Nordstrom to Shut Two Shops in Downtown San Francisco

The retail sector in downtown San Francisco has taken another blow with Nordstrom’s decision to close two stores.
The Seattle-based retailer will close its 312,000-square-foot department store at the Westfield San Francisco Center at 865 Market Street in August due to reduced foot traffic. The San Francisco Business Times reported.
On July 1, Nordstrom will also close its 45,500-square-foot Nordstrom Rack across the street at 901 Market Street, South of Market.
The move out of both Nordstrom stores at the end of their current leases marks the end of a 35-year presence in downtown San Francisco.
“Decisions like these are never easy, and this one was particularly difficult,” Jamie Nordstrom, the company’s chief stores officer, wrote in a message to affected employees. “But as many of you know, the dynamics of the downtown San Francisco market have changed dramatically over the past few years, affecting the footfall in our stores and our ability to operate successfully.”
The company believes it can better serve customers by focusing on e-commerce sales and its other 16 Nordstrom and Nordstrom Rack stores in the Bay Area.
Nordstrom opened its Westfield mall in 1988 and since 2014 has operated the 901 Market Store, owned by Los Angeles-based Hudson Pacific Properties.
An unidentified spokesman for Westfield mall and its owner, Paris-based Unibail-Rodamco-Westfield, told the Business Times in a statement that Nordstrom’s upcoming closure “underscores the deteriorating situation in downtown San Francisco.”
“We have urged the city to find solutions to key issues and lack of enforcement against rampant criminal activity,” the spokesman said. “The current environment is unsustainable for either the community or business, and we hope the city will implement the changes that are so desperately needed.”
The spokesman declined to comment further on specific criminal activity and the possibility that Westfield might seek a buyer for the stricken mall. Unibail-Rodamco-Westfield has publicly stated that it intends to do so sell most of its US properties this year.
But market conditions and the San Francisco mall’s declining performance, whose metrics are often excluded from portfolio earnings statistics, make it a tough sell, according to the Business Times.
The Nordstrom Rack store is nearing the end of its original 10-year lease at 901 Market Street and is waiving the option for up to four consecutive five-year renewals.
Exercise of either option would have increased the incremental scaling rent from its current annual rate of approximately $3.1 million per year to approximately $3.4 million per year, according to a copy of the original lease.
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The Nordstrom closures follow a decision by Whole Foods earlier this month to close its flagship grocery store at 1177 Market Street. citing the deteriorating road conditions. The 65,000 square meter market was open for 12 months.
They also follow the news for the past week Office Depot will be leaving its store at 33 Third Street to the south of the market and Anthropologie plans to close stores at 880 Market Street in Union Square.
– Dana Bartholomew