Kevin Truong

Next to a picture of his family on Michael Shvo’s desk is a framed sketch he made when he was a young boy. Inspired by a trip to San Francisco, the image is of a stick figure drawing of himself beside the sharp angles of the Transamerica Pyramid.

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Next to a picture of his family on Michael Shvo’s desk is a framed sketch he made when he was a young boy. Inspired by a trip to San Francisco, the image is of a stick figure drawing of himself beside the sharp angles of the Transamerica Pyramid.

“This was my American Dream,” said Shvo, the CEO of his eponymously named real estate development firm, from a conference room on the pyramid’s fifth floor. “It’s somewhat unbelievable. I still walk by the building and get goosebumps because I can&#8217;t believe we own this building.”

“This was my American Dream,” said Shvo, the CEO of his eponymously named real estate development firm, from a conference room on the pyramid’s fifth floor. “It’s somewhat unbelievable. I still walk by the building and get goosebumps because I can't believe we own this building.”

“This was my American Dream,” said Shvo, the CEO of his eponymously named real estate development firm, from a conference room on the pyramid’s fifth floor. “It’s somewhat unbelievable. I still walk by the building and get goosebumps because I can&#8217;t believe we own this building.”

Shvo, a New Yorker, began his career in real estate as a luxury residential broker in Manhattan. Four decades after his visit to San Francisco, he controls a portfolio of real estate around the country worth billions of dollars—including the 1972 building that loomed so large in his childhood imagination.

Shvo, a New Yorker, began his career in real estate as a luxury residential broker in Manhattan. Four decades after his visit to San Francisco, he controls a portfolio of real estate around the country worth billions of dollars—including the 1972 building that loomed so large in his childhood imagination.

RELATED: <a href="https://sfstandard.com/2022/12/07/transamerica-pyramid-at-50-san-francisco-icon-enters-a-new-era-with-400m-redevelopment/">Transamerica Pyramid at 50: San Francisco Icon Enters a New Era With $400M Redevelopment</a>

Transamerica Pyramid at 50: San Francisco icon enters a new era with $400M redevelopment

RELATED: <a href="https://sfstandard.com/2022/12/07/transamerica-pyramid-at-50-san-francisco-icon-enters-a-new-era-with-400m-redevelopment/">Transamerica Pyramid at 50: San Francisco Icon Enters a New Era With $400M Redevelopment</a>

He <a href="https://www.google.com/search?q=50th+anniversary+transamerica+kevin+truong&amp;sca_esv=575939874&amp;rlz=1C5GCEM_en&amp;ei=WwU3Zf2GFp_x0PEPoZyhgAU&amp;ved=0ahUKEwi9oPXrrI2CAxWfODQIHSFOCFAQ4dUDCBA&amp;uact=5&amp;oq=50th+anniversary+transamerica+kevin+truong&amp;gs_lp=Egxnd3Mtd2l6LXNlcnAaAhgCIio1MHRoIGFubml2ZXJzYXJ5IHRyYW5zYW1lcmljYSBrZXZpbiB0cnVvbmcyBRAhGKABSLMLUJ0BWNcKcAF4AZABAJgB9AGgAbANqgEFMy40LjS4AQPIAQD4AQHCAg0QABhHGNYEGLADGIsDwgIFECEYqwLiAwQYACBBiAYBkAYI&amp;sclient=gws-wiz-serp" target="_blank" rel="noreferrer noopener">purchased the iconic 48-story property at 600 Montgomery St.</a> for $650 million in 2020 and has plans for a $400 million renovation that includes the tower, adjacent structures at 505 and 545 Sansome St., as well as the adjacent redwood park. The project will expand and open up the park to create an active hub connecting the neighborhoods of North Beach, Jackson Square and Chinatown.

He <a href="https://www.google.com/search?q=50th+anniversary+transamerica+kevin+truong&amp;sca_esv=575939874&amp;rlz=1C5GCEM_en&amp;ei=WwU3Zf2GFp_x0PEPoZyhgAU&amp;ved=0ahUKEwi9oPXrrI2CAxWfODQIHSFOCFAQ4dUDCBA&amp;uact=5&amp;oq=50th+anniversary+transamerica+kevin+truong&amp;gs_lp=Egxnd3Mtd2l6LXNlcnAaAhgCIio1MHRoIGFubml2ZXJzYXJ5IHRyYW5zYW1lcmljYSBrZXZpbiB0cnVvbmcyBRAhGKABSLMLUJ0BWNcKcAF4AZABAJgB9AGgAbANqgEFMy40LjS4AQPIAQD4AQHCAg0QABhHGNYEGLADGIsDwgIFECEYqwLiAwQYACBBiAYBkAYI&amp;sclient=gws-wiz-serp" target="_blank" rel="noreferrer noopener">purchased the iconic 48-story property at 600 Montgomery St.</a> for $650 million in 2020 and has plans for a $400 million renovation that includes the tower, adjacent structures at 505 and 545 Sansome St., as well as the adjacent redwood park. The project will expand and open up the park to create an active hub connecting the neighborhoods of North Beach, Jackson Square and Chinatown.

