When the project was first proposed in 1996, building a 1.4 million sf project seemed like a good idea. San Francisco was booming and office and retail rents were at an all-time high peaking at around $80 per sf. However, the latest market reports reveal that there is approximately 15 million sf of vacant office space in the city and the $80 rental rates have dropped into the $30s. Even the retail sector has taken a big it, with rental rates dropping about 30%.

Developer Forest City Development California Inc. remains undaunted. The company plans to go through with the massive project despite the market's instability, which is to say they are confident that the market will bounce back in the next few years.

The $500 million Bloomingdale's project consists of a 275,000-sf Bloomingdale's department store, 220,000-sf of office space, a nine-screen theater, 125,000-sf of additional retail space and a 230-room hotel. The developers say that they have a lot of tenants already interested in the property.

Indeed, Forest City is in negotiations with a hotel operator, though the name of the operator has thus far been kept secret. A number of hotel operators have expressed interest in the project, including Rosewood Hotels and Resorts and Carlson Hospitality Worldwide.