Skip to main content
Business

Developer of Troubled Downtown San Francisco Tower Gives Property Back to Lender

Written by Kevin TruongPublished Apr. 10, 2023 • 4:34pm
All Star Cafe and a parking lot currently sit at the location of Build Inc.'s planned One Oak Development.| Google Street View

The developer behind a stalled effort to build a 40-story housing high-rise in Downtown San Francisco has given the property up to its lender in a sign of growing distress in the city’s real estate market. 

Developer Build Inc. has filed a deed in lieu of foreclosure for its One Oak development at 1500 Market St. on the corner of Market and Oak streets, according to city property records. 

Property owners may sometimes choose to give up their properties through this process as an alternative to foreclosure when they default on their mortgages. The news about One Oak was first reported by the San Francisco Business Times. 

According to city records, Build Inc. owed more than $44 million in debt to lender Washington Capital Management Inc. and gave up the property for a nominal $100 fee. Build Inc. and Washington Capital Management did not respond to a request for comment. 

A rendering shows Build Inc.'s planned One Oak development in Downtown San Francisco. | Courtesy Solomon Cordwell Buenz

One Oak has had a somewhat troubled development history as it sought to start construction amid a difficult financing environment and rising interest rates. Build Inc. originally won approval to build 304 for-sale condos in 2017 before pivoting its plans to 460 rental units last year. 

The developer also tried to offload the site in 2018, blaming rising costs and fees as major barriers to construction. Build Inc. is also behind the 469 Stevenson St. project that became a flashpoint in San Francisco’s housing debates after the Board of Supervisors moved to stall the project.

The Mid-Market neighborhood has struggled after the pandemic dramatically cut the area’s pre-pandemic daytime population of office workers, increasing vacancies and heightening concerns over public safety and street conditions. A number of businesses such as Block, Uber and Reddit have gone remote or given up leases in the neighborhood. 

In the latest blow to the neighborhood, a Whole Foods grocery store announced its closure barely a year after its grand opening citing safety concerns.

Commercial vacancies in San Francisco are nearing 30% and show little signs of abating. Real estate insiders are predicting that a wave of landlords will decide that owning real estate in San Francisco is no longer worth it. 

One Oak is the latest example of a property owner doing just that. Another example is Redco Development and its investment partner AEW Capital Management deciding to walk away from the historic 1 Montgomery St. building that they purchased for $84 million in 2019. 

“Commercial real estate finds itself in the eye of a perfect storm,” said Dan McNamara of Polpo Capital, a hedge fund that holds a short position in the commercial mortgage-backed securities market, in a recent interview.

Kevin Truong can be reached at [email protected]


Bay Area Home Depot Stores Lock Up Soap, Gloves, Drain Covers Amid Rampant Theft

Bay Area Home Depot Stores Lock Up Soap, Gloves, Drain Covers Amid Rampant Theft


Black Workers at Fremont Tesla Factory Allege Rampant Racism

Black Workers at Fremont Tesla Factory Allege Rampant Racism


When Will Downtown San Francisco Ikea Open? New Signs Project Moving Forward

When Will Downtown San Francisco Ikea Open? New Signs Project Moving Forward


Pioneering San Francisco Company Issues Its First Post-Pandemic Layoffs

Pioneering San Francisco Company Issues Its First Post-Pandemic Layoffs


Breaking the Doom Loop: San Francisco Lawmakers Back Sweeping Changes for Small Business

Breaking the Doom Loop: San Francisco Lawmakers Back Sweeping Changes for Small Business


Stay on top of what’s happening in your city

SF’s most important stories, delivered straight to your inbox



By clicking Sign up you confirm you have read and agree to our Terms of Use and acknowledge our Privacy Policy