Another signature shopping mall in San Francisco is up for sale in Metreon, but in this case the sale is not being forced by the owner surrendering the property to a lender, and the location’s occupancy rate is 92% of people are busy.
The financial collapse of the former Westfield Mall in downtown San Francisco was the result of a “loop of doom” in which increasing vacancies, shoplifting, violence and, most importantly, the owner had to surrender the property to a lender. It became the trigger for the story. That’s precisely the problem during the pandemic in San Francisco, where their debt far exceeded the current value of the property.
And today’s very surprising news in the SF Business Times that Metreon Mall is for sale will likely bring back even more of that “loop of doom” story. However, Metreon appears to be very solid financially and is highly unlikely to sell at the desperate fire sale prices that much of SF commercial real estate is seeing these days. This is a rare San Francisco real estate property that could sell for the asking price or more.
First, as the Business Times points out, Metreon is currently 91.9% leased, which was completely unheard of at the time, when neighboring Union Square’s vacancy rate was 20.6%. Yes, Metreon’s occupancy is primarily Target stores and AMC Cineplexes, but both seem to be doing brisk business from what I can see. There are also five 40-foot-tall billboards on the Moscone side of the building that are reportedly generating pre-pandemic levels of revenue and guaranteeing a huge amount of Dreamforce advertising each year. A skilled negotiator can easily overcharge. .
“Metreon represents a generational opportunity to acquire an iconic urban retail asset with immediate and long-term opportunities to add value and shape the future of downtown San Francisco,” publicly traded Jones Lang LaSalle (JLL) said in a statement. ,” publicly traded company Jones Lang LaSalle (JLL) said in a promotion of the building.
You can confirm that this place is for sale on JLL’s website.
However, the current owner is Starwood Capital Group, which purchased Metreon in 2012, although the sales price is not listed in the brochure analyzed by SF Business Times. Interestingly, the city of SF owns the land where Metreon is located. A 312,592-square-foot shopping center is being built, and the rental lease runs through 2082.
Those who were here when it opened as “Sony Metreon” in 1999 remember that despite all the hype, the mall fell into disastrous management. I expected crowds at the PlayStation and Microsoft stores, but there were days when I walked several floors and didn’t see a single other customer shopping. (Remember Maurice Sendak) where wild things are Will you exhibit it? (Nobody went!) The flagship store closed and Metreon was sold in 2006, ironically by Westfield who subsequently sold it to Starwood Capital.
But Metreon has shown that he can reinvent himself. And lo and behold, with nearly 93% uptime, we don’t even have to reinvent ourselves. Add some lively restaurants and bars to the empty space on the ground floor, and the Metreon could become a pretty attractive buy. At least for private investment companies willing to spend eight or nine figures.
Related: San Francisco’s former Westfield Mall will be rebranded as Emporium Center San Francisco [SFist]
Image: Jason F. Via Yelp
