Kevin V. Nguyen

Two times a year—when the Earth&#8217;s orbit aligns—the sun rises perfectly up California Street with the Bay Bridge in the foreground, splitting a warm glow across a sliver of San Francisco skyscrapers.&nbsp;

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<p>Two times a year—when the Earth's orbit aligns—the sun rises perfectly up California Street with the Bay Bridge in the foreground, splitting a warm glow across a sliver of San Francisco skyscrapers.&nbsp;</p>

<p>Two times a year—when the Earth&#8217;s orbit aligns—the sun rises perfectly up California Street with the Bay Bridge in the foreground, splitting a warm glow across a sliver of San Francisco skyscrapers.&nbsp;</p>

The cosmic event, known as “California Henge,” draws influencers, tourists and weary office workers alike to what has long been the city&#8217;s premier business address.

<p>The cosmic event, known as “California Henge,” draws influencers, tourists and weary office workers alike to what has long been the city's premier business address.</p>

<p>The cosmic event, known as “California Henge,” draws influencers, tourists and weary office workers alike to what has long been the city&#8217;s premier business address.</p>

A different kind of phenomenon is now taking place along the famed corridor, and it has nothing to do with an <a href="https://sfstandard.com/2024/04/08/see-solar-eclipse-photos-from-san-francisco-and-beyond-as-totality-hits-the-u-s/">eclipse</a> or the <a href="https://sfstandard.com/2024/05/11/photos-northern-lights-flash-flicker-over-bay-area-skies/">aurora borealis</a>. Rather, the stars are aligning for empty California Street office buildings to find new life.

See solar eclipse photos from San Francisco and beyond as totality hits the U.S.

Photos: Northern lights flash, flicker over Bay Area skies

<p>A different kind of phenomenon is now taking place along the famed corridor, and it has nothing to do with an <a href="https://sfstandard.com/2024/04/08/see-solar-eclipse-photos-from-san-francisco-and-beyond-as-totality-hits-the-u-s/">eclipse</a> or the <a href="https://sfstandard.com/2024/05/11/photos-northern-lights-flash-flicker-over-bay-area-skies/">aurora borealis</a>. Rather, the stars are aligning for empty California Street office buildings to find new life.</p>

At least, that’s how developer Roger Fields of Peninsula Land &amp; Capital must feel right now. Last summer, his real estate company, primarily based in South Bay, entered the San Francisco office market for the first time by purchasing 550 California St. for about $43 million, less than half of what the 13-story building was worth nearly two decades prior.

<p>At least, that’s how developer Roger Fields of Peninsula Land &amp; Capital must feel right now. Last summer, his real estate company, primarily based in South Bay, entered the San Francisco office market for the first time by purchasing 550 California St. for about $43 million, less than half of what the 13-story building was worth nearly two decades prior.</p>

“To pay that price for a building in great shape, in a location like that, is just unheard of,” Fields previously told The Standard.&nbsp;

<p>“To pay that price for a building in great shape, in a location like that, is just unheard of,” Fields previously told The Standard.&nbsp;</p>

A pedestrian passes the exterior of 550 California St. in San Francisco on Thursday, Oct. 12, 2023. 550 California sold for $41.7 million or $114 per square foot, a 60% discount from the price paid in 2005. San Francisco’s turbulent commercial real estate market offers financial opportunities for developers and others that may have the financial assets and the patience to wait on the most desirable space available. Some developers have traditionally focused on renovating midsized office buildings but are now looking to help facilitate a renters pool that include private equity firms and family offices.


<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2024/05/inlined01_20240509-californiastreetstatus.jpg?w=2500" alt="A person stands in front of a modern building marked &quot;550,&quot; with sunlight casting sharp shadows on its glass facade." class="wp-image-275633"/><figcaption class="wp-element-caption">The 13-story building at 550 California St. was once fully occupied by Wells Fargo.</figcaption></figure>


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<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2024/05/inlined01_20240509-californiastreetstatus.jpg?w=2500" alt="A person stands in front of a modern building marked &quot;550,&quot; with sunlight casting sharp shadows on its glass facade." class="wp-image-275633"/><figcaption class="wp-element-caption">The 13-story building at 550 California St. was once fully occupied by Wells Fargo.</figcaption></figure>

Fields said this week his firm had just inked nine new leases at the previously vacant skyscraper in the heart of the city’s Financial District. It might not be a magic sunrise, but it’s a badly needed ray of light on the city’s <a href="https://sfstandard.com/2024/04/24/how-much-big-tech-pulled-back-in-san-francisco/">beleaguered office market</a>.&nbsp;

Corporate retreat: Big Tech has slashed its office presence in San Francisco by half

<p>Fields said this week his firm had just inked nine new leases at the previously vacant skyscraper in the heart of the city’s Financial District. It might not be a magic sunrise, but it’s a badly needed ray of light on the city’s <a href="https://sfstandard.com/2024/04/24/how-much-big-tech-pulled-back-in-san-francisco/">beleaguered office market</a>.&nbsp;</p>

That possibility is enabled by a wave of new building owners, like Fields, who are acquiring premier real estate at a discounted price and passing those savings onto tenants who otherwise would’ve been priced out of the area. Around this time four years ago, the average asking rent for office space on California Street was $90 per square foot, according to real estate firm Cushman &amp; Wakefield. Today, that number is closer to $62.<strong>&nbsp;</strong>

<p>That possibility is enabled by a wave of new building owners, like Fields, who are acquiring premier real estate at a discounted price and passing those savings onto tenants who otherwise would’ve been priced out of the area. Around this time four years ago, the average asking rent for office space on California Street was $90 per square foot, according to real estate firm Cushman &amp; Wakefield. Today, that number is closer to $62.<strong>&nbsp;</strong></p>


