It was supposed to be San Francisco’s 2nd-tallest building. It became a $1.6B money pit

Envisioned as the second-tallest building in San Francisco, Oceanwide Center was meant to be a $1.6 billion pillar of the city’s modern skyline. 

Today, the project site is nothing more than a literal money pit of concrete and metal in the heart of downtown, filled with a tangled thicket of lawsuits and pointed fingers.

Located kitty-corner to Salesforce Tower, the project would have spanned two adjacent skyscrapers at 512 Mission St. and 50 First St. and include 262 massive luxury condos, a Waldorf-Astoria hotel and 1.35 million square feet of office space.

The property’s groundbreaking celebration in 2016 featured flowing champagne and appearances from then-Mayor Ed Lee and billionaire Lu Zhiqiang, the owner of Oceanwide Holdings, a Chinese developer then making waves for its interest in signature properties in the U.S. Dignitaries lined up in matching gray hard hats and stuck commemorative shovels in a wooden box filled with dirt. 

After purchasing the site for $296 million, Oceanwide hired starchitect Norman Foster to help lead the design of what city leaders hoped would become a new downtown jewel enabled by the flood of Chinese investment then coming ashore. 

Soon after construction kicked off, however, the planned 2021 completion date started to slip. Red flags about the finances of Oceanwide Holdings began to surface.

Taking over the site will be an expensive proposition. According to city tax records, the owners have failed to pay property taxes for the site since 2020 and currently owe nearly $13 million.

Mark Ong, the founder of Independent Tax Representatives, was hired by Oceanwide to challenge the property’s tax bill in front of the city. Soon after putting in the appeal in, however, he said the company stopped paying him and he decided to drop it as a client.  

Darlene Chiu Bryant, executive director of GlobalSF, a nonprofit organization that connects Chinese investors to San Francisco organizations, started working on the project in 2014 and helped negotiate the land acquisition by Oceanwide. A decade later, she said the fallow site functions as a symbol of what could have been.

“I walk by it every day to go to my office, and I try not to look,” Chiu Bryant said. “Luckily, they have the fence there, but you can’t avoid it. It’s just a reminder of what used to be and how now there’s nothing.”

With the pandemic now in San Francisco’s rearview and pressure mounting on city leaders to do something—anything—to bring life back to downtown, the metaphor of a costly hole in the middle of the district has become impossible to ignore. 

But put simply—in the words of multiple people interviewed for this story—it’s a “fucking mess.” And no one knows exactly how it can be cleaned up, or at what cost. 

If San Francisco can take any solace in the aborted project, at least the city didn’t get into the kind of mess that Los Angeles did with Oceanwide. 

In January 2019, facing a severe cash crunch, Oceanwide stopped work on a $1 billion, 49-story project in downtown Los Angeles known as Oceanwide Plaza, leaving it a high-rise husk of concrete, glass and steel four years after construction began.

Like the San Francisco tower, that project was meant to include a five-star hotel and luxury condos with lavish perks like a two-acre park and a rooftop pool. Instead, it became a magnet for risky activity ranging from BASE jumpers leaping from the property to robbers stripping the buildings for parts. 

Earlier this year, taggers scaled and spray-painted nearly every floor of the property, earning Oceanwide Plaza the moniker “graffiti towers.” Video of the vandalism went viral globally.

City leaders passed a resolution demanding that Oceanwide Holdings secure the property.  Those pleas went unanswered. 

Frustrated, LA’s city council approved spending $3.8 million of public funds to secure and clean the site. Meanwhile, a group of creditors sued to force the project into bankruptcy with an eye toward getting the ball rolling on an eventual sale and revival of the site.  

A similar dynamic is at play around Oceanwide Center, which also saw its construction stall in 2019. An agreement to sell the San Francisco site to fellow Chinese investor SPF Group collapsed just as the coronavirus pandemic started its global spread.

It was just the first of several times the project’s owners tried and failed to sell the property.

The project’s general contractors, a joint venture between construction firms Swinerton and Webcor, pulled out. Other contractors started filing so-called mechanic’s liens on the property to the tune of $200 million. Hong Kong investment bank Haitong International, a lender to Oceanwide, seized the San Francisco property as collateral. 

Real estate professionals consulted by The Standard estimated that more than $400 million in construction costs have already gone into the site.

Recently, there has been slight movement on getting the project out of its morass. According to an arbitration agreement viewed by The Standard, the roughly $200 million in mechanic’s liens have been consolidated into one lawsuit and reduced to a balance of around $21.1 million. 

The agreement would allow contractors to foreclose on the property via the court, helping to clear one of the primary barriers for a sale or paving the way for Haitong to pay the debt and grab full control. A receiver appointed by the courts to represent Haitong declined to comment on the plans for Oceanwide Center. 

In September 2023, a Bermuda court ordered the liquidation of Oceanwide over unpaid loans. 

Even if the way is cleared for a sale, who in the world would buy the site?