Michael Shvo, the owner of San Francisco’s Transamerica Pyramid, released renderings of the iconic building. Michael purchased the property at 600 Montgomery St. for $650 million in 2020 and plans for a $400 million renovation that includes the tower, adjacent structures at 505 Sansome St. and 545 Sansome St. as well as the adjacent Redwood park. The project will expand and open up the park to create an active hub connecting downtown neighborhoods.

<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2023/10/MichaelShvoInConversation-06.jpg?w=2500" alt="" class="wp-image-213836"/><figcaption class="wp-element-caption">Shvo&#8217;s planned renovation project will expand the lobby and open up the pyramid&#8217;s adjacent park.</figcaption></figure>

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<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2023/10/MichaelShvoInConversation-06.jpg?w=2500" alt="" class="wp-image-213836"/><figcaption class="wp-element-caption">Shvo's planned renovation project will expand the lobby and open up the pyramid's adjacent park.</figcaption></figure>

<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2023/10/MichaelShvoInConversation-06.jpg?w=2500" alt="" class="wp-image-213836"/><figcaption class="wp-element-caption">Shvo&#8217;s planned renovation project will expand the lobby and open up the pyramid&#8217;s adjacent park.</figcaption></figure>

&#8220;You&#8217;re going to have a park with three buildings inside the park,&#8221; Shvo explained. Anywhere you come from around here, you&#8217;ll see the green. You&#8217;re going to feel like you have these buildings sitting within a park.&#8221;

"You're going to have a park with three buildings inside the park," Shvo explained. Anywhere you come from around here, you'll see the green. You're going to feel like you have these buildings sitting within a park."

&#8220;You&#8217;re going to have a park with three buildings inside the park,&#8221; Shvo explained. Anywhere you come from around here, you&#8217;ll see the green. You&#8217;re going to feel like you have these buildings sitting within a park.&#8221;

The completion date for the pyramid’s lobby renovation and upgrades to the redwood park has stretched out from the end of the year to the first quarter of 2024. Other renovations will take longer. Among the upgrades are a branch of the high-end Core club, which has a reported initiation fee of $50,000, as well as a private skybar only available to tenants.&nbsp;

The completion date for the pyramid’s lobby renovation and upgrades to the redwood park has stretched out from the end of the year to the first quarter of 2024. Other renovations will take longer. Among the upgrades are a branch of the high-end Core club, which has a reported initiation fee of $50,000, as well as a private skybar only available to tenants.&nbsp;

Despite the negative headlines that have surrounded both San Francisco and the larger commercial real estate industry, Shvo remains bullish on the city’s future and the irreplaceability of office-based work.

Despite the negative headlines that have surrounded both San Francisco and the larger commercial real estate industry, Shvo remains bullish on the city’s future and the irreplaceability of office-based work.

“I’ve been always the most positive person about San Francisco while everyone wrote off the city,” Shvo said. “And interestingly enough, we’re sitting here today, and all of a sudden, the word on the street is it ain’t that bad; it’s getting back.”

“I’ve been always the most positive person about San Francisco while everyone wrote off the city,” Shvo said. “And interestingly enough, we’re sitting here today, and all of a sudden, the word on the street is it ain’t that bad; it’s getting back.”

<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2023/10/MichaelShvoInConversation-01.jpeg?w=2500" alt="" class="wp-image-213832"/><figcaption class="wp-element-caption">Interiors in the tower are being designed with the help of architect Norman Foster of Foster + Partners.<a href="https://www.fosterandpartners.com/"></a></figcaption></figure>

He pointed to the example of a <a href="https://www.ft.com/content/71d8013d-9d94-441e-b2d1-3039c04397d6" target="_blank" rel="noreferrer noopener">May Financial Times article</a> that illustrated the city’s “doom loop” with overexaggerated illustrations of ruined buildings and an overgrown jungle out of The Last of Us. As a city symbol, the pyramid was featured prominently.

He pointed to the example of a <a href="https://www.ft.com/content/71d8013d-9d94-441e-b2d1-3039c04397d6" target="_blank" rel="noreferrer noopener">May Financial Times article</a> that illustrated the city’s “doom loop” with overexaggerated illustrations of ruined buildings and an overgrown jungle out of The Last of Us. As a city symbol, the pyramid was featured prominently.

“I called up the FT and said, ‘Can you introduce me to the guy that does your renderings?’” Shvo said. “It’s a nonsense article, but they did a great job on the imagery to make headlines.”

“I called up the FT and said, ‘Can you introduce me to the guy that does your renderings?’” Shvo said. “It’s a nonsense article, but they did a great job on the imagery to make headlines.”

Shvo believes that the tide is turning on remote work as major Fortune 500 firms start to mandate that employees return to the office.

Shvo believes that the tide is turning on remote work as major Fortune 500 firms start to mandate that employees return to the office.

“The work-from-home model is not something that&#8217;s sustainable because we are here to collaborate,” Shvo said. “That’s why you go to work.”

“The work-from-home model is not something that's sustainable because we are here to collaborate,” Shvo said. “That’s why you go to work.”

“The work-from-home model is not something that&#8217;s sustainable because we are here to collaborate,” Shvo said. “That’s why you go to work.”

Shvo said that he’s looked at purchasing other buildings in San Francisco, including the former PG&amp;E headquarters at 77 Beale St., but owning the pyramid is a bit of “double-edged sword.”

Shvo said that he’s looked at purchasing other buildings in San Francisco, including the former PG&amp;E headquarters at 77 Beale St., but owning the pyramid is a bit of “double-edged sword.”

