Saks is latest to exit San Francisco's Union Square. Experts say things aren't as grim as they seem.
SAN FRANCISCO — Saks Fifth Avenue in Union Square is the latest retailer to say farewell to San Francisco. The company announced that the store will be closing its doors next month in a broader plan to consolidate.
While Saks has been a fixture on the corner of Post and Powell since 1997, retail real estate experts say the store's departure isn't a sign of the trend they're seeing downtown.
"Union Square is highly desirable globally for retail tenants and that remains," said Alex Sagues, the senior vice president of retail leasing for CBRE.
He added that while we hear of major retailers closing stores downtown, there has actually been positive growth in the past year.
"More space is becoming occupied than it's getting vacant in general, but we have a long way to go," he said. "If you look at the combined square footage of Bloomingdale's, Macy's, Nordstrom, and Saks, that's a lot of square footage."
According to the Bay Area Council Economic Institute, San Francisco is nowhere near pre-pandemic levels, but vacancy has gone down year after year.
The institute's executive director, Jeff Bellisario, says San Francisco is almost like a blank canvas and several factors will determine how quickly it will bounce back.
"The story now is we have a lot of empty space. How do we create the policies and the financial incentives, maybe around companies coming in?" Bellisario said. "Or do we just wait for the market to eventually correct itself? That's a longer time frame, but eventually it will."
Policies include the basics, such as creating safe and clean streets, to rezoning some buildings for housing. Bellisario also believes it's important to bring in a university presence where people stay and spend every day of the week, not just for the short term but for the future of the city.
"We also don't want to be sitting here again in the next real estate downturn saying that tech and AI all left the city," he said. "We were heavily relying on them. We want to be saying yes, we ran into an economic speed bump, but we had enough different uses built in where the city didn't empty out."
As retailers are breaking away from the traditional brick-and-mortar stores, real estate agents are forced to be more creative about filling huge vacant buildings.
"Each building is highly nuanced in terms of what you can do," Sagues said. "So, the owners of the buildings are looking at all of the options. You see it as a general trend in retail and place-making that you don't necessarily want just one use. Office, retail, hospitality or hotel, even medical. It can be really synergistic."
Experts say the biggest key to bringing back downtown San Francisco is to change the perception of the city. Sagues says that many clients from Asia and Europe have heard all the bad stuff, but he's saying that perception is starting to change.
"When we can get them to San Francisco, that changes," he said. "San Francisco is one of the most beautiful cities in the world. My opinion, the best city in the world, and our challenge is getting people here. When we do that, the city sells itself."