<h2 class="wp-block-heading" id="h-an-outsize-impact">An outsize impact</h2>


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<h2 class="wp-block-heading" id="h-an-outsize-impact">An outsize impact</h2>

As opposed to the tech companies that primarily dominated the last real estate boom and drove up asking rents, the new tenants come from a variety of industries, including professional services, hospitality and biopharmaceuticals.&nbsp;

<p>As opposed to the tech companies that primarily dominated the last real estate boom and drove up asking rents, the new tenants come from a variety of industries, including professional services, hospitality and biopharmaceuticals.&nbsp;</p>

Taken altogether, the building at 550 California St. will be nearly 20% occupied after those companies move in. Once his firm can get the place at least half full, Fields said he’d like to see a restaurant on the ground floor.&nbsp;

<p>Taken altogether, the building at 550 California St. will be nearly 20% occupied after those companies move in. Once his firm can get the place at least half full, Fields said he’d like to see a restaurant on the ground floor.&nbsp;</p>

“That just means we’re going to have to do more transactions to fill it up,” Fields said.&nbsp;

<p>“That just means we’re going to have to do more transactions to fill it up,” Fields said.&nbsp;</p>

Which spaces are in demand has also changed. Rather than a single large firm leasing an entire building in anticipation of future growth or a unicorn funding round, Fields said he’s noticed that most tenants now in the hunt for new office spaces in San Francisco are of the small- to medium-size varieties, which don’t necessarily need an entire building or a floor at a grand skyscraper but still want to be in the heart of downtown.&nbsp;

<p>Which spaces are in demand has also changed. Rather than a single large firm leasing an entire building in anticipation of future growth or a unicorn funding round, Fields said he’s noticed that most tenants now in the hunt for new office spaces in San Francisco are of the small- to medium-size varieties, which don’t necessarily need an entire building or a floor at a grand skyscraper but still want to be in the heart of downtown.&nbsp;</p>

His building’s confirmed list of new tenants includes Core Hotels, Peak Technology Partners, Genedata, Kevala, Tobin Capital, Behmke Reporting and Video Services, law firm Miura &amp; Partners, United Litigation Discovery and Optime.

<p>His building’s confirmed list of new tenants includes Core Hotels, Peak Technology Partners, Genedata, Kevala, Tobin Capital, Behmke Reporting and Video Services, law firm Miura &amp; Partners, United Litigation Discovery and Optime.</p>

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Before the pandemic, setting up camp in San Francisco’s northern Financial District, where the city’s first monumental skyscrapers were erected, likely wouldn’t have been an option for many of these companies. For example, the entirety of 550 California St., considered a Class B building today, was once occupied by Wells Fargo.&nbsp;

<p>Before the pandemic, setting up camp in San Francisco’s northern Financial District, where the city’s first monumental skyscrapers were erected, likely wouldn’t have been an option for many of these companies. For example, the entirety of 550 California St., considered a Class B building today, was once occupied by Wells Fargo.&nbsp;</p>

Today, 27 office towers totaling over 8 million square feet line the California Street corridor, according to Cushman &amp; Wakefield. Of those, five buildings are over 50% vacant, with six more trending in that direction if no new leases are signed. Meanwhile, at least 10 buildings are over 80% occupied.&nbsp;

<p>Today, 27 office towers totaling over 8 million square feet line the California Street corridor, according to Cushman &amp; Wakefield. Of those, five buildings are over 50% vacant, with six more trending in that direction if no new leases are signed. Meanwhile, at least 10 buildings are over 80% occupied.&nbsp;</p>

All told, approximately 33% of California Street’s offices are currently vacant, and the overwhelming majority of those offices on the market are under 10,000 square feet. Because most of San Francisco’s office space is concentrated downtown, those figures mirror the citywide 34% vacancy.&nbsp;

<p>All told, approximately 33% of California Street’s offices are currently vacant, and the overwhelming majority of those offices on the market are under 10,000 square feet. Because most of San Francisco’s office space is concentrated downtown, those figures mirror the citywide 34% vacancy.&nbsp;</p>

A sunrise locally known as 'California Henge' hits building behind along California Street, bottom,  in San Francisco on Sept. 5, 2023.


<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2024/05/inlined02_20240509-californiastreetstatus.jpg?w=2500" alt="The image shows a cityscape at sunrise, with silhouette skyscrapers bathed in golden light and hazy clouds." class="wp-image-275634"/><figcaption class="wp-element-caption">A sunrise locally known as “California Henge” hits buildings along California Street in San Francisco on Sept. 5, 2023.</figcaption></figure>


Robert Sammons, senior director of research at Cushman &amp; Wakefield, said because California Street is bookended with large “Tier 1 trophy” buildings, the street has an outsize impact on setting pricing and expectations for the overall market.&nbsp;&nbsp;

<p>Robert Sammons, senior director of research at Cushman &amp; Wakefield, said because California Street is bookended with large “Tier 1 trophy” buildings, the street has an outsize impact on setting pricing and expectations for the overall market.&nbsp;&nbsp;</p>

Fields, whose Twitter bio says he’s “actively seeking acquisitions,” manages nearly 50 commercial and industrial properties outside of San Francisco.&nbsp;

<p>Fields, whose Twitter bio says he’s “actively seeking acquisitions,” manages nearly 50 commercial and industrial properties outside of San Francisco.&nbsp;</p>

“Right now, we know we have the best value in town,” he said. To compete with the glut of available, often newer, office spaces in town, Fields said he’s been flexible with rent terms, even signing a one-year lease if it gets a deal done. Traditionally, office tenants signing direct leases would commit to five- or 10-year terms.&nbsp;

<p>“Right now, we know we have the best value in town,” he said. To compete with the glut of available, often newer, office spaces in town, Fields said he’s been flexible with rent terms, even signing a one-year lease if it gets a deal done. Traditionally, office tenants signing direct leases would commit to five- or 10-year terms.&nbsp;</p>

But big lease deals are not totally out of vogue. Last month, Rippling, the well-funded HR automation company, migrated north from SoMa, where it had outgrown its digs at 55 Second St. and <a href="https://sfstandard.com/2024/04/14/more-san-francisco-companies-return-to-office/">signed a multiyear lease</a> at 430 California St., where it will now occupy a whopping nine floors. The technology firm requires its employees to come into the office at least three days a week.