“I own the Transamerica Pyramid. It&#8217;s very hard after you own this building to buy almost anything else,” Shvo said. That being said, Shvo said he was outbid in some of his purchasing efforts in the city but believes he’ll be able to take advantage of current distress to buy buildings directly from lenders.

“I own the Transamerica Pyramid. It's very hard after you own this building to buy almost anything else,” Shvo said. That being said, Shvo said he was outbid in some of his purchasing efforts in the city but believes he’ll be able to take advantage of current distress to buy buildings directly from lenders.

“I own the Transamerica Pyramid. It&#8217;s very hard after you own this building to buy almost anything else,” Shvo said. That being said, Shvo said he was outbid in some of his purchasing efforts in the city but believes he’ll be able to take advantage of current distress to buy buildings directly from lenders.

As for his own prospects for refinancing his Transamerica Pyramid buy, Shvo said he’s unconcerned.

As for his own prospects for refinancing his Transamerica Pyramid buy, Shvo said he’s unconcerned.

“I have many years to go, but also, my rents have doubled. I went from rents that were $65 to $100 a foot to north of $250 a foot,” Shvo said. These rates mark the tower as one of the most expensive office buildings in the country, with rates far higher than other trophy properties.

“I have many years to go, but also, my rents have doubled. I went from rents that were $65 to $100 a foot to north of $250 a foot,” Shvo said. These rates mark the tower as one of the most expensive office buildings in the country, with rates far higher than other trophy properties.

Tenants in the property include Northwestern Mutual, Callan Associates and BakerHostetler, according to the Shvo company website, though it’s unclear how much of the tower is currently leased.

Tenants in the property include Northwestern Mutual, Callan Associates and BakerHostetler, according to the Shvo company website, though it’s unclear how much of the tower is currently leased.

<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2023/10/MichaelShvoInConversation-04.jpeg?w=2500" alt="" class="wp-image-213834"/><figcaption class="wp-element-caption">Michael Shvo, the owner of San Francisco’s Transamerica Pyramid, released renderings of plans for the iconic building&#8217;s ground floor. </figcaption></figure>

<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2023/10/MichaelShvoInConversation-04.jpeg?w=2500" alt="" class="wp-image-213834"/><figcaption class="wp-element-caption">Michael Shvo, the owner of San Francisco’s Transamerica Pyramid, released renderings of plans for the iconic building's ground floor. </figcaption></figure>

<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2023/10/MichaelShvoInConversation-04.jpeg?w=2500" alt="" class="wp-image-213834"/><figcaption class="wp-element-caption">Michael Shvo, the owner of San Francisco’s Transamerica Pyramid, released renderings of plans for the iconic building&#8217;s ground floor. </figcaption></figure>

The current distress in San Francisco real estate circles, caused by a combination of remote work and sky-high refinancing costs, has led to fears of empty or “zombie buildings” across the city. However, Shvo said this is part of a normal process where new structures are erected to replace buildings that are “past their shelf life.”

The current distress in San Francisco real estate circles, caused by a combination of remote work and sky-high refinancing costs, has led to fears of empty or “zombie buildings” across the city. However, Shvo said this is part of a normal process where new structures are erected to replace buildings that are “past their shelf life.”

“You can’t take milk that’s sour and make a milkshake out of it,” Shvo said. “Buildings that have expired are going to have be demolished and brand new buildings are going to have to come instead.”

“You can’t take milk that’s sour and make a milkshake out of it,” Shvo said. “Buildings that have expired are going to have be demolished and brand new buildings are going to have to come instead.”

That’s where the public sector can help step in, according to Shvo, by helping to kick-start development by shortening timelines for approvals or providing incentives to build.

That’s where the public sector can help step in, according to Shvo, by helping to kick-start development by shortening timelines for approvals or providing incentives to build.

San Francisco is a notoriously difficult place for developers, but Shvo said he’s had a great experience working with the city, in part because officials realize the symbolic importance of the investment being made in what he’s calling the “Transamerica district.”

San Francisco is a notoriously difficult place for developers, but Shvo said he’s had a great experience working with the city, in part because officials realize the symbolic importance of the investment being made in what he’s calling the “Transamerica district.”

Shvo launched a marketing campaign for the pyramid tied to its 50th anniversary in 2022. The theme: “Ahead of its time since 1972.”

Shvo launched a marketing campaign for the pyramid tied to its 50th anniversary in 2022. The theme: “Ahead of its time since 1972.”

Although Shvo said he typically doesn’t get involved in politics, the prominence of his investment has meant that he has had the ear of city leaders. He’s used the opportunity to argue for them to change what he called an “arrogance” in San Francisco’s relationship with the business community.

Although Shvo said he typically doesn’t get involved in politics, the prominence of his investment has meant that he has had the ear of city leaders. He’s used the opportunity to argue for them to change what he called an “arrogance” in San Francisco’s relationship with the business community.

