These S.F. malls are experiencing a ‘renaissance' that defies the doom loop. Here's their secret

San Francisco Chronicle​

2 days ago

Rebekah Penaloza loves San Francisco's Japantown so much that she and a friend drove an hour and a half from their homes in Fairfield during a recent weekday to shop for K-pop merchandise, Pokémon cards and nostalgic anime trinkets.
'I love to spend money here,' said Penaloza, 19, who is Filipino American. 'I love all the cute things. I love the food, the drinks. Japantown is just perfect for me.'
As downtown's struggling San Francisco Centre mall and Union Square face scores of empty storefronts, a new wave of Asian retailers and restaurants in Japantown and Stonestown Galleria has captured the zeitgeist by offering unique Japanese, Korean and Chinese pop culture merchandise as well as experiential businesses such as bowling, movies and augmented reality.
There are almost no vacancies at either mall.
By capitalizing on buzzy imports like Sanrio plushies and anime collectibles in claw machines and wildly popular Pop Mart toy figurines, the malls have captured the young customers that all shopping centers are chasing.
The success of the Japantown and Stonestown malls offers lessons about what it takes to thrive as a brick-and-mortar business in a still-recovering city.
'After the pandemic, we started seeing a renaissance of more visitors here. We are seeing an increase in more young people here in Japantown and that's because of the shops and restaurants here,' said Japantown Merchants Association president Richard Hashimoto.
While Japantown attracts shoppers from within and outside San Francisco, Stonestown's shopping base pulls from nearby San Francisco State University, multiple high schools and Parkmerced.
'We've always had a strong student population here. Now we've got more offerings for them, with the entertainment,' including arcade and bowling alley Round One, escape rooms and a movie theater, said Darren Iverson, Brookfield's senior general manager of Stonestown.
Stonestown is enjoying record high foot traffic — up 6% in the last 12 months, said Iverson. Sales per square foot are up 20% since 2019.


Both malls have suburban elements like abundant parking, are located in safe neighborhoods and Stonestown benefits from freeway access while Japantown gets a boost from ample Muni bus lines. Both have a diverse mix of offerings that attract residents seeking everything from daily necessities to a fun night out, such as Japantown's karaoke bar, eye-popping Kiddleton arcade and traditional Japanese communal bath house, Kabuki Springs and Spa.
'Stonestown is a regional center that has got all things to all people. You've got a grocery, you've got a gym, you've got soft goods, you have a lot of food,' said Kazuko Morgan, a retail broker at Cushman & Wakefield. 'Everybody I know is going there. The kids from Pac Heights go every weekend. They used to all go to S.F. Centre.'
No longer. San Francisco Centre, the city's biggest mall, is over half empty and has lost dozens of retailers in recent years, including Nordstrom and Bloomingdale's. Stonestown owner Brookfield previously co-owned the downtown mall before walking away from its mortgage along with then-partner Westfield.
Meanwhile, transit data suggests that Japantown foot traffic has exceeded that of downtown's shopping district. The bus lines that serve Japantown are some of Muni's strongest performing routes, SFMTA spokesperson Erica Kato said. And the mall's parking garage became the agency's busiest last year.
'I would never have thought, in the close to 50 years I've been there, that we would surpass Union Square, the bigger downtown garages,' said Hashimoto, who's worked at Japan Center Garage since 1977.
That change is partly a sign of rising Asian cultural power.
'Anime, manga, all that, has always been popular in Japan but now it's making its way over here to the U.S,' he said.