San Francisco is getting back to in-person work. Just ask these companies

<p>But big lease deals are not totally out of vogue. Last month, Rippling, the well-funded HR automation company, migrated north from SoMa, where it had outgrown its digs at 55 Second St. and <a href="https://sfstandard.com/2024/04/14/more-san-francisco-companies-return-to-office/">signed a multiyear lease</a> at 430 California St., where it will now occupy a whopping nine floors. The technology firm requires its employees to come into the office at least three days a week.</p>


<h2 class="wp-block-heading" id="h-rewriting-history-nbsp">Rewriting history&nbsp;</h2>


A month before Fields successfully landed his building, real estate firms SKS Partners and the Swig Company <a href="https://sfstandard.com/2023/09/26/downtown-san-francisco-61m-tower-purchase-signals-real-estate-reset/">partnered to purchase</a> 350 California St. just down the street for around $61 million, a roughly 75% haircut from the price the seller shopped the property for in 2020.&nbsp;&nbsp;

Downtown San Francisco: $61M tower purchase signals real estate reset

<p>A month before Fields successfully landed his building, real estate firms SKS Partners and the Swig Company <a href="https://sfstandard.com/2023/09/26/downtown-san-francisco-61m-tower-purchase-signals-real-estate-reset/">partnered to purchase</a> 350 California St. just down the street for around $61 million, a roughly 75% haircut from the price the seller shopped the property for in 2020.&nbsp;&nbsp;</p>

The new owners of the Class A office building leveraged their personal connections to bring on two new tenants near the start of the year. Paul Stein, a managing partner at SKS, whose father founded Bridge Housing some 40 years ago, helped steer the nonprofit developer toward a long-term lease for the entire 16th floor of the building in January.&nbsp;

<p>The new owners of the Class A office building leveraged their personal connections to bring on two new tenants near the start of the year. Paul Stein, a managing partner at SKS, whose father founded Bridge Housing some 40 years ago, helped steer the nonprofit developer toward a long-term lease for the entire 16th floor of the building in January.&nbsp;</p>

A composite image of exterior of 350 California Street and inset images of Connor Kidd, left, and Paul Stein, right, new owners of 350 California Street.


<figure class="wp-block-image size-full is-resized"><img src="https://content.sfstandard.com/wp-content/uploads/2023/09/SOCIAL_350CalBuyers.jpg" alt="The image features a modern skyscraper flanked by two portraits of smiling men in business attire on either side. The setting suggests a bustling urban environment." class="wp-image-204806" style="width:669px;height:auto"/><figcaption class="wp-element-caption">The building at 350 California Street is now owned by the Swig Company—whose CEO and president, Connor Kidd, is pictured at left—and SKS Partners—whose Paul Stein, a managing partner, is pictured at right.</figcaption></figure>


Shortly after, when the former CEO of coworking company RocketSpace Inc., Duncan Logan, needed a home for his new climate change-focused company called 9Zero, he leaned on his previous connection with the building owner to lease the fourth and fifth floors of the 22-story building. Years prior, Stein was Logan’s first landlord at 181 Fremont before the Jay Paul Company redeveloped the site.&nbsp;

<p>Shortly after, when the former CEO of coworking company RocketSpace Inc., Duncan Logan, needed a home for his new climate change-focused company called 9Zero, he leaned on his previous connection with the building owner to lease the fourth and fifth floors of the 22-story building. Years prior, Stein was Logan’s first landlord at 181 Fremont before the Jay Paul Company redeveloped the site.&nbsp;</p>

The company officially unveiled its new space to the public during <a href="https://www.sfclimateweek.org/">SF Climate Week</a> last month, where it hosted over 3,000 visitors at the building’s sleek glass-encased mezzanine and its leased floors.

<p>The company officially unveiled its new space to the public during <a href="https://www.sfclimateweek.org/">SF Climate Week</a> last month, where it hosted over 3,000 visitors at the building’s sleek glass-encased mezzanine and its leased floors.</p>

Like a cross between LinkedIn and WeWork for climate technology companies, 9Zero offers paying members access to an exclusive online networking platform and lets them reserve and rent office space within the company’s facilities at 350 California St.&nbsp;

<p>Like a cross between LinkedIn and WeWork for climate technology companies, 9Zero offers paying members access to an exclusive online networking platform and lets them reserve and rent office space within the company’s facilities at 350 California St.&nbsp;</p>

The new space also regularly hosts events and programming in a bid to maintain the momentum that would previously evaporate after the end of a San Francisco climate-change convention.

<p>The new space also regularly hosts events and programming in a bid to maintain the momentum that would previously evaporate after the end of a San Francisco climate-change convention.</p>

Here, in one of the city&#8217;s most famed corridors, the 9Zero team is hoping to build a critical mass for companies focused on environmental issues. Think Wall Street but for climate bros.