Mayor London Breed speaks with Michael Shvo, Real estate developer and CEO of SHVO, at the  celebration of the Transamerica building’s 50th birthday and interior renovation by SHVO development, at 600 Montgomery Street in the downtown, Financial District of San Francisco, Calif., on Tuesday, Dec. 6, 2022.| Camille Cohen/The Standard

<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2023/10/TransamericaPyramid120522-63.jpg?w=2500" alt="" class="wp-image-213946"/><figcaption class="wp-element-caption">Mayor London Breed speaks with Michael Shvo, real estate developer and CEO of Shvo, at the celebration of the Transamerica building’s 50th birthday and interior renovation by Shvo development.</figcaption></figure>

“The companies and CEOs of companies have to feel the love from the city,” Shvo said. “I can&#8217;t tell you how many times I’ve voiced that at a loud voice. When the city understands that companies need to feel loved and courted, everybody that is thinking of leaving is not going to leave, and some of the people that left might come back.”

“The companies and CEOs of companies have to feel the love from the city,” Shvo said. “I can't tell you how many times I’ve voiced that at a loud voice. When the city understands that companies need to feel loved and courted, everybody that is thinking of leaving is not going to leave, and some of the people that left might come back.”

“The companies and CEOs of companies have to feel the love from the city,” Shvo said. “I can&#8217;t tell you how many times I’ve voiced that at a loud voice. When the city understands that companies need to feel loved and courted, everybody that is thinking of leaving is not going to leave, and some of the people that left might come back.”

So, is the city doing a good job on that? Better than it was a year ago, he replied.

So, is the city doing a good job on that? Better than it was a year ago, he replied.

“I believe today that the role of a mayor is one where you are the promoter of the city,” Shvo said. “You need to wake up in the morning and say, ‘How do I promote my city? How do I make the people that live here love San Francisco and have them feel like San Francisco loves them?’”

“I believe today that the role of a mayor is one where you are the promoter of the city,” Shvo said. “You need to wake up in the morning and say, ‘How do I promote my city? How do I make the people that live here love San Francisco and have them feel like San Francisco loves them?’”

Transamerica Pyramid owner Michael Shvo discusses his billion-dollar bet on downtown San Francisco

Jesse Rogala

Eddie Sun

A leading real estate analysis firm has connected a so-called San Francisco “crime shadow” with the city’s next possible commercial real estate collapses in a first-of-its-kind study.&nbsp;

A leading real estate analysis firm has connected a so-called San Francisco “crime shadow” with the city’s next possible commercial real estate collapses in a first-of-its-kind study.&nbsp;

The Trepp study examines the impact of crime on business performance and predicted some corporate, retail and hotel buildings in San Francisco could be at risk of defaulting on loans due to their proximity to areas plagued with high violent and property crime rates.&nbsp;

The Trepp study examines the impact of crime on business performance and predicted some corporate, retail and hotel buildings in San Francisco could be at risk of defaulting on loans due to their proximity to areas plagued with high violent and property crime rates.&nbsp;

These properties include the Ritz-Carlton hotel in Lower Nob Hill and the Hyatt Regency hotel in SoMa, as well as the Financial District’s One Market Plaza office complex, <a href="https://sfstandard.com/2023/07/20/autodesk-renews-lease-in-downtown-san-francisco-headquarters/">a once-heralded corporate space</a> that Google and Autodesk are currently leasing. <a href="https://therealdeal.com/sanfrancisco/2023/05/01/visa-puts-190k-sf-headquarter-in-san-francisco-on-sublease-market/" target="_blank" rel="noreferrer noopener">Visa subleased</a> the building earlier this year to move its headquarters just south of Oracle Park.

Autodesk renews lease in downtown San Francisco headquarters

These properties include the Ritz-Carlton hotel in Lower Nob Hill and the Hyatt Regency hotel in SoMa, as well as the Financial District’s One Market Plaza office complex, <a href="https://sfstandard.com/2023/07/20/autodesk-renews-lease-in-downtown-san-francisco-headquarters/">a once-heralded corporate space</a> that Google and Autodesk are currently leasing. <a href="https://therealdeal.com/sanfrancisco/2023/05/01/visa-puts-190k-sf-headquarter-in-san-francisco-on-sublease-market/" target="_blank" rel="noreferrer noopener">Visa subleased</a> the building earlier this year to move its headquarters just south of Oracle Park.

“One Market Plaza is a high-quality, trophy office asset that is ~96% leased and has seen more leasing activity since the onset of Covid than any other major office campus in San Francisco,” a spokesperson for the office complex said in a statement.

“One Market Plaza is a high-quality, trophy office asset that is ~96% leased and has seen more leasing activity since the onset of Covid than any other major office campus in San Francisco,” a spokesperson for the office complex said in a statement.

Trepp's 'crime shadow' map showing business struggles overlaid on a crime heat map. The map indicates many defaults and closures are occuring in high-crime areas.

