By Meghan Hall
After months of delay, Santa Monica, Calif.-based Macerich Companies and Five Point Holdings, a California master developer spin-off company of Miami-based home builder Lennar, have called it quits on their joint venture at Candlestick Point, a half-a-million square foot Fashion Outlet mall in San Francisco. The future of the development, called the Candlestick Point Mixed-Use Project, was initially thrown into question in April 2018 when SEC filings confirmed that the firms were re-evaluating the feasibility of the project amid a rapidly changing retail climate. Now, in another round of SEC filings dating to mid-February, confirms that the original plans to develop the Candlestick Point site have been scrapped.
“That’s not what tenants would have wanted,” explained Mike Moran, a senior vice president at Cushman & Wakefield, who was tasked with leasing some of the office space proposed in the original plans. “They want collaboration, indoor/outdoor restaurants. They want neighborhoods. They don’t want malls, much more mixed-use, tangible, walkable, amenities.”
The property was originally marketed as The Fashion Outlets of San Francisco at Candlestick, according to a tenant design criteria pamphlet released by Macerich in January of 2017. However, the world of brick and mortar retail has seen a dramatic shift in recent years with the rise of eCommerce impacting many traditional big box retailers. In San Francisco, Gump’s, a 157 year-old luxury department store, closed at the end of 2018, while regional retailer Orchard Supply closed numerous stores across the San Francisco Bay Area. Macy’s also closed its men’s store location at 120 Stockton St. and consolidated its men’s flagship store at 170 O’Farrell at the end of last year.
According to a Cushman & Wakefield Americas Marketbeat Retail Report from the fourth quarter of 2018, while San Francisco enjoys strong leasing fundamentals — the vacancy rate remains one of the lowest in the nation at three percent — rental rates for prime locations remain high, and attracting and retaining employees is difficult in a market with low unemployment and a surplus of jobs.
Plans for the original Candlestick Point Mixed-Use Project were originally laid in 2014, when the two companies announced their intentions to develop the San Francisco 49ers’ and Giants’ former stadium — which was demolished in 2015 — into one of the largest urban, mixed-use projects in the country. The project included 635,000 square feet of regional retail in a variety of forms, ranging from small local commercial units to larger regional stores. The project was also expected to infuse more than $1 billion of new investment and infrastructure between 2014 and 2018. In addition to retail, the development was slated to include a performance venue and hotel, movie theaters, a restaurant village and an African diaspora-themed marketplace. The mall was originally set to open in 2017.
Around the same time Macerich and Five Point announced their plans for Candlestick Point, construction was slated to begin at The San Francisco Shipyard just north of the project site. The Shipyard is expected to be redeveloped into 6,000 units of new homes and three million square feet of office and commercial space and 230 acres of parks and open space. The redevelopment of the shipyard is also currently on hold while the Navy and other public agencies evaluate whether or not the site was properly remediated.
Both projects have attracted plenty of attention in recent years; both properties are located between downtown San Francisco and San Francisco International Airport on approximately 800 acres of property.
According to reporting done by the San Francisco Business times, Five Point intends to redevelop the site in three phases between now and 2035. The first phase will include 2,950 homes, 380,000 square feet of retail, 750,000 square feet of office, a hotel, grocery store, school and a 25-acre and is to be completed around 2025. Phase Two will add another 2,520 homes with anticipated completion around 2030, while Phase Three will add 1,750 homes with deliver anticipated for 2035.
Five Point did not immediately return The Registry’s request for comment.