<p>Here, in one of the city's most famed corridors, the 9Zero team is hoping to build a critical mass for companies focused on environmental issues. Think Wall Street but for climate bros.</p>

<p>Here, in one of the city&#8217;s most famed corridors, the 9Zero team is hoping to build a critical mass for companies focused on environmental issues. Think Wall Street but for climate bros.</p>

9Zero Co-founder Matthew Joehnk looks out onto California Street from his firm's new "climate hub" on the fifth floor of 350 California St.


<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2024/05/img_6300.jpg?w=2500" alt="A man in a gray shirt stands by large windows overlooking a busy city street, holding a tablet and gazing outward thoughtfully." class="wp-image-275721"/><figcaption class="wp-element-caption">Matthew Joehnk, 9Zero co-founder, looks out onto California Street from his firm&#8217;s new “climate hub” on the fifth floor of 350 California St.</figcaption></figure>


<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2024/05/img_6300.jpg?w=2500" alt="A man in a gray shirt stands by large windows overlooking a busy city street, holding a tablet and gazing outward thoughtfully." class="wp-image-275721"/><figcaption class="wp-element-caption">Matthew Joehnk, 9Zero co-founder, looks out onto California Street from his firm's new “climate hub” on the fifth floor of 350 California St.</figcaption></figure>

<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2024/05/img_6300.jpg?w=2500" alt="A man in a gray shirt stands by large windows overlooking a busy city street, holding a tablet and gazing outward thoughtfully." class="wp-image-275721"/><figcaption class="wp-element-caption">Matthew Joehnk, 9Zero co-founder, looks out onto California Street from his firm&#8217;s new “climate hub” on the fifth floor of 350 California St.</figcaption></figure>

“If you outgrow your offices here, that’s good,” 9Zero co-founder Matthew Joehnk said. “There are more floors in this building that could use you.”&nbsp;

<p>“If you outgrow your offices here, that’s good,” 9Zero co-founder Matthew Joehnk said. “There are more floors in this building that could use you.”&nbsp;</p>

Kieran White and Andrew Porter are some of the fresh new faces making use of the business-class digs. The duo started their company, Curo, which facilitates access to underutilized electric vehicle charging stations, less than a year ago.&nbsp;

<p>Kieran White and Andrew Porter are some of the fresh new faces making use of the business-class digs. The duo started their company, Curo, which facilitates access to underutilized electric vehicle charging stations, less than a year ago.&nbsp;</p>

They cycled through different coworking spaces and White’s living room before renting two permanent desks at 9Zero, where they have a corner view of California Street below.

<p>They cycled through different coworking spaces and White’s living room before renting two permanent desks at 9Zero, where they have a corner view of California Street below.</p>

“It’s the vision of the [9Zero] community that sold it for us,” White said. “We’re around people who are interested in the same things.”

<p>“It’s the vision of the [9Zero] community that sold it for us,” White said. “We’re around people who are interested in the same things.”</p>

Porter, who rides an electric scooter into the office from North Beach every day, said the location has the right blend of fun, convenience and safety. Additionally, he and White are hoping the prestige of the location will attract talent and investors.&nbsp;

<p>Porter, who rides an electric scooter into the office from North Beach every day, said the location has the right blend of fun, convenience and safety. Additionally, he and White are hoping the prestige of the location will attract talent and investors.&nbsp;</p>

Soon enough, they’ll be joined by others who want in on a piece of classic San Francisco history on the cheap. The building next door at 300 California St. is reportedly under contract to be acquired by local investors Redco Development and GCI General Contractors.&nbsp;

<p>Soon enough, they’ll be joined by others who want in on a piece of classic San Francisco history on the cheap. The building next door at 300 California St. is reportedly under contract to be acquired by local investors Redco Development and GCI General Contractors.&nbsp;</p>

The building at 255 California St. in San Francisco is reportedly close to being sold for around $50 million.


<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2024/05/inlined04_20240509-californiastreetstatus.jpg?w=1812" alt="A modern high-rise building with a reflective blue glass facade and arch-shaped concrete entrance, flanked by American and corporate flags." class="wp-image-275636"/><figcaption class="wp-element-caption">The building at 255 California St. in San Francisco is reportedly close to being sold for around $53 million.</figcaption></figure>


The San Francisco Business Times <a href="https://www.bizjournals.com/sanfrancisco/news/2024/04/19/redco-gci-300-california.html">reported the final sale price</a> is expected to be around $28 million. The building last traded hands for twice as much in 2014.&nbsp;

<p>The San Francisco Business Times <a href="https://www.bizjournals.com/sanfrancisco/news/2024/04/19/redco-gci-300-california.html">reported the final sale price</a> is expected to be around $28 million. The building last traded hands for twice as much in 2014.&nbsp;</p>

Another building at 255 California St. is also <a href="https://sfstandard.com/2024/03/04/paramount-group-downtown-trophy-buildings-in-trouble/">close to being sold</a> for around $53 million, sources say, a roughly two-thirds discount from the price that the previous owners purchased the property for in 2019.&nbsp;

Bought for $949M, 2 San Francisco offices have been marked down to zero

<p>Another building at 255 California St. is also <a href="https://sfstandard.com/2024/03/04/paramount-group-downtown-trophy-buildings-in-trouble/">close to being sold</a> for around $53 million, sources say, a roughly two-thirds discount from the price that the previous owners purchased the property for in 2019.&nbsp;</p>

Call it an office reset, planetary alignment or whatever you want. Any way you slice it, the city’s top skyscrapers on the most prestigious strip of downtown are for sale.