High interest rates, paired with plummeting demand for office space, continue to stymie development citywide. That goes doubly so for a project with years of negative attention. 

“The costs of bringing this site up to a blank slate are immense,” said a developer with knowledge of the project. “Meanwhile, the rest of the market has cratered, and you can find far less complicated projects that are less capital intensive."

A San Francisco real estate commercial broker who is familiar with the project and the players involved said major developers like Boston Properties and Tishman Speyer have kicked the tires on a purchase in years past.

“The owners have been trying to sell it off and on for a long time now,” the broker said. “But there’s a reason there’s no crane on the site right now. Nothing is getting built, let alone a major office and hotel project. Whoever takes control will need to try and entitle this to something more feasible.”

One source involved with bids on the project said there was a significant divide between what owners felt was their sunk cost in the property and the actual market for a site with an increasing number of issues and a growing debt load. 

The developers were required to pay more than $117 million in one-time development impact fees in addition to other community benefits costs such as $12 million for sports and recreation programming, $40 million for affordable housing and the creation of a Downtown Neighborhood Preservation Fund, according to public documents. 

At the moment, the broker said, far from being an asset, the property has “negative value” because of the debt and legal issues weighing it down. 

Even so, real estate sources say, interested parties will continue to look at banking the valuable land until the economic environment for development changes. One option would be for the new owner to spend some money to level the site to protect it from the elements and essentially turn it into a parking lot.

“There’s still a big hole in the ground,” the broker said. “ It’s going to be three to five years before we break ground on it. Can we at least park cars?”

But the site itself is not a level plane; it is a mix of concrete slabs at different elevations, steel structures and rebar. That means even turning it into a surface lot would require a not-insignificant investment. 

There are examples of stalled San Francisco skyscrapers getting kick-started again. A block away from the Oceanwide Center site sits the geometrical and glass-sided 27-floor tower at 535 Mission St. 

Various projects were pitched at the site over the years. For a time, it was temporarily turned into a 66-space parking lot. Real estate investors Beacon Capital Partners broke ground on the site in 2008 and laid the building’s foundation until the Great Recession put a pause on their plans. 

Building materials were packed away into storage, and the site lay empty and dormant for about five years until developer Boston Properties bought the property and revived the project in 2013. The building eventually opened in November 2014. 

But a largely abandoned site comes with its own host of issues for any buyer interested in restarting construction.   

Alan Burr, president of the structural engineering firm Murphy Burr Curry, travels past Oceanwide Center on his bus commute to and from his SoMa office. On a recent weekday afternoon, he walked around the site peeking through holes in the fencing and green privacy mesh and pointing out potential areas of concern for anyone taking over the property. 

Although some columns have waterproof cladding around them, the vast majority of the concrete slabs and metal rebar poking out of the ground like daisies are exposed to the elements. Moisture is a critical enemy of structural integrity, and the fear would be that years of water damage has started to eat away at the foundation of the property, necessitating even more costly repairs and remediation. 

“The main thing that stands out to me is that it’s an open basin exposed to the weather. That means it’s all steel and concrete that’s getting rained on,” Burr said. “My diligence would be taking a look at the steel to make sure there’s no significant damage, particularly where the concrete and the steel meet.”

The arbitration agreement to clear the mechanic’s liens helps align the incentives of the contractors and Haitong to aggressively market and sell the property in a bid to recover as much cash as possible.

The end of the judicial foreclosure process is technically a public auction for the property. Nearly always, there is a party who can purchase the debt on the property at a discount and gain control prior to that point. 

But with so many claimants at various levels of seniority, international complexities and Oceanwide Center’s status as an albatross of site, it’s unclear who will be left holding the bag.

Most observers agree that the project as originally imagined would be impossible in the current economic environment. Adding to the difficulty is that properties surrounding the site previously owned by Oceanwide have been ceded by lenders who have sold the buildings to new owners. 

The hotel and office components would likely need to be nixed or massively reduced and replaced with a much larger proportion of housing. That would require an entirely new approval process with the city. 

District 6 Supervisor Matt Dorsey, who represents SoMa, said with the project unlikely to move forward in its current form, he hopes housing can rise on a central site in the middle of downtown that could be critical to the neighborhood’s revival. 

“I will do everything in my power to ensure that more housing can be built on the site, including helping the owners take advantage of new local and state laws,” Dorsey said.

Yolanda Olguin has owned El Faro Restaurant at 82 First St., directly abutting the Oceanwide Center site, for more than two decades.

She remembers when construction kicked off, a stream of rodents came through the restaurant and surrounding buildings, panicking customers. And she remembers when construction first slowed, then stopped, crushing her hopes for a new customer base and leaving the streetscape perpetually half-finished. 

What would Olguin like to see at the dormant site? She’s skeptical of a major housing project or another office that would sit largely empty.

A parking lot would be nice, she said, shrugging as she counted the bills from the day’s sales. 

“Anywhere I could park downtown that would be less expensive,” she said with a laugh.