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A major San Francisco real estate development has been “paused”
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The developer says it needs to “de-risk” the proposed business and commercial project
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Businesses are leaving the city’s business district, and demand for commercial property has slumped
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Residential property values, once the highest in the US, are also falling
(NewsReady.com) – San Francisco, once one of the most successful US cities, has struggled badly since 2020. Far-left local politicians and a soft approach to crime have unleashed a plague of theft on downtown retailers as well as increasing street crime and homelessness. Now, work on an ambitious construction project, which aimed to give the flagging city center a shot in the arm, has been paused — because the developers couldn’t find tenants.
New Tower Halted
Earlier this year, Australian real estate giant Lendlease started building a new tower in downtown San Francisco on the corner of Market Street and Van Ness Avenue. The new development, Hayes Point, was planned to hold 333 condos and 290,000 square feet of office space on top of ground-floor retail and artistic units. Announcing the project last September, Lendlease CEO praised the location, calling it “probably the most transit-rich site in the city” and pointing out that residents would be close to the popular Hayes Valley neighborhood, with its restaurants, artisan stores, and other amenities. Lendlease, which is financing the project itself and acting as the main building contractor, hoped the 540-foot tower would open in 2026.
Now, that looks unlikely to happen. On August 14, Lendlease released its latest earnings report, and buried in it was the announcement that work on Hayes Point has been suspended “pending further de-risking.” So far, the company has invested over $165 million into the project but doesn’t want to spend more unless it can attract a capital partner or commitments from more tenants.
San Francisco’s Decline Is Worsening
Unfortunately, attracting tenants is going to be a struggle. Businesses aren’t looking for new premises in San Francisco; they’re abandoning their existing ones. The work-from-home trend that’s set in since 2020 is one cause. Millions of square feet of office space are sitting empty, and the city is working on laws to make it easier to convert commercial property to residential use. On the other hand, residential demand isn’t exactly booming either — home prices in Hayes Valley are down 12% in the last year. The ugly truth is that people don’t want to live in San Francisco anymore.
Despite the recall of far-left district attorney Chesa Boudin last July, San Francisco still has a major crime problem. Officially, crime is falling — but former city prosecutor Charles Stimson says that’s because the public is giving up on reporting crime and police are reluctant to make arrests. Stimson says Boudin’s replacement, Brooke Jenkins, is “pro-criminal” and won’t prosecute offenders either. Whatever the cause, figures show robbery is up 9.8% over last year, and 17 major stores have left the Union Square retail neighborhood. San Francisco doesn’t need a big new development; it needs a crackdown on crime.
Copyright 2023, NewsReady.com
