American Eagle Lawsuit Accuses San Francisco Mall of ‘Deteriorating into Disarray’

American Eagle called out one of its landlords for allowing its mall to “become a lightning rod for rampant criminal activity,” which sent peers like Nordstrom packing as well.

The clothing retailer filed a complaint in the Superior Court of San Francisco County last week, accusing commercial real estate firm Unibail-Rodamco-Westfield of neglecting San Francisco’s Westfield Centre and refusing to invest in security.

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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 complaint said. “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.”

According to the complaint, Westfield has invested more than $2 million in upgrades and maintenance to other malls in the region. In June, the company defaulted on a $550 million loan, essentially giving up the property in San Francisco’s Union Square District to lenders. The default came after major tenant Nordstrom shuttered its flagship store in the mall, bringing the facility’s occupancy rate to around 55 percent.

“Given the challenging operating conditions in downtown San Francisco, which have led to declines in sales, occupancy and foot traffic, we have made the difficult decision to begin the process to transfer management of the shopping center to our lender to allow them to appoint a receiver to operate the property going forward,” Molly Morse, a spokeswoman for Unibail-Rodamco-Westfield, said in a statement in June.

American Eagle’s complaint alleges that Westfield has acknowledged “rampant criminal activity” in and around the mall, including stabbings, violent physical and sexual assaults and robberies. Between May 2022 and May 2023, American Eagle employees reported more than 100 incidents, including store visitors threatening employees with firearms and a machete.

The retailer said it has hired additional security and installed a security window film on the store’s Market Street entrance to reduce an uptick in smash-and-grab style robberies, which have been on the rise across the nation at malls and other retail outlets.

Softened consumer spending also has hit commercial retail landlords such as Westfield hard. A report from Moody’s Investors Service released in June said that credit risks for real estate companies would increase over the following 12 to 18 months.

While American Eagle seeks compensation with its suit, the larger goal likely is to get out of its lease, which the retailer signed in 2017 and runs through 2028. With leases typically difficult to break, suits such as this one can give lessees an easier out.

Westfield declined to comment on the lawsuit.

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