Nordstrom, Saks Off 5th Closing San Francisco

[veteran+]

That is exactly what I hear from trusted friends who LIVE in or near those areas you mentioned.

[storewanderer]

CNN is merely reporting on a story they've probably he;lped blow out of proportion.

I regularly talk to people who work in downtown LA and their perspective is that the techies thought they could gentrify the Tenderloin which has been the poorest part of the city and its version of skid row for many, many decades. In the end, they couldn't---many of the social agencies there own their properties and there is housing on long-term subsidy agreements, etc. plus the techies' redevelopments stalled during COVID. They mostly describe the area as its always been. I've been visiting SF for about 30 years and usually windup downtown because of where meetings are located and often cross the Tenderloin. The Tenderloin has been shrinking over that time, very slowly, along with adjacent areas like South of Market (which really changed once the convention center went-up). South of Market has evolved through a variety of uses---warehouses and cheaper retail--North Face used to have an outlet there and many bars--those kinds of uses have been replaced by those that can pay higher rents. The effort to redevelop the Tnederloin, if only its edges, goes back decades---if no place else was available, there was a Holiday Inn just off Market, close to the Civic Center that usually had rooms. It probably dated from the 80s and was one of those early attempts, along upgrades to the Civic Center.

The return of retail to downtown SF probably depends on the return to tourism, which seems to be varying nationally. The comeback in DC has been slow, but this year we seem to have the full complement of school trips, events like law enforcement week, etc. Georgetown lost quite a bit of retail during COVID but the vacancies are slowly filling-up--that area depends a lot on foreign toruism which came back before the domestic variety. I was in Chicago last fall and was impressed how Michigan Avenue had comeback--few vacancies and lots of people with a very positive energy. Times Square & Herald Square have largely comeback although there are some retail vacancies--still, neighborhoods where regular New Yorkers live like teh Upper West Side seem back to normal. SF depends a lot on foreign tourists, including those from Asia and I don't have a sense of how that has changed recently. I was in Seattle a couple months ago, so it wasn't cruise season yet and there weren't many tourists, but the downtown area wasn't as dire as I'd seen it described---downtown Seattle and its adjecaent neighborhoods like Belltown, Pike/Pine and Pioneer Square never seem totally in synch--if one is struggling one or more of the others seem to prosper. Pioneer Square has lost its galleries but finally seems to have a decent range of restaurants and hotels---the actual square is the historic skid row and I've seen way more homeless people there in the past than I did this year.

What you report about your personal experiences in DC and Chicago is great and it is pretty consistent with what we are hearing out of media sources as well. A lot of government work is still being done remotely. That has clearly hurt traffic around DC but at the same time the area has not declined as a result of that traffic decrease as San Francisco has. Also we aren't hearing much about Los Angeles either. Sometimes no news is good news.

Foreign tourists from Asia are back in the US in smaller numbers than before and they are doing bus tours around national parks and going to casinos and doing all those other things. But they are back. They aren't going to San Francisco.

I suggest you take a trip to San Francisco around Union Square and see/smell for yourself what is going on there. If you avoid that entire area and go into many other sections of San Francisco, even ones directly surrounding Union Square like North Beach or Chinatown, you will have a great trip. But if you are using public transit it is quite difficult to avoid that Union Square area at multiple points. Obviously tourists are not going to tolerate the current conditions in Union Square which historically has been a heavy tourist area for decades due to the public transit and large number of hotels/shopping in the area.

[retailfanmitchell019]

What you report about your personal experiences in DC and Chicago is great and it is pretty consistent with what we are hearing out of media sources as well. A lot of government work is still being done remotely. That has clearly hurt traffic around DC but at the same time the area has not declined as a result of that traffic decrease as San Francisco has. Also we aren't hearing much about Los Angeles either. Sometimes no news is good news.

Foreign tourists from Asia are back in the US in smaller numbers than before and they are doing bus tours around national parks and going to casinos and doing all those other things. But they are back. They aren't going to San Francisco.

