As cities like Miami, Scottsdale, Ariz. and Austin, Texas flourish in a post-pandemic world, with more folks working remotely in sunnier and lower-cost places, other cities have struggled to regain their strength.
San Francisco, for example, whose workforce is primarily based around the tech and finance space, has struggled mightily.
DON'T MISS: An iconic business in San Francisco just closed after nearly 30 years
The city has been going without the typical influx of workers and tourism with which it had been accustomed pre-pandemic. Offices and residential buildings lay vacant, foot traffic has fallen, municipal budgets and tax revenues are falling.
Office buildings sit with over 30% vacancy rates and many residential buildings are struggling to regain their pre-pandemic occupancy rate. And it's expensive to build more living spaces, at three to five times the national average.
Because of rising costs and a fleeing workforce, the Bay Area is also grappling with one of the largest homeless rates in the country.
"On any given night, 38,000 individuals in the Bay Area are homeless, an increase of 35 percent since 2019," McKinsey & Company estimates.
This unfortunate humanitarian issue has caused many retailers to flee the area. In many cases, it's more difficult, more costly, and sometimes even more dangerous to do business there.
Over 90 stores have left the Union Square district in San Francisco since 2019 as the crime issue remains unresolved. Some retailers that have fled include Old Navy, Banana Republic, Crate & Barrel, AmazonGo, Saks Off Fifth, Anthropologie and Office Depot. Walgreens has been chaining up some of its most stolen goods from heavily shoplifted stores to prevent theft from further cutting into its bottom line.
And in late August, Nordstrom (JWN) -), said it would abandon its large retail presence in the city after nearly 30 years. The flagship store is a part of San Francisco's biggest mall – the former Westfield Mall, now San Francisco Centre – near the South of Market neighborhood of the large Pacific city.
American Eagle Outfitters (AEO) -) is one such retailer that has actually stayed, but with growing concern.
American Eagle sues over San Francisco conditions
American Eagle is the single largest tenant in San Francisco's iconic Westfield San Francisco Centre mall. And now it is fed up with the neglect and deterioration it alleges has taken over in the area.
The retailer is suing Westfield San Francisco Centre, filing a complaint in the Superior Court of San Francisco County in September.
“Westfield accepted no responsibility for its role in allowing these issues to infect its mall,” American Eagle said in court documents. “It shifted all the blame to San Francisco in public statements and through the media. But Westfield omitted from those statements that it considered options to address the security issues at the mall, but ultimately decided not to make that investment.”
In June, Westfield said it would default on a $558 million loan for the mall and give up control of San Francisco’s Union Square District to lenders. It also previously shuttered its mall management office which would ostensibly deal with issues such as shoplifting, vagrancy, and disarray.
"American Eagle believed it was leasing a prime retail space with a street-front entrance in Downtown San Francisco from one of the most established and reputable retail landlords in the country," the court document reads. "But Westfield let the mall deteriorate into disarray, leaving American Eagle and its employees to suffer and respond to gun violence, physical assaults, burglaries, and robberies... This is not the store American Eagle paid millions of dollars for, or the store that Westfield promised. Westfield cannot walk away from the harm that it has caused without consequence. It must be held accountable for the damages caused by its failures and broken promises."
American Eagle alleges it has witnessed "'rampant criminal activity' at and around the mall, including stabbings, violent physical and sexual assaults, and robberies."
The retailer alleges it has seen over 100 incidents between May 2022-23, some of which involve individuals wielding firearms and machetes.
American Eagle signed a lease in the mall in 2017 that runs through 2028. Initial reports indicate the retailer may be trying to get out of the agreement, which is typically difficult to break. It is also seeking compensation for damages "in an amount to be proven at trial."
Westfield has not commented on the matter.