<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2023/08/FireShot-Capture-416-Trepp_SF-Crime-Rate-Study-8.16.23-.docx-Google-Docs-docs.google.com_.png?w=1527" alt="" class="wp-image-192799"/><figcaption class="wp-element-caption">Trepp&#8217;s &#8220;crime shadow&#8221; map shows business struggles overlaid on a crime heat map. The map indicates many defaults and closures are occurring in high-crime areas.</figcaption></figure>

<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2023/08/FireShot-Capture-416-Trepp_SF-Crime-Rate-Study-8.16.23-.docx-Google-Docs-docs.google.com_.png?w=1527" alt="" class="wp-image-192799"/><figcaption class="wp-element-caption">Trepp's "crime shadow" map shows business struggles overlaid on a crime heat map. The map indicates many defaults and closures are occurring in high-crime areas.</figcaption></figure>

<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2023/08/FireShot-Capture-416-Trepp_SF-Crime-Rate-Study-8.16.23-.docx-Google-Docs-docs.google.com_.png?w=1527" alt="" class="wp-image-192799"/><figcaption class="wp-element-caption">Trepp&#8217;s &#8220;crime shadow&#8221; map shows business struggles overlaid on a crime heat map. The map indicates many defaults and closures are occurring in high-crime areas.</figcaption></figure>

The report, put together by Trepp, a firm that provides data analytics on banking and commercial real estate, identified San Francisco’s most financially dire properties and their proximity to high-crime neighborhoods in the city, such as Union Square and the Tenderloin District. The analysis firm solely measured violent and property crimes in their report.

The report, put together by Trepp, a firm that provides data analytics on banking and commercial real estate, identified San Francisco’s most financially dire properties and their proximity to high-crime neighborhoods in the city, such as Union Square and the Tenderloin District. The analysis firm solely measured violent and property crimes in their report.

Leasors who have defaulted or returned commercial buildings to their lenders, such as with the <a href="https://sfstandard.com/2023/06/12/westfield-gives-up-downtown-san-francisco-mall/">Westfield San Francisco Centre in SoMa</a> and <a href="https://sfstandard.com/2023/06/05/real-estate-group-halts-loan-payments-two-san-francisco-hotels/">two Hilton hotel locations in Union Square</a>, showed the same patterns of running businesses in an area deemed under a “crime shadow” while facing financial woes.

Westfield gives up downtown San Francisco mall

Union Square woes: San Francisco hotel owner stops debt payments on Hilton, Parc 55

Leasors who have defaulted or returned commercial buildings to their lenders, such as with the <a href="https://sfstandard.com/2023/06/12/westfield-gives-up-downtown-san-francisco-mall/">Westfield San Francisco Centre in SoMa</a> and <a href="https://sfstandard.com/2023/06/05/real-estate-group-halts-loan-payments-two-san-francisco-hotels/">two Hilton hotel locations in Union Square</a>, showed the same patterns of running businesses in an area deemed under a “crime shadow” while facing financial woes.

Trepp calculated the financial health of city properties by measuring its debt-service coverage ratio, or a firm’s available cash compared with its outstanding debts. The identified buildings all had a deficit or were <a href="https://sfstandard.com/2023/08/15/iconic-san-francisco-hotel-has-lost-90-of-its-value-owner-says/">facing a cash crunch</a>, with loan payments coming due before 2026.

Iconic San Francisco hotel has lost 90% of its value, filing says

Trepp calculated the financial health of city properties by measuring its debt-service coverage ratio, or a firm’s available cash compared with its outstanding debts. The identified buildings all had a deficit or were <a href="https://sfstandard.com/2023/08/15/iconic-san-francisco-hotel-has-lost-90-of-its-value-owner-says/">facing a cash crunch</a>, with loan payments coming due before 2026.

The property and violent crime data used in the Trepp report was taken from the San Francisco Police Department’s incident report. The department did not respond to requests for comment by publication time.

The property and violent crime data used in the Trepp report was taken from the San Francisco Police Department’s incident report. The department did not respond to requests for comment by publication time.

Trepp's heat map showing the prevalence of property and violent crime by location. The crime data is pulled from SFPD's incidence report.

<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2023/08/FireShot-Capture-415-Trepp_SF-Crime-Rate-Study-8.16.23-.docx-Google-Docs-docs.google.com_.png?w=1165" alt="" class="wp-image-192798"/><figcaption class="wp-element-caption">Trepp&#8217;s heat map shows the prevalence of property and violent crime by location. The crime data is pulled from the San Francisco Police Department incident report.</figcaption></figure>

<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2023/08/FireShot-Capture-415-Trepp_SF-Crime-Rate-Study-8.16.23-.docx-Google-Docs-docs.google.com_.png?w=1165" alt="" class="wp-image-192798"/><figcaption class="wp-element-caption">Trepp's heat map shows the prevalence of property and violent crime by location. The crime data is pulled from the San Francisco Police Department incident report.</figcaption></figure>

<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2023/08/FireShot-Capture-415-Trepp_SF-Crime-Rate-Study-8.16.23-.docx-Google-Docs-docs.google.com_.png?w=1165" alt="" class="wp-image-192798"/><figcaption class="wp-element-caption">Trepp&#8217;s heat map shows the prevalence of property and violent crime by location. The crime data is pulled from the San Francisco Police Department incident report.</figcaption></figure>

The report found that businesses tend to perform worse in areas with high crime: More than 65% of businesses in these neighborhoods stagnated or experienced losses. This relationship was most apparent for hotels, where “a small decline in crime may be accompanied by a huge improvement in lodging properties’ financial performance.”

The report found that businesses tend to perform worse in areas with high crime: More than 65% of businesses in these neighborhoods stagnated or experienced losses. This relationship was most apparent for hotels, where “a small decline in crime may be accompanied by a huge improvement in lodging properties’ financial performance.”