When Kelvin Chak, a Japantown regular, was a kid growing up in the Fillmore, liking anime meant 'You're going to get bullied,' he said of the Japanese animation genre. 'But now, it's normal.'
The surging consumer demand for East Asian culture and food, propelled by the success of K-pop groups like BTS and Blackpink, has helped drive foot traffic to these two malls — both of which are more than 50 years old. Reinvention was made possible when longtime tenants left during the pandemic.
'In the last three to four years, what we identified was an untapped customer here and they happened to be Asian," Chris Brandon, Brookfield senior vice president of leasing, said about Stonestown, pointing out how many of the nearby university students are Asian American. 'We didn't cater to (them) enough.'
They are now. Stonestown diners have a slew of new Asian food options including spicy Chinese hot pot from Tang Bar and Japanese rice ball vendor Onigilly. Taiwan's Supreme Dumpling and Vietnamese restaurant Le Soleil are on the verge of opening as well.
One hugely popular Asian retailer at Stonestown, Pop Mart, saw long lines on opening day last year and virtually every week during its regular product releases, including its 'Labubu' collectible toy series. Superfans can buy 'blind boxes' with a range of possible dolls, including rare versions that can resell for thousands of dollars.
"We've been thrilled by the enthusiastic response at Stonestown,' said Emily Brough, head of Pop Mart's intellectual property licensing in the Americas. 'Stonestown has cultivated a strong community feel, which we believe is key to its success.'
That demand led gaming center Activate, Escapology escape rooms and Regal Cinemas to lease the former Macy's space in Stonestown. The Japan-based, neon-tinged arcade Round One replaced the former Nordstrom there and buzzy fried chicken restaurant Raising Cane's is replacing a shuttered McDonald's.
Tang Bar owner Russell Liu said his hot pot restaurant sees sales of $2,100 per square foot per year, which he said ranks it in the top 10% among restaurants nationwide.
Other retailers are also taking notice. In an unusual move, H&M is reopening in the same Stonestown space where it closed in 2019. DSW, Vans and GNC have also signed leases in recent years.
Japantown was hit hard by the pandemic, Hashimoto said. But that provided an opportunity for the aging district to revamp itself, said Haley Klein, one of the partners at Maven Commercial, the leasing agent for Japan Center's East and West Mall.
By 2021, there were 13 vacancies, which gave Klein's team a chance to find a 'better blend' of tenants.
'After COVID, there was an influx of newer, modern urban tenants,' Klein said, such as boba chain Yifang Taiwan Fruit Tea, which she said she sought out. 'Now five to six years later, with little to no vacancy, Japan Center has become a budding hotspot for new and emerging trends.'
One such entrepreneur is Fanny Deng, who's had a dream of opening a store for teenage girls filled with beautiful stationery, plush toys and make-up ever since she immigrated to the U.S. at 19. She wanted to create a place like her favorite store growing up in Guangdong Province, China, where she could spend hours picking the perfect notebook.
In 2019, she heard about a vacancy at Stonestown Galleria and emailed the leasing agent. She refinanced her house to obtain $200,000 to start her first brick-and-mortar called Fanloli, named after her daughter. She now has more than five stores across the Bay Area, including in Stonestown and Japantown.
'I built my dream store,' she said. Her teenage daughter frequently sends her TikTok videos about the latest makeup trends and Deng often stocks products at her daughter's recommendation, such as a popular Korean lipstick-blush gel. 'I am always just listening to young people.'
Even legacy businesses have adapted to Japantown's increasingly youthful clientele.
When husband-wife duo Stephen Jordan and Mariko Sawada Jordan opened 'Sakura Sakura' in Japantown 26 years ago selling Kimono-inspired Japanese garments and art pieces, they never imagined that they'd end up carrying a line of 'little fuzzy dolls,' Jordan said.
In 2016, their daughter urged them to update their merchandise to cater to Gen-Z.
Today, their store houses a line of Japanese-imported mischievous-looking street cat dolls dressed in hoodies and beanies, alongside cute plushies and sweatshirts, which the couple said has attracted more young people and increased sales.
There's a common refrain among customers, retailers and advocates about another upside of the malls: Safety.
'The success of Japantown,' Hashimoto said, 'is that people see Japantown as being safe and not being exposed to the skid row type people, mentally disturbed people.'
The Japantown Community Benefit District runs a community ambassador program and 'clean team' hotline to respond to requests for sidewalk sweeping, graffiti removal and cleaning the glass from car break-ins.
Unlike San Francisco Centre, Stonestown has not had widespread security or safety problems. One exception were two large-scale fights among teenagers and youths in 2023, which Brookfield spokesperson Lindsay Kahn called 'an unfortunate, isolated location.' The mall has a 'robust security presence,' which includes security officers, canines and security cars, she said.
Brookfield is investing in Stonestown and plans a massive 3,500-unit housing project approved last year to replace parking lots in what would be the biggest west side development in 50 years.
An additional 150,000 square feet of shops, restaurants and entertainment as well as parks are planned over two decades.
Still, President Donald Trump's proposed tariffs loom large over business owners' futures. Fanoli owner Deng said shipping costs have increased but she has been afraid to raise prices. Jordan said he recently had to pay for duties on imported Japanese merchandise that were 'untenable,' including $313 on a shipment of plush dolls valued at $598. Eunice Ashizawa of Japantown's oldest store, Soko Hardware, said her distributor cancelled her order of Chinese-made somen machines. And Tang Bar's Liu said he's forced to raise prices nearly 5% due to tariffs.
For the time being, the stores at Japantown and Stonestown remain packed with Gen-Zers like the 19-year-old shopper Penaloza, who enjoyed wandering through the pastel-colored shelves of the Fanloli store, picking out a photo card set from a beloved K-pop band.
'This is like my favorite place,' she said.