Troubled 6X6 mall bought by developers
The empty 6X6 mall in San Francisco’s MidMarket neighborhood, which has been unable to find tenants for the past three years, has been sold.
Developers Alexandria Real Estate Equities and TMG Partners bought the property at 945 Market St., which opened in 2016.
The 250,000squarefoot project’s inability to fill storefronts reflects both challenges in the retail sector and the area’s persistent crime and homelessness. Its only active business is its 167space parking garage.
The price wasn’t immediately clear and the new owners’ plans for the building weren’t disclosed.
“We are excited to be bringing this important property under local control and look forward to securing a mixeduse project with a strong retail presence,” the company said.
The $150 million project opened in the fall of
2016 and sat empty for three years. Prior to opening, its name was changed from Market Street Place to 6X6, a reference to the six floors of retail and its location near Sixth Street.
“It’s a great property, but retail on the upper levels is going to be difficult,” said previous property owner Chris Maguire of Cypress Equities. “The MidMarket location and the shifts in retail has been challenging.”
Cypress Equities won approval last year to convert 47,522 square feet of retail space to office space, room for about 300 workers.
Retail consultant Helen Bulwik in Oakland noted that the 6X6 mall has competition from nearby Union Square stores and the Westfield mall, the city’s popular shopping destinations frequented by residents and tourists. Another challenge is finding tenants who can pay San Francisco rents amid retail industry trends like bankruptcies, the rise in online shopping and store closures.
“The reality of retail today is we’re not opening a lot of stores, we’re closing a lot of stores,” Bulwik said. “And the amount of premium shops close by is going to be tough for 6X6.”
The location of the building is also a concern.
The MidMarket area is home to tech firms including Twitter, Uber and Square, but has grappled with shuttered restaurants and high crime. A 2011 tax break meant to spur investment has helped companies create thousands of jobs, and the neighborhood has attracted new housing projects and hotels. But city officials and businesses have acknowledged that the area still has unclean streets and a high crime rate.
“It’ll be tough to overcome the realities of where that building is if all they want to do is retail,” Bulwik said.
Kazuko Morgan, a Cushman & Wakefield broker, said she will continue marketing the project. She said both retail and food tenants are in talks to lease at the project.
Alexandria and TMG Partners developed Pinterest’s headquarters at 651 Brannan St., and won approval last month for 88 Bluxome St., where Pinterest signed another major lease. TMG’s retail experience includes developing the Public Market in Emeryville in the 1980s.
Malls can benefit by embracing entertainment tenants rather than traditional retailers, which are shrinking with the rise in online shopping, said Kirthi Kalyanam, director of the Retail Management Institute at Santa Clara University. Retailers are hesitant to sign longterm leases when spending is volatile, he said.
“Food and entertainment have done a better job keeping up,” he said. “Those are bright spots.”