However, the report also observed a mixed relationship between changes in crime rate and business performance. Crime rates in Union Square, the Tenderloin and the Mission District all decreased from 2018 to 2022, but the number of registered businesses in these neighborhoods also dropped during this period.&nbsp;

However, the report also observed a mixed relationship between changes in crime rate and business performance. Crime rates in Union Square, the Tenderloin and the Mission District all decreased from 2018 to 2022, but the number of registered businesses in these neighborhoods also dropped during this period.&nbsp;

The report suggests that the relationship between crime rates and business performance could be “bidirectional,” meaning a decline in commerce can also reduce the likelihood of crime, due to reduced foot traffic and storefront spaces.

The report suggests that the relationship between crime rates and business performance could be “bidirectional,” meaning a decline in commerce can also reduce the likelihood of crime, due to reduced foot traffic and storefront spaces.

About 35% of businesses also experienced relatively high growth in areas where crimes increased, the report found.&nbsp;

About 35% of businesses also experienced relatively high growth in areas where crimes increased, the report found.&nbsp;

Trepp added that the tight-knit geography of San Francisco makes it difficult to accurately measure how crime affects business from one neighborhood or community to the next.

Trepp added that the tight-knit geography of San Francisco makes it difficult to accurately measure how crime affects business from one neighborhood or community to the next.

Hyatt and Marriott, Ritz-Carlton’s parent company, did not respond to requests for comment by publication time.

Hyatt and Marriott, Ritz-Carlton’s parent company, did not respond to requests for comment by publication time.

San Francisco ‘crime shadow’ report predicts the next commercial real estate collapses

A buyer has been selected for 350 California St., a Downtown San Francisco office tower that has become a bellwether for the state of the city’s commercial real estate market. And as many observers had expected, the property is <a href="https://sfstandard.com/business/san-franciscos-famed-california-street-is-selling-at-a-deep-discount/">selling at a huge discount.</a>

A buyer has been selected for 350 California St., a Downtown San Francisco office tower that has become a bellwether for the state of the city’s commercial real estate market. And as many observers had expected, the property is <a href="https://sfstandard.com/business/san-franciscos-famed-california-street-is-selling-at-a-deep-discount/">selling at a huge discount.</a>

A bid from San Francisco-based real estate developer SKS has been chosen by property owners MUFG Americas, according to multiple sources with knowledge of the deal. Sources said that a Korean real estate investor is partnered with SKS on the purchase of the 286,000-square-foot building.&nbsp;&nbsp;

A bid from San Francisco-based real estate developer SKS has been chosen by property owners MUFG Americas, according to multiple sources with knowledge of the deal. Sources said that a Korean real estate investor is partnered with SKS on the purchase of the 286,000-square-foot building.&nbsp;&nbsp;

Pricing is said to be in the $200-$225 per square foot range, which translates to about $58 million to $65 million. That’s a roughly 75% haircut from the $250 million brokers were asking for the property when it went on sale in 2020.&nbsp;

Pricing is said to be in the $200-$225 per square foot range, which translates to about $58 million to $65 million. That’s a roughly 75% haircut from the $250 million brokers were asking for the property when it went on sale in 2020.&nbsp;

According to <a href="https://www.loopnet.com/Listing/350-California-St-San-Francisco-CA/27717007/">a listing on LoopNet</a>, the property is currently only 32% leased, with the majority of those leases expiring within the next 18 months.

According to <a href="https://www.loopnet.com/Listing/350-California-St-San-Francisco-CA/27717007/">a listing on LoopNet</a>, the property is currently only 32% leased, with the majority of those leases expiring within the next 18 months.

SKS did not respond to a request for comment as of publication time. The San Francisco Business Times was the <a href="https://www.bizjournals.com/sanfrancisco/news/2023/05/08/union-bank-350-califorrnia-office-sale.html">first to report</a> the news.&nbsp;

SKS did not respond to a request for comment as of publication time. The San Francisco Business Times was the <a href="https://www.bizjournals.com/sanfrancisco/news/2023/05/08/union-bank-350-califorrnia-office-sale.html">first to report</a> the news.&nbsp;

Sources said that the deal has yet to close and the property is yet to complete contract negotiations and the due diligence process.&nbsp;&nbsp;

Sources said that the deal has yet to close and the property is yet to complete contract negotiations and the due diligence process.&nbsp;&nbsp;

Real estate observers have been on the lookout for a major Downtown San Francisco office building to trade hands to provide a comparison for the rest of the market, which has been racked by <a href="https://sfstandard.com/business/san-francisco-braces-for-epic-commercial-real-estate-crash/">record-high vacancy rates</a> amid the transition to remote work for many of the city’s employers.&nbsp;

Real estate observers have been on the lookout for a major Downtown San Francisco office building to trade hands to provide a comparison for the rest of the market, which has been racked by <a href="https://sfstandard.com/business/san-francisco-braces-for-epic-commercial-real-estate-crash/">record-high vacancy rates</a> amid the transition to remote work for many of the city’s employers.&nbsp;

Other nearby office buildings that are currently on the market include 550 California St., now owned by Wells Fargo, and 60 Spear St., currently owned by New York City-based Clarion Partners.

Other nearby office buildings that are currently on the market include 550 California St., now owned by Wells Fargo, and 60 Spear St., currently owned by New York City-based Clarion Partners.

