping center. Starwood Capital acquired the complex in 2012 as part of a $1.15 billion deal involving eight U.S. shopping centers.
“Since it first opened in 1999, Metreon has been a mecca for entertainment, shopping and dining for families, local office workers and visitors to San Francisco,” said TMG Partners President and Chief Investment Officer Ben Kochalski in a statement on the Metreon’s latest sale.
“TMG Partners will now continue the tradition as we improve the experiential opportunities across the theaters, dining options, retail, common areas and most notably the top-floor event space.”
The Metreon is not the only high-profile downtown San Francisco retail property connected to locally-based TMG in recent months. The San Francisco real estate firm is also working with Macy’s to reimagine or redevelop its iconic store in Union Square, the city’s premier shopping district.