Big Projects Help Revive S.F. Retail
San Francisco’s retail scene got another shot in the arm when it was announced that Los Angeles–based Westfield America and Cleveland real estate developer Forest City Enterprises have reached an agreement to buy the Sony Metreon entertainment center.
The Metreon, based in San Francisco’s SoMa district, specializes in gaming and technology retail concepts and is anchored by a 15- screen AMC Loews Theater complex. Despite the backing of Sony and the unique concept of combining gaming, education and entertainment under one roof, the 300,000-square-foot center has failed to live up to the hype surrounding the project when it opened in 1999.
A Microsoft store and Discovery Channel store have shuttered, as have two museum- style stores based on children’s books: “The Way Things Work” and “Where the Wild Things Are.”
Now Westfield and Forest City plan to reposition the center with more mainstream retailers. Company officials declined to elaborate further on the new concept. One tenant, who declined to be named, said the current configuration does not lend itself well to the specialty retail tenant that matches Westfield’s profile.
“There are many egresses and lots of open floor space here that is conducive to theft. Westfield would have to reconfigure much of the center to make it work for the tenants they are used to dealing with,” said the source.
Westfield and Forest City will buy the center for an undisclosed sum from Yerba Buena Entertainment Center, a partnership between Millennium Partners and Sony Corp. of America. The San Francisco Redevelopment Agency still has to approve the purchase, which is expected to close next month. Sony said it plans to maintain its Game Station stores in the center but will revert to the role of a tenant rather than an owner.
The Metreon deal is the second between Westfield and Forest City, which are building the ambitious $440 million Westfield San Francisco Centre on Market Street a few blocks away. The developers are renovating the landmark Emporium store and building a new 350,000-square-foot flagship for Bloomingdale’s, adding more than 1 million square feet of specialty retail space to the center, which is expected to open this fall. The center will be adjoined with the Nordstrom-anchored San Francisco Shopping Center to create the third-largest shopping complex in the world, said Westfield officials.
The project is expected to help revive San Francisco’s retail landscape, which has suffered since the 9/11 terrorist attacks chased away much of the tourist traffic that fuels the city’s economy. The crash in the neighboring technology industry has also taken its toll. Vacancy rates climbed from 5 to 10 percent for Union Square retailers as a result but have since dropped to around 7.5 percent, according to real estate firm GVA Whitney Cressman.
New stores from European retailers such as Diesel, Zara and H&M have helped revive the local retail scene, and the Westfield/Forest City partnership is expected to pump new life into Union Square. The new Westfield center has already attracted major chains Abercrombie & Fitch, Eddie Bauer, Bebe and American Eagle. —Robert McAllister
