San Francisco Recovery Slumps as the Future of Its Downtown Mall Hangs in Limbo

Shoppers are sipping hot cocoa in Union Square. Tourists are lining up at the cable car turnaround on Powell Street. Crime rates have plummeted. The vibes are good, and it’s almost as if San Francisco’s downtown is back. Just don’t look too closely at the data, or the nearly vacant mall down on Market Street.

Newly released citywide figures show promising increases in foot traffic from earlier this year have tapered off, and new business registrations have crashed. And the once-humming San Francisco Centre is virtually empty.

Work-from-home culture, waves of layoffs and shifts to online shopping have continued to challenge once-bustling corridors. From Nordstrom to Disney and The North Face, many major companies have shuttered stores in and around Powell Street. The trends paint a complicated picture for San Francisco’s downtown, as well as the massive mall, which is now up for sale.

“All of the recovery in downtown activity, up until the past couple months, that’s all happening while the biggest property in downtown is hollowing out,” said Ted Egan, the city’s chief economist.

But San Francisco city and business leaders have been championing an economic turnaround and throwing money and social media attention at signs of recovery, from restaurant openings and store pop-ups to music festivals downtown. Egan is optimistic: “It’s going to be a huge boost that [the mall] is moving on to its next stage.”

Tourists and shoppers from across the Bay Area trekking downtown for holiday shopping seem to hardly notice the macro trends at play. Many told KQED they feel the city is looking and feeling better than it has in years.

Natasha De La Rosa, a mother of four from Tracy, drove to the city to buy her kids presents at the new Nintendo Store in Union Square on a recent Tuesday.

“I love it out here. My husband actually worked in the city during the pandemic, so I’ve seen a drastic change,” she said. “I feel very safe, it feels back to normal, honestly, it really does. So that makes me happy.”

There are real signs of improvement. Compared to just before the pandemic in 2019, violent crime is down 34% in San Francisco and property crime is down 54%. Groups like the nonprofit Downtown Development Corporation have raised nearly $60 million from local billionaires to fund efforts like sidewalk power washing and draw businesses downtown again.

The city’s overall retail market is showing signs of stabilization, too. Retail vacancy dropped to 6.8% in the last quarter, according to a market research report from commercial real estate firm Kidder Mathews, down from 7.5% the same time last year.

San Francisco saw a 50.6% increase in in-store sales and a 11.5% growth in online sales over Thanksgiving weekend from the previous year, according to data from Block, a sales tool used by many small businesses across the city.

Programs like Vacant to Vibrant, which offer small businesses six months of free rent for retail space they could lease in the future, have helped fill some storefront spaces on the street level. For small business owners like Paul Bradley Carr and Sarah Lacy, who opened the Best Bookstore on Powell through Vacant to Vibrant just before Black Friday, business is booming.

“We want this to be permanent,” Carr said. “People come in, and they’re like, ‘This is so great, like things are really happening again. It feels great to be back downtown.’”

The pair opened their first bookstore in Palm Springs. But before becoming a bookseller, Carr lived full-time near Union Square and has seen the neighborhood’s ups and downs.

“It feels like when I first came to San Francisco in like 2007, that energy that this is the center of things,” Carr said.

But not all stores along Powell Street are seeing the same traffic and success. Many shops remain empty. And the sustainability of privately funded revitalization efforts is not clear.

“It’s been surprisingly slow. I feel like we kind of have a niche market, but yeah, it’s been slow down here. I’m hoping it will pick up,” said Skylar Grey, a sales associate at Nooworks, a local clothing company that’s opened a pop-up just north of O’Farrell Street through Vacant to Vibrant. “It’s amazing to see shops down here again, though. It’s been so dead recently, and it’s exciting to have more availability for shopping down here than in the past.”

The city has been focusing most of its downtown revitalization efforts on street-level storefronts and highly visible hubs like Union Square, which generates nearly 15% of citywide retail sales tax dollars, according to Anne Taupier, executive director of the city’s Office of Economic and Workforce Development.

“We’ve always known that between Moscone [Center] and Union Square is key, so it’s been so important to us to try to find a way to bring back retail onto the street level on Powell Street and in Union Square,” Taupier said. “Some of the spaces on Powell Street are big, so they’re a little bit harder to fill with small businesses, but we’re seeing so much interest.”

Even harder to fill is the massive 1.2 million-square-foot San Francisco Centre, sitting nearly completely empty at Market and Powell streets. The historic building includes 5.9 acres of retail, office space, a former movie theatre and storage, all in a prime location with access to BART and MUNI lines.

The mall was auctioned last month for nearly $133 million to lenders now looking to steer the space into a new future. Broker CBRE is marketing the mall for sale.

“Amid renewed civic leadership, three consecutive years of positive population growth 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,” Kyle Kovac, executive vice president of CBRE’s Capital Markets team in San Francisco, said in a prepared statement.

The mall’s occupancy rate is now around 9%. Some of the few remaining tenants are choosing to allow their leases to expire and other businesses have been asked to vacate the building by the end of January.

The mall remains open with only a handful of businesses currently operating, and the spiraling central escalator is closed off to higher stories. On a recent weekday in December, one of the busiest shopping seasons, security guards nearly outnumbered guests coming in to shop, or just to charge their cell phones, but holiday music still echoed through the atrium and eerily empty hallways.

City leaders are banking on a new kind of future for the building beyond a typical mall, but what that looks like remains uncertain and officials are tight-lipped about plans. CBRE declined an interview about the building, and this reporter was stopped by security and told to quit interviewing shoppers while on location for this story.

The uncertain future and shifting economic trends bring a combination of hope and anxiety to San Francisco supervisors like Matt Dorsey, whose district includes the mall property.

“Over the years, that building, especially the Emporium side, has succeeded and failed and succeeded and failed,” Dorsey said. As for what should come next in space, he said, “It’s my least favorite question, because I don’t have a good answer or a good idea.”

Experts say whatever does come next must offer people an experience that they can’t buy online.

“If a mall is not reconfigured and doesn’t have retailers offering something unique, it won’t be successful,” said Kirthi Kalyanam, executive director of the Retail Management Institute at Santa Clara University. “Filing a few storefronts is tactical, but I don’t think [city leaders] have a real strategy.”

Ideas have ranged from sports stadiums to a university and all kinds of mixed-uses of the Emporium Building and mall center that was, until recently, home to the nation’s largest Nordstrom.

Devin Begley is one of the few San Francisco residents who still stop by the mall frequently. He used to work for one of the mall’s retail stores and has witnessed its post-pandemic transformation first-hand.

“This has to become a community space, something artistic. Let City College have it, or the Art Academy,” he said. “It’s frustrating. I just want this space to feel as much of a bear hug as I’ve felt here.”

Begley often plays guitar on the corner of Market and 4th streets, and will pop into the mall for a phone call or break now and then. When tourists ask him for ideas of where to go and what to see, he points them to the Ferry Building, Golden Gate Park or Union Square. But, for now, he’s directing people away from the mall.

“The good news is something is going to happen,” said Egan, the city’s economist. “It doesn’t really matter what it is, as long as it happens soon.”