<p>Call it an office reset, planetary alignment or whatever you want. Any way you slice it, the city’s top skyscrapers on the most prestigious strip of downtown are for sale.</p>

Real estate deals on this downtown street signal a comeback

A severe budget crisis at the San Francisco Unified School District means that regardless of <a href="https://sfstandard.com/2024/10/17/superintendent-to-resign-amid-school-closure-chaos/">what happens with the superintendent</a>, a wave of school closures and mergers is likely coming. While reducing costs shores up one side of the balance sheet, generating cash is critical for the other.

Superintendent to resign amid school closure chaos

<p>A severe budget crisis at the San Francisco Unified School District means that regardless of <a href="https://sfstandard.com/2024/10/17/superintendent-to-resign-amid-school-closure-chaos/">what happens with the superintendent</a>, a wave of school closures and mergers is likely coming. While reducing costs shores up one side of the balance sheet, generating cash is critical for the other.</p>

As a nonprofit public agency, the district is limited in its ability to raise money outside of government funds (which are tied directly to enrollment) and local taxes and fees (which are sporadic). But one asset the district does have at its disposal is real estate.&nbsp;

<p>As a nonprofit public agency, the district is limited in its ability to raise money outside of government funds (which are tied directly to enrollment) and local taxes and fees (which are sporadic). But one asset the district does have at its disposal is real estate.&nbsp;</p>

In total, SFUSD owns 9.9 million square feet across 155 properties, making it the third largest holder of city-owned property, according to the district’s most recent <a href="https://go.boarddocs.com/ca/sfusd/Board.nsf/files/CQP5P3111C0E/$file/2023-04-25%20SFUSD%202023%20FMP%20FINAL.pdf">facilities master plan</a>. Of that portfolio, SFUSD recently <a href="https://sfstandard.com/2024/10/08/school-closure-list-sfusd/">identified 13 schools for closure</a> or merger.

13 SF public schools targeted for closure or mergers

<p>In total, SFUSD owns 9.9 million square feet across 155 properties, making it the third largest holder of city-owned property, according to the district’s most recent <a href="https://go.boarddocs.com/ca/sfusd/Board.nsf/files/CQP5P3111C0E/$file/2023-04-25%20SFUSD%202023%20FMP%20FINAL.pdf">facilities master plan</a>. Of that portfolio, SFUSD recently <a href="https://sfstandard.com/2024/10/08/school-closure-list-sfusd/">identified 13 schools for closure</a> or merger.</p>

In the private sector, companies are incentivized to either <a href="https://sfstandard.com/2024/01/05/brookfield-ballast-residential-landlord-in-sf-apartment-veritas/">sell distressed assets or walk away from underwater loans</a>. Business logic would have the school district do the same, since it claims it can <a href="https://www.sfusd.edu/announcements/2024-10-15-doing-right-all-san-francisco-students">no longer afford</a> to operate or maintain those properties. But in reality, public schools are reluctant to let go of real estate, especially in San Francisco, where the scarce commodity would be difficult to acquire again by a district with limited resources.

This real estate company dumped its downtown San Francisco mall. Now it&#8217;s gobbling up apartments

<p>In the private sector, companies are incentivized to either <a href="https://sfstandard.com/2024/01/05/brookfield-ballast-residential-landlord-in-sf-apartment-veritas/">sell distressed assets or walk away from underwater loans</a>. Business logic would have the school district do the same, since it claims it can <a href="https://www.sfusd.edu/announcements/2024-10-15-doing-right-all-san-francisco-students">no longer afford</a> to operate or maintain those properties. But in reality, public schools are reluctant to let go of real estate, especially in San Francisco, where the scarce commodity would be difficult to acquire again by a district with limited resources.</p>

SFUSD officials have not said they intend to sell any property, and the district’s master plan makes no mention of doing so. Furthermore, even if sales were to happen, <a href="https://casetext.com/statute/california-codes/california-education-code/title-1-general-education-code-provisions/division-1-general-education-code-provisions/part-105-school-facilities/chapter-4-property-sale-lease-exchange">state law</a> restricts SFUSD from spending the proceeds on anything aside from maintaining or upgrading its facilities, meaning teacher salaries or other general operating expenses are <a href="https://casetext.com/statute/california-codes/california-education-code/title-1-general-education-code-provisions/division-1-general-education-code-provisions/part-105-school-facilities/chapter-4-property-sale-lease-exchange/article-4-sale-or-lease-of-real-property/section-17462-use-of-funds-derived-from-sale-of-surplus-property">off the table</a>.&nbsp;

<p>SFUSD officials have not said they intend to sell any property, and the district’s master plan makes no mention of doing so. Furthermore, even if sales were to happen, <a href="https://casetext.com/statute/california-codes/california-education-code/title-1-general-education-code-provisions/division-1-general-education-code-provisions/part-105-school-facilities/chapter-4-property-sale-lease-exchange">state law</a> restricts SFUSD from spending the proceeds on anything aside from maintaining or upgrading its facilities, meaning teacher salaries or other general operating expenses are <a href="https://casetext.com/statute/california-codes/california-education-code/title-1-general-education-code-provisions/division-1-general-education-code-provisions/part-105-school-facilities/chapter-4-property-sale-lease-exchange/article-4-sale-or-lease-of-real-property/section-17462-use-of-funds-derived-from-sale-of-surplus-property">off the table</a>.&nbsp;</p>

Rather than pursue sales or redevelopment, SFUSD will focus on “activating” school sites that have been closed, spokesperson Laura Dudnick said in a statement.&nbsp;

<p>Rather than pursue sales or redevelopment, SFUSD will focus on “activating” school sites that have been closed, spokesperson Laura Dudnick said in a statement.&nbsp;</p>