In the oft-theorized “<a href="https://sfstandard.com/housing-development/sf-doom-loop-convert-downtown-offices-student-housing-uc-berkeley/">doom loop</a>,” a decline in real estate values could lead to a hit in property taxes, which is San Francisco’s single largest source of revenue. But in the case of 350 California St., the city would be largely insulated from a drop in tax revenue.

In the oft-theorized “<a href="https://sfstandard.com/housing-development/sf-doom-loop-convert-downtown-offices-student-housing-uc-berkeley/">doom loop</a>,” a decline in real estate values could lead to a hit in property taxes, which is San Francisco’s single largest source of revenue. But in the case of 350 California St., the city would be largely insulated from a drop in tax revenue.

The assessed value of the property is currently at $66.2 million, according to real estate data provider PropertyShark. That’s due in part to Prop. 13, which limits when properties can be reassessed and restricts annual appreciation to 2%.

The assessed value of the property is currently at $66.2 million, according to real estate data provider PropertyShark. That’s due in part to Prop. 13, which limits when properties can be reassessed and restricts annual appreciation to 2%.

But the same phenomenon may not hold true for other properties. According to real estate firm JLL, approximately 48% of office space have been resold or refinanced since 2015 at an average price per square foot of around $700. If the sale of 350 California St. is any indication, San Francisco’s coffers could be in a world of hurt.&nbsp;

But the same phenomenon may not hold true for other properties. According to real estate firm JLL, approximately 48% of office space have been resold or refinanced since 2015 at an average price per square foot of around $700. If the sale of 350 California St. is any indication, San Francisco’s coffers could be in a world of hurt.&nbsp;

Downtown San Francisco office tower likely to sell at massive discount: Sources

Codi’s Downtown San Francisco headquarters look and feel like a typical startup office, from the open concept floor plan and video-call-enabled conference room to the snacks and sparkling water in the kitchen.&nbsp;

Codi’s Downtown San Francisco headquarters look and feel like a typical startup office, from the open concept floor plan and video-call-enabled conference room to the snacks and sparkling water in the kitchen.&nbsp;

But it also functions as a proof of concept for what CEO and co-founder Christelle Rohaut believes is the future of how commercial real estate will function in a remote work world.&nbsp;

But it also functions as a proof of concept for what CEO and co-founder Christelle Rohaut believes is the future of how commercial real estate will function in a remote work world.&nbsp;

The 19-person startup uses the office four days a week for its business activities. On Thursdays, however, a PR agency takes over in a timeshare model that Rohaut said has gotten increasingly popular for Codi users. Currently, around 30% of the Codi’s customers take the space on a temporary basis versus 70% who lease full time.&nbsp;

The 19-person startup uses the office four days a week for its business activities. On Thursdays, however, a PR agency takes over in a timeshare model that Rohaut said has gotten increasingly popular for Codi users. Currently, around 30% of the Codi’s customers take the space on a temporary basis versus 70% who lease full time.&nbsp;

Christelle Rohaut, CEO and co-founder, Codi, a San Francisco-based startup that helps link companies with short term office space leases for a hybrid work world, poses for a portrait on Monday, Dec. 12, 2022 in their Downtown San Francisco HQ and leasing space. | Camille Cohen/The Standard

<figure class="wp-block-image size-full"><img src="https://content.sfstandard.com/wp-content/uploads/2022/12/INLINE1_CodiProfile120922.jpg" alt="" class="wp-image-105920"/><figcaption class="wp-element-caption">Christelle Rohaut is the CEO and co-founder of Codi, a San Francisco-based startup that helps link companies with short-term office space. | Camille Cohen/The Standard</figcaption></figure>

“We can have different companies coming in on different days, which helps generate revenue, bring life back into spaces and really aligns more with how companies work today,” Rohaut said. 

“We can have different companies coming in on different days, which helps generate revenue, bring life back into spaces and really aligns more with how companies work today,” Rohaut said.

By and large there, is very little interaction between Codi and its office-mate outside of friendly exchanges of baked goods. The startup provides lockers to secure personal items.

By and large there, is very little interaction between Codi and its office-mate outside of friendly exchanges of baked goods. The startup provides lockers to secure personal items.

core/heading

Codi operates a marketplace platform that <a href="https://www.codi.com/locations/us/ca/san-francisco" target="_blank" rel="noreferrer noopener">lists commercial properties</a> it renovates and prepares for leasing. It also functions as an office manager that deals with furniture, cleaning services and utilities, in addition to creature comforts like snacks and coffee.

Codi operates a marketplace platform that <a href="https://www.codi.com/locations/us/ca/san-francisco" target="_blank" rel="noreferrer noopener">lists commercial properties</a> it renovates and prepares for leasing. It also functions as an office manager that deals with furniture, cleaning services and utilities, in addition to creature comforts like snacks and coffee.

