Westfield’s bailed on San Francisco, but it won’t in London, say experts
Westfield will hand back the keys to its flagship San Francisco mall following nearly two decades of ownership after it was battered by crime and the exit of its 350,000 ft flagship Nordstrom site.
In recent years, the shopping centre’s occupancy level plummeted dramatically to around 55 per cent, with a host of household-name retailers bailing out.
The decline has largely been blamed on the California city’s social problems, with downtown struggling with crime and a homelessness epidemic.
Just a few miles away in neighbouring San Jose, Westfield said its Valley Fair site is performing well.
“Given the challenging operating conditions in downtown San Francisco, which have led to declines in sales, occupancy and foot traffic, we have made the difficult decision to begin the process to transfer management of the shopping centre to our lender to allow them to appoint a receiver to operate the property going forward,” a spokesperson said.
Shopping centres have been struggling for sometime, as their once sparkling appeal of having a range of retailers located under one roof fails to impress consumers who now have access to an endless conveyor belt of trends through online shopping.
But does the decline of Westfield’s San Francisco site mean much for their London destinations?
“There’s still problems in the UK but they’re lucky to have two really good spaces in terms of Stratford and Shepherds Bush,” John Hoyle, founder of flexible pop-up retail space provider Sook, told City PM
Sook research suggests that the two sites operate at about a 10 per cent vacancy rate.
That’s “not a good thing,” Hoyle notes but says in comparison to other shopping centres in the UK which operate at around 20 per cent vacancy it’s actually doing “all right”.
“[For its size] they should be 95 per cent plus occupancy, but in the context of other shopping centres in the UK, it’s just not as bad.”
URW also recently issued a positive first quarter update reporting a 12 per cent hike in footfall across its UK portfolio – as the group said retailers looked to increase their footprint as they focus on the “most productive stores in prime locations”.
In efforts to shift away from a solely retail business, Westfield has also pumped over £700m into developing a range of build-to-rent flats next to its Stratford shopping mall, in a similar move to John Lewis.
Hoyle said that it will be worth “far more” to the business than probably the shopping centre, as it creates a permanent community in the area.
While Westfield appears to be keeping its head above water in London, plans to take its malls to other regions of London remain in question.
In 2021, a £1.4bn scheme to bring its offering to Croydon and revive its town centre with the help of Hammerson was scrapped after it received a number of setbacks including John Lewis pulling out as its anchor tenant.
However, after nearly three years of silence, Westfield revealed in April that it bought Hammerson’s 50 per cent stake in the transformation project noting that it is “very excited about what can be achieved in Croydon”.