‘Save Harvey Milk’: School named after LGBTQ icon in peril

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At those sites, the district’s priority will be to make use of those spaces to expand programs such as early education centers, serving preschool and transitional kindergarten students.&nbsp;

<p>At those sites, the district’s priority will be to make use of those spaces to expand programs such as early education centers, serving preschool and transitional kindergarten students.&nbsp;</p>

“If there are vacant sites once all of SFUSD’s needs have been met, we will consider city partnership opportunities,” Dudnick said, adding that the district will continue paying for custodial and security services at those locations.&nbsp;

<p>“If there are vacant sites once all of SFUSD’s needs have been met, we will consider city partnership opportunities,” Dudnick said, adding that the district will continue paying for custodial and security services at those locations.&nbsp;</p>

Dudnick said that starting next fall, playgrounds at certain elementary schools will be shared with local communities on weekends, while unused rooms and outdoor spaces will be made available under the district’s <a href="https://www.sfusd.edu/business-with-sfusd/real-estate/using-and-renting-sfusd-facilities">existing rental program,</a> which allows for nonprofit groups, public agencies, and private or commercial users to book spaces for events, subject to school approval.&nbsp;

<p>Dudnick said that starting next fall, playgrounds at certain elementary schools will be shared with local communities on weekends, while unused rooms and outdoor spaces will be made available under the district’s <a href="https://www.sfusd.edu/business-with-sfusd/real-estate/using-and-renting-sfusd-facilities">existing rental program,</a> which allows for nonprofit groups, public agencies, and private or commercial users to book spaces for events, subject to school approval.&nbsp;</p>

SFUSD’s analysis of its portfolio shows its buildings are not being efficiently utilized. According to district data, just 20 of 72 elementary schools are more than 90% occupied, while eight of 21 middle schools and five of 17 high schools meet that mark.&nbsp;

<p>SFUSD’s analysis of its portfolio shows its buildings are not being efficiently utilized. According to district data, just 20 of 72 elementary schools are more than 90% occupied, while eight of 21 middle schools and five of 17 high schools meet that mark.&nbsp;</p>

Students gather at the Harvey Milk Civil Rights Academy before a protest in response to school closures in San Francisco, on Wednesday, Oct. 9, 2024. The San Francisco Unified School District announced Tuesday a list of schools including the Harvey Milk Civil Rights Academy that could face closures and eventual mergers.


<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2024/10/20241009-harveymilkprotest_0107.jpg?w=2500" alt="Children holding signs stand in front of a colorful mural, surrounded by adults watching them in an outdoor playground area." class="wp-image-320609"/><figcaption class="wp-element-caption">Students gather this month at Harvey Milk Civil Rights Academy to protest a potential closure.</figcaption></figure>


Mark Sanchez, left, and superintendent Matt Wayne listen to people comment during a school board meeting in San Francisco on October 8, 2024.The planed meeting took place just after San Francisco Unified School District announced that several schools could be closed.


<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2024/10/20241008-schoolboardmeetdrama_aar_5.jpg?w=2500" alt="Two men sit at a table with laptops and nameplates. One is focused, and the other is speaking. There's a U.S. flag in the background." class="wp-image-320258"/><figcaption class="wp-element-caption">SFUSD Superintendent Matt Wayne, right, has agreed to step down after residents and politicians pushed back against the planned closures.</figcaption></figure>


Adding to the distress, an internal assessment of the <a href="https://go.boarddocs.com/ca/sfusd/Board.nsf/files/CK54D50AFF58/$file/20221011%20Presentation%20(revised)%20Facilities%20Condition%20Assessment%20-%20BOE.pdf">district’s facility conditions</a> estimates that nearly $1.7 billion in repair or renewal costs are needed in the immediate future. Public school advocates are focusing their efforts on Proposition A in the <a href="https://sfstandard.com/2024/10/09/san-francisco-election-ballot-bot-chat-gpt-ai-voter-guide/">upcoming election</a>, a measure that&nbsp; aims to raise $790 million in bonds for building improvements.

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<p>Adding to the distress, an internal assessment of the <a href="https://go.boarddocs.com/ca/sfusd/Board.nsf/files/CK54D50AFF58/$file/20221011%20Presentation%20(revised)%20Facilities%20Condition%20Assessment%20-%20BOE.pdf">district’s facility conditions</a> estimates that nearly $1.7 billion in repair or renewal costs are needed in the immediate future. Public school advocates are focusing their efforts on Proposition A in the <a href="https://sfstandard.com/2024/10/09/san-francisco-election-ballot-bot-chat-gpt-ai-voter-guide/">upcoming election</a>, a measure that&nbsp; aims to raise $790 million in bonds for building improvements.</p>

According to district data, SFUSD has 14 other properties that are not being used for educational or administrative purposes and are leased to various entities. These include parking lots and office space for nonprofits and a 75,675-square-foot lot under the <a href="https://sfstandard.com/2024/01/24/san-francisco-centre-mall-store-owners-pray-for-turnaround/">San Francisco Centre Mall</a> on Market Street.&nbsp;

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<p>According to district data, SFUSD has 14 other properties that are not being used for educational or administrative purposes and are leased to various entities. These include parking lots and office space for nonprofits and a 75,675-square-foot lot under the <a href="https://sfstandard.com/2024/01/24/san-francisco-centre-mall-store-owners-pray-for-turnaround/">San Francisco Centre Mall</a> on Market Street.&nbsp;</p>

SFUSD this year has generated approximately $7.7 million from its leases, the district confirmed.&nbsp;

<p>SFUSD this year has generated approximately $7.7 million from its leases, the district confirmed.&nbsp;</p>

