Changes in the retail landscape that were exacerbated by the pandemic might have presented a major stumbling block for BXP, Inc.’s (NYSE: BXP) Embarcadero Center in San Francisco. Instead, BXP reacted to the loss of several national retail tenants by embarking on a creative, multi-pronged outreach effort that has attracted a slate of vibrant, popular local businesses to the property.
The strategy has enhanced Embarcadero Center’s appeal to its office tenants and forged stronger connections with the wider community.
Located in the heart of the city’s commercial district, Embarcadero Center is a four-building complex with about 3 million square feet of office space and approximately 300,000 square feet of retail. The retail offerings are situated on the bottom three levels, and the office tower lobbies are on the second level. BXP has owned Embarcadero Center since 1998.
Christine Yuen, senior vice president of leasing at BXP, describes the retail element as especially important to Embarcadero Center because “first of all, we have a lot of it. And secondly, it’s the front door to our office space.”
As a long-time owner, BXP has continued to invest in Embarcadero Center, from remodeling and expanding the office lobby spaces to adding Mosaic, an 11,000-square-foot indoor-outdoor event space designed by Gensler that can accommodate more than 550 people.
Overcoming Challenges
Yuen points out that the pandemic was particularly challenging for San Francisco. The city shut down longer than most other markets, and the rise in remote work resulted in higher levels of office and retail vacancies. Embarcadero Center was not spared. “Despite us offering assistance to some of these retailers, they had other fixed costs that made it hard without the foot traffic downtown, so we lost a few.”
Changes to retail had been in motion prior to the pandemic, notably the uptick in online shopping. “The pandemic really accelerated all of that for our national retailers. We had to get creative in how we looked at retail in order to still be able to provide the amenities that our office tenants look for.”
BXP was able to retain almost all of its full service restaurants at Embarcadero Center but needed to fill spaces left vacant by its national brand clothing and beauty product retail, and grab-and-go food retail tenants.
In response, Yuen explains, BXP turned to “the people that knew San Francisco really well and believed in the city. And those were the small local businesses.” Unlike national tenants however, these retailers typically do not work with a broker, which meant the approach had to be different.
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