Once prominent and prosperous, San Francisco has recently seen businesses vacate the inner city amid rising troubles. Cinemark Holdings, the national movie theater chain, is the most recent city to flee downtown San Francisco. The company recently announced it would permanently close one of its downtown locations following an unsatisfactory review of “local business conditions.”
Located in Westfield San Francisco Centre, the movie theater announced it would close the location at the end of its current lease. “Cinemark can confirm it has decided to permanently close the Century San Francisco Centre 9 and XD theater shortly before the conclusion of its lease term following a comprehensive review of local business conditions,” a spokesperson for Cinemark said. Furthermore, the owner of the shopping center, Westfield, announced it would be rescinding ownership of the property to a bank due to the deteriorating conditions in which it has to operate in.
Westfield recently announced the property was only 55 percent leased after Nordstrom was also leaving the location at the end of this summer. Nordstrom stated it would vacate its downtown San Francisco stores due to unfavorable “dynamics” of their sites. However, the Westfield San Francisco Centre mall is set to remain in operation while potential new buyers are sought out.
Regardless, it is disconcerting for downtown San Francisco that a prominent piece of retail real estate is almost 50 percent vacant, especially considering Westfield properties are 93 percent leased on average. The trouble at Westfield coincides with an announcement from Part Hotels & Resorts that the real estate company had quit making payments on a Hilton hotel property at Union Square and other properties in the city. The company cited “major challenges” in the city as the reason.
The American Tribune recently reported on Park Hotel & Resorts’ recent decision. Reports indicate that crime and the declining quality of life are prominent issues preventing business activity from reaching past levels. According to the CEO of Park Hotels & Resorts, “This past week we made the very difficult, but necessary decision to stop debt service payments on our San Francisco CMBS loan. After much thought and consideration, we believe it is in the best interest for Park’s stockholders to materially reduce our current exposure to the San Francisco market.”
The American Tribune also covered Nordstrom’s decision to leave its locations in San Francisco locations amid degrading conditions. The company announced that the city has “changed dramatically” in recent years, hindering the operational success of the luxury clothing company. A Nordstrom executive stated, “Decisions like this are never easy, and this one has been especially difficult. But as many of you know, 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.”
The trend of retailers fleeing San Francisco is nothing new, as the city is embroiled in homelessness, drug addiction, theft, and various forms of other crime. If San Francisco doesn’t deal with these problems, significant economic activity could leave the city and cause further issues.
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