I suggest you take a trip to San Francisco around Union Square and see/smell for yourself what is going on there. If you avoid that entire area and go into many other sections of San Francisco, even ones directly surrounding Union Square like North Beach or Chinatown, you will have a great trip. But if you are using public transit it is quite difficult to avoid that Union Square area at multiple points. Obviously tourists are not going to tolerate the current conditions in Union Square which historically has been a heavy tourist area for decades due to the public transit and large number of hotels/shopping in the area.

I went to NYC last summer and I felt quite safe there. I mostly spent time in Manhattan. Even the Concourse neighborhood in the Bronx felt fine when walking from the subway to Yankee Stadium.

[storewanderer]

I went to NYC last summer and I felt quite safe there. I mostly spent time in Manhattan. Even the Concourse neighborhood in the Bronx felt fine when walking from the subway to Yankee Stadium.

NYC recovered from COVID as it had more to offer than San Francisco in the first place (subjectively speaking, the setting isn't as nice, but it just has a lot more "stuff" and is a far larger area with far more people/population also) and more companies and governments that forced people back to the offices sooner there.

And if you were to go to San Francisco you'd probably feel relatively safe too after getting out of Union Square area. But not as safe as you would have felt if you had gone there 5-10 years ago. And you would absolutely notice the decline in the cleanliness and condition of the area. All you have to do is go over to Google Maps and do image views and change the dates of the images to see and understand the horrendous deterioration of the Union Square and immediately surrounding blocks of San Francisco today vs. even 2 years, 3 years, and especially 5 years ago.

Nordstrom isn't closing one of its nicest largest stores just for the heck of it.

[Romr123]

Good article on the subject from Washington Post. Gift link https://wapo.st/3C2lYe3

[storewanderer]

The WARN notice filed shows 333 employees being laid off at the main store effective 8/27 and 46 employees being laid off at the Rack effective 7/1.

The employee count seems a bit low for the Rack but not for the Nordstrom. Especially considering the Nordstrom has short hours of 10-7 daily (11-6 Sunday).

If this Nordstrom wasn't doing much volume it would be significantly below 333 employees...

[ClownLoach]

Westfield has stopped payments along with Brookfield and will allow the bank to foreclose on the center.

https://www.sfgate.com/bayarea/article/ ... 148703.php

I opened a new thread over on the Shopping Centers category.

[storewanderer]

Westfield has stopped payments along with Brookfield and will allow the bank to foreclose on the center.

https://www.sfgate.com/bayarea/article/ ... 148703.php

I opened a new thread over on the Shopping Centers category.

The dominos are really starting to fall...

How many others will follow their lead?

They appear to have followed Park Hotel's (Hilton spin off) lead... who is turning the Union Square Hilton and Union Square Parc 55 back to lenders. Both hotels were in particularly nasty locations based on current conditions in the area. Previously they were a little iffy if you went the wrong way out an exit, now they are outright bad no matter which way you go.

Still looking forward to that Ikea grand opening... but with what has happened now I don't think it will turn the tide.

I am actually shocked at what is happening with San Francisco. I know it is bad, I've been there, I can see it, but things are getting very real now...

[reymann]

the mass exodus of businesses in san francisco puts chapter 9 municipal bankruptcy in play for the city within the next couple of years. oakland may be another city that could be teetering on the brink of municipal bankruptcy.

[storewanderer]

What happens to the property tax on these commercial properties when the owners walk away and let the lender foreclose?

Does it get adjusted down to current market value if the current value is less than whatever the owner who is walking away paid for it (I assume these owners are walking away because they are way underwater on the properties)?

If enough properties get walked away from like this and those 2 Park (Hilton) hotels, I can see a pretty serious property tax shortfall occurring. Whoever buys up these properties for cheap and gets property tax base reset at a depressed low base value will hit the jackpot if the city actually turns itself around in 5 years.

The Mayor of San Francisco says Westfield is exiting the US and they've known for months that this is a property they were looking to get rid of. So this came as no surprise to city leadership. So perhaps they are prepared for whatever financial implications this causes the city. So there is that.