The beleaguered former Westfield SF Centre mall will not be redeveloped by a pair of local of developers after all, and complications with the ownership of the land underneath the mall could be to blame.<\/p>\n
Back in March, local development firms Presidio Bay Ventures and Prado Group became the winning bidders<\/a>, in partnership, to buy the 1.5-million-square-foot former SF Centre mall, two months after it had been fully emptied of tenants and went dark.<\/p>\n The mall had exited receivership late last year, and the new owners of the property, a partnership of Goldman Sachs and JPMorgan Chase, foreclosed on a $560 million outstanding loan that had been tied to it, via previous owner Westfield. The winning bid by the banks was reportedly $134 million, and the purchase price proposed by Presidio Bay and Prado Group is not known.<\/p>\n But now, as the Chronicle reports<\/a>, the developers are walking away from the deal, reportedly for multiple reasons. But one could have to do with the San Francisco Unified School District, which was reportedly renegotiating a long-term ground lease for the property \u2014 the district owns the portion of the mall property closest to Fifth Street, where Nordstrom once resided, and has been getting $3.2 million in annual lease revenue since 1983, in a contract that lasts until 2043.<\/p>\n Future redevelopment of the property would obviously be impacted by this, not to mention the issue that Macy’s owns another portion of the land, the part that sits beneath the former Bloomingdale’s store. (The Examiner published a history of the property<\/a> last year, which was once home to a stately boys’ school, Lincoln Grammar School, that was built in 1865 at 5th and Market and had a statue of Abraham Lincoln out front.)<\/p>\n The foreclosure auction for the property, which was delayed multiple times, was also reportedly complicated by the SFUSD’s ground lease, and the district’s insistance that it not lose that $3.2 million in annual revenue.<\/p>\n The developers put out a statement to the Chronicle Wednesday saying, “After extensive diligence and thoughtful evaluation, we are not currently moving forward with the transaction.” They added that they remain “strong believers in the long-term future of downtown San Francisco” and the mall\u2019s “pivotal importance to Market Street and the broader San Francisco downtown recovery that is underway.”<\/p>\n The mall had been pitched as a redevelopment opportunity, though the full scope of what the developers imagined was never shared.<\/p>\n Several blocks away, at Union Square. the Macy’s flagship store remains another redevelopment opportunity as Macy’s has been in an extended process to sell it off that began over two years ago<\/a>. Last November, Macy’s announced<\/a> that it was not planning any imminent closure of the store, and that it was partnering with local developer TMG Partners to discuss the future development of the 600,000-square-foot store property.<\/p>\n