Meanwhile, SFUSD has two plots of undeveloped land, totaling more than 280,000 square feet. One district-owned site in the Outer Sunset was <a href="https://www.sf.gov/news/san-francisco-announces-two-new-affordable-educator-housing-projects-0">redeveloped into teacher housing</a> last year; two others have been <a href="https://www.sfexaminer.com/news/education/san-francisco-pegs-two-more-sites-for-sfusd-teacher-housing/article_8b40fc76-fdc3-11ee-8fcc-fb2e6c79859d.html">earmarked for the same</a>.&nbsp;

<p>Meanwhile, SFUSD has two plots of undeveloped land, totaling more than 280,000 square feet. One district-owned site in the Outer Sunset was <a href="https://www.sf.gov/news/san-francisco-announces-two-new-affordable-educator-housing-projects-0">redeveloped into teacher housing</a> last year; two others have been <a href="https://www.sfexaminer.com/news/education/san-francisco-pegs-two-more-sites-for-sfusd-teacher-housing/article_8b40fc76-fdc3-11ee-8fcc-fb2e6c79859d.html">earmarked for the same</a>.&nbsp;</p>


<h2 class="wp-block-heading" id="h-private-school-choice">Private school choice</h2>


Whereas public schools are stuck with excess they can’t get rid of, private schools are often hungry for bigger space.&nbsp;

<p>Whereas public schools are stuck with excess they can’t get rid of, private schools are often hungry for bigger space.&nbsp;</p>

For most of his time leading the Chinese American International School — one of the city’s most sought-after <a href="https://sfstandard.com/2024/09/09/private-chinese-mandarin-schools-san-francisco/">private dual-language immersion schools</a> — Jeff Bissell has had to cobble together small bits of real estate as it has grown.

As public schools flounder, private Chinese schools are booming

<p>For most of his time leading the Chinese American International School — one of the city’s most sought-after <a href="https://sfstandard.com/2024/09/09/private-chinese-mandarin-schools-san-francisco/">private dual-language immersion schools</a> — Jeff Bissell has had to cobble together small bits of real estate as it has grown.</p>

The front entrance of 3250 19th Ave. on Tuesday, Oct. 15. The site used to be Mercy High School, but it has since been converted into Chinese American International School. SFUSD recently announced over 10 schools across the district will likely close by the next school year. What will happen to the buildings? The buildings in these photos are former school buildings and now have been converted for other uses or abandoned.


<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2024/10/202410-schoolclosuresrealestate-es-31.jpg?w=2500" alt="The image shows a modern building with an orange and gray facade, featuring large windows and a prominent arched entrance, surrounded by greenery." class="wp-image-322409"/><figcaption class="wp-element-caption">The former Mercy High School is now home to the Chinese American International School, which purchased it for $40 million in 2021.</figcaption></figure>


The front entrance of 300 Valley Street still has its original signage on Tuesday, Oct. 15. The site used to be St. Paul’s Primary School, but it is now being turned into condos. SFUSD recently announced over 10 schools across the district will likely close by the next school year. What will happen to the buildings? The buildings in these photos are former school buildings and now have been converted for other uses or abandoned.


<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2024/10/202410-schoolclosuresrealestate-es-15.jpg?w=2500" alt="The image shows a white building with a modern design featuring large windows. The stone plaque at the base reads &quot;St. Paul's Primary School.&quot;" class="wp-image-322414"/><figcaption class="wp-element-caption">St. Paul’s Primary School in Noe Valley was transformed into condos after the school sold the building in 1999 and relocated down the street.</figcaption></figure>


In 2020, the religious institute Sisters of Mercy closed its all-girls preparatory school. CAIS purchased the 82,000-square-foot property the following year for $40 million.&nbsp;&nbsp;

<p>In 2020, the religious institute Sisters of Mercy closed its all-girls preparatory school. CAIS purchased the 82,000-square-foot property the following year for $40 million.&nbsp;&nbsp;</p>

“It was a once-in-a-lifetime opportunity for us to consolidate,” Bissell said.

<p>“It was a once-in-a-lifetime opportunity for us to consolidate,” Bissell said.</p>

Transactions involving San Francisco schools have mostly been made between private groups. In 1999, St. Paul’s School, another Catholic institution, offloaded its property on the corner of Valley and Sanchez Streets in Noe Valley to private developers who <a href="https://www.sfgate.com/realestate/article/Former-school-302-valley-noe-valley-for-sale-15137772.php">transformed the building into condos</a> a decade later. In 2005, <a href="https://sfstandard.com/2022/12/14/the-furious-effort-behind-effortless-cool-unraveling-the-myth-of-levis/">Levi Strauss &amp; Co.</a> sold its <a href="https://www.sfgate.com/business/article/Levi-Strauss-buttoning-up-its-S-F-operations-2853739.php">former factory building</a> at 250 Valencia St. to the San Francisco Friends School for $3.5 million.&nbsp;

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<p>Transactions involving San Francisco schools have mostly been made between private groups. In 1999, St. Paul’s School, another Catholic institution, offloaded its property on the corner of Valley and Sanchez Streets in Noe Valley to private developers who <a href="https://www.sfgate.com/realestate/article/Former-school-302-valley-noe-valley-for-sale-15137772.php">transformed the building into condos</a> a decade later. In 2005, <a href="https://sfstandard.com/2022/12/14/the-furious-effort-behind-effortless-cool-unraveling-the-myth-of-levis/">Levi Strauss &amp; Co.</a> sold its <a href="https://www.sfgate.com/business/article/Levi-Strauss-buttoning-up-its-S-F-operations-2853739.php">former factory building</a> at 250 Valencia St. to the San Francisco Friends School for $3.5 million.&nbsp;</p>

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After nearly three years of renovations and a fresh coat of paint, the students and faculty at CAIS finally moved into their new campus this fall.&nbsp;

<p>After nearly three years of renovations and a fresh coat of paint, the students and faculty at CAIS finally moved into their new campus this fall.&nbsp;</p>

The new location has more room for activities, including a separate arts center and gym. The new location has also opened doors for more students from the peninsula, Bissell said, boosting the private school’s prospects even more.

