Many entrepreneurs consider that opening their store, or a branch, in a large shopping center is a guarantee of success. However, attention must be paid to the conditions, as there are some that end up being a failure, such as the San Francisco Center which is losing more and more stores and today has an occupancy rate of only 25 percent, so it could soon close permanently.
Clothing brand Madewell is the latest store to announce closure within the ccommercial center located in Union Square, becoming the fifth to leave this space. Another that will close its doors is J. Crew, which will stop providing service on January 22.
Also, according to The New York Post, There are signs placed in other stores such as the Aldo shoe store that will close on January 21 and the denim giant Lucky Brand, which will close on the 29th of the same month.
Despite being the largest in San Francisco, it is becoming a ghost shopping center little by little. Since last year, several major brands have left the location after one of the most relevant businesses, Nordstrom, moved into its own space in August.
After that, Hollister, the Lego store and the Cinemark movie theater also announced that they would no longer be available in the plaza, which has caused its value to decrease by millions of dollars. In fact, according to the investment valuation analysis firm, Morningstar Credit Analytics, the property that was valued at 1.2 billion dollars in 2016 is today only worth US$290,000,000.
The reason why San Francisco's largest shopping center is close to closing
Due to the sad panorama of the San Francisco Center, The owners of the place, Westfield and Brookfield, suspended payments on their US$558,000,000 mortgage last year, saying they couldn't sustain it due to terrible foot traffic and declining sales since the pandemic.
The company has operated the San Francisco Center for 20 years and they say that during that time they have invested in its modernization. However, the current conditions in downtown San Francisco have caused a huge decline in sales, occupancy and pedestrian traffic. “We have made the difficult decision to begin the process to transfer management of the shopping center to our lender to allow it to appoint a receiver to operate the property in the future,” Westfield said in a statement.
After the previous announcement There has been speculation about the future of the San Francisco Center. Even the city's mayor, London Breed, proposed remodeling it into a soccer stadium. In fact, he has already hired a group of architects to carry out feasibility studies in this regard.
Finally, it should be said that the city of San Francisco is facing various problems, which is forcing many companies to leave the city. One of the critical points, denounced by actors such as JPMorgan, is that there is a significant housing shortage, which has raised the prices of smaller rooms that not everyone can afford.
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