<p>The new location has more room for activities, including a separate arts center and gym. The new location has also opened doors for more students from the peninsula, Bissell said, boosting the private school’s prospects even more.</p>

“Real estate is such a blood sport in this city,” he noted. “It’s expensive, and there is not enough of it. … It&#8217;s definitely not for the faint of heart.”&nbsp;

<p>“Real estate is such a blood sport in this city,” he noted. “It’s expensive, and there is not enough of it. … It's definitely not for the faint of heart.”&nbsp;</p>

<p>“Real estate is such a blood sport in this city,” he noted. “It’s expensive, and there is not enough of it. … It&#8217;s definitely not for the faint of heart.”&nbsp;</p>

After public school closures, what happens to the real estate?

Parkmerced, a 3,200-home neighborhood in southwestern San Francisco, faces decaying infrastructure and declining financial prospects due to a <a href="https://www.sfchronicle.com/sf/article/s-f-apartment-complex-default-19406353.php">looming $1.8 billion loan default</a>, but it&#8217;s still one of the best answers to the city’s housing shortage: It’s dense, it’s tall, and it’s available.

<p>Parkmerced, a 3,200-home neighborhood in southwestern San Francisco, faces decaying infrastructure and declining financial prospects due to a <a href="https://www.sfchronicle.com/sf/article/s-f-apartment-complex-default-19406353.php">looming $1.8 billion loan default</a>, but it's still one of the best answers to the city’s housing shortage: It’s dense, it’s tall, and it’s available.</p>

<p>Parkmerced, a 3,200-home neighborhood in southwestern San Francisco, faces decaying infrastructure and declining financial prospects due to a <a href="https://www.sfchronicle.com/sf/article/s-f-apartment-complex-default-19406353.php">looming $1.8 billion loan default</a>, but it&#8217;s still one of the best answers to the city’s housing shortage: It’s dense, it’s tall, and it’s available.</p>

In 2011, the Board of Supervisors approved a sweeping plan to transform the 152-acre site over three decades from a rushed World War II-era housing project into a “vibrant, pedestrian-focused” neighborhood of homes linked by public parks and retail.&nbsp;

<p>In 2011, the Board of Supervisors approved a sweeping plan to transform the 152-acre site over three decades from a rushed World War II-era housing project into a “vibrant, pedestrian-focused” neighborhood of homes linked by public parks and retail.&nbsp;</p>

This plan will account for 2,200 of the 82,000 new homes San Francisco <a href="https://sfstandard.com/2023/01/24/sf-housing-plan-passes-but-faces-tight-timeline-and-tough-road-to-implementation/">must permit before 2031</a>, with nearly 7,000 additional units still to come in future phases. But 13 years after approval by the city, the project by property owner Maximus Real Estate Partners has yet to break ground.&nbsp;

SF housing plan passes, but faces tight timeline and tough road to implementation

<p>This plan will account for 2,200 of the 82,000 new homes San Francisco <a href="https://sfstandard.com/2023/01/24/sf-housing-plan-passes-but-faces-tight-timeline-and-tough-road-to-implementation/">must permit before 2031</a>, with nearly 7,000 additional units still to come in future phases. But 13 years after approval by the city, the project by property owner Maximus Real Estate Partners has yet to break ground.&nbsp;</p>

An entire <a href="https://sfstandard.com/2024/08/26/navigating-the-bottom-of-san-franciscos-office-market/">boom-and-bust real estate cycle</a> has transpired since the project got the green light.&nbsp;

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<p>An entire <a href="https://sfstandard.com/2024/08/26/navigating-the-bottom-of-san-franciscos-office-market/">boom-and-bust real estate cycle</a> has transpired since the project got the green light.&nbsp;</p>

Residential units rest at Parkmerced near San Francisco State University on Friday, Sept. 6, 2024.


<figure class="wp-block-image size-full"><img src="https://content.sfstandard.com/wp-content/uploads/2024/09/202240910-southwestsftaleof2cities_0401_7a2586.jpg" alt="The image shows modern townhouses with green and teal facades in front of a large beige apartment building. Cars are parked along the street." class="wp-image-310123"/><figcaption class="wp-element-caption">The 80-year-old Parkmerced remains San Francisco&#8217;s largest apartment complex.</figcaption></figure>


<figure class="wp-block-image size-full"><img src="https://content.sfstandard.com/wp-content/uploads/2024/09/202240910-southwestsftaleof2cities_0401_7a2586.jpg" alt="The image shows modern townhouses with green and teal facades in front of a large beige apartment building. Cars are parked along the street." class="wp-image-310123"/><figcaption class="wp-element-caption">The 80-year-old Parkmerced remains San Francisco's largest apartment complex.</figcaption></figure>

<figure class="wp-block-image size-full"><img src="https://content.sfstandard.com/wp-content/uploads/2024/09/202240910-southwestsftaleof2cities_0401_7a2586.jpg" alt="The image shows modern townhouses with green and teal facades in front of a large beige apartment building. Cars are parked along the street." class="wp-image-310123"/><figcaption class="wp-element-caption">The 80-year-old Parkmerced remains San Francisco&#8217;s largest apartment complex.</figcaption></figure>

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