Instead of the five- or 10-year terms common in commercial leases, Codi offers deals as short as six months, with prorated rents based on how much of the office is required—similar to renting an Airbnb or vacation home, but for office space. Customized options like standing desks, monitors and whiteboards are available for an additional fee.&nbsp;

Instead of the five- or 10-year terms common in commercial leases, Codi offers deals as short as six months, with prorated rents based on how much of the office is required—similar to renting an Airbnb or vacation home, but for office space. Customized options like standing desks, monitors and whiteboards are available for an additional fee.&nbsp;

“There’s been a lot of talk about how the <a href="https://sfstandard.com/business/san-francisco-braces-for-epic-commercial-real-estate-crash/">demand for offices has dropped</a>. That’s true, but I think there’s still high demand for specific types of offices which are turnkey and flexible,” Rouhat said.&nbsp;

“There’s been a lot of talk about how the <a href="https://sfstandard.com/business/san-francisco-braces-for-epic-commercial-real-estate-crash/">demand for offices has dropped</a>. That’s true, but I think there’s still high demand for specific types of offices which are turnkey and flexible,” Rouhat said.&nbsp;

San Francisco’s commercial real estate industry is <a href="https://sfstandard.com/business/mayor-breed-sf-budget-officials-acknowledge-remote-work-is-here-to-stay/">facing a vacancy crisis</a> that was kicked off by the pandemic-induced shift to remote work. The return of office workers to San Francisco has lagged behind most other major cities in the U.S., and the vacancy rates are hovering around 25%, its highest point ever.

San Francisco’s commercial real estate industry is <a href="https://sfstandard.com/business/mayor-breed-sf-budget-officials-acknowledge-remote-work-is-here-to-stay/">facing a vacancy crisis</a> that was kicked off by the pandemic-induced shift to remote work. The return of office workers to San Francisco has lagged behind most other major cities in the U.S., and the vacancy rates are hovering around 25%, its highest point ever.

Codi’s model relies on revenue sharing with landlords, who benefit from reduced vacancy times and lower expenses for renovations. Rents consist of an all-in price that includes base rent, utilities, office management services and weekly cleaning. 

Codi’s model relies on revenue sharing with landlords, who benefit from reduced vacancy times and lower expenses for renovations. Rents consist of an all-in price that includes base rent, utilities, office management services and weekly cleaning.

“Our pitch to them is: It’s better to get a company now to use the space who really loves it even if it&#8217;s for a short time,” Rouhat said, adding there’s still some healthy skepticism in the industry. “More than ever companies need flexibility, ease and speed, but we need to partner with landlords who are open with it.”

“Our pitch to them is: It’s better to get a company now to use the space who really loves it even if it's for a short time,” Rouhat said, adding there’s still some healthy skepticism in the industry. “More than ever companies need flexibility, ease and speed, but we need to partner with landlords who are open with it.”

“Our pitch to them is: It’s better to get a company now to use the space who really loves it even if it&#8217;s for a short time,” Rouhat said, adding there’s still some healthy skepticism in the industry. “More than ever companies need flexibility, ease and speed, but we need to partner with landlords who are open with it.”

Currently, Codi lists around 130 spaces in 50 buildings across the Bay Area and New York City. The firm recently raised a $16 million Series A round led by Andreessen Horowitz. Somewhat fittingly, the venture capital firm <a href="https://a16z.com/2022/07/21/a16z-is-moving-to-the-cloud/" target="_blank" rel="noreferrer noopener">announced its own transition</a> to a “cloud-based” model earlier this year.

Currently, Codi lists around 130 spaces in 50 buildings across the Bay Area and New York City. The firm recently raised a $16 million Series A round led by Andreessen Horowitz. Somewhat fittingly, the venture capital firm <a href="https://a16z.com/2022/07/21/a16z-is-moving-to-the-cloud/" target="_blank" rel="noreferrer noopener">announced its own transition</a> to a “cloud-based” model earlier this year.

Codi was founded in 2019, born out of Rohaut’s urban planning studies at UC Berkeley and her interest in the circular economy, the idea that existing resources should be shared, reused and recycled in an effort to combat environmental impacts and waste.

Codi was founded in 2019, born out of Rohaut’s urban planning studies at UC Berkeley and her interest in the circular economy, the idea that existing resources should be shared, reused and recycled in an effort to combat environmental impacts and waste.

The initial concept was something like an “Airbnb for the office” that allowed remote workers to rent space inside of private homes. But then came the pandemic and a major pivot as underutilized space transitioned from residential to commercial.

The initial concept was something like an “Airbnb for the office” that allowed remote workers to rent space inside of private homes. But then came the pandemic and a major pivot as underutilized space transitioned from residential to commercial.

In a bid to differentiate Codi from <a href="https://sfstandard.com/business/an-unlikely-pandemic-success-story-wework-san-francisco/">competitors like WeWork and Industrious</a>, Rohaut said many prospective clients are “seeking to graduate from the coworking experience with their own private office.” The company’s bread-and-butter are offices between 1,000-5,000 square feet, meant to accommodate fast-growing companies that may need to regularly evaluate their space needs.

In a bid to differentiate Codi from <a href="https://sfstandard.com/business/an-unlikely-pandemic-success-story-wework-san-francisco/">competitors like WeWork and Industrious</a>, Rohaut said many prospective clients are “seeking to graduate from the coworking experience with their own private office.” The company’s bread-and-butter are offices between 1,000-5,000 square feet, meant to accommodate fast-growing companies that may need to regularly evaluate their space needs.

Christelle Rohaut, CEO and co-founder of Codi is reflected in the pods inside the San Francisco-based startup that helps link companies with short term office space leases for a hybrid work world, on Monday, Dec. 12, 2022. | Camille Cohen/The Standard

<figure class="wp-block-image size-full"><img src="https://content.sfstandard.com/wp-content/uploads/2022/12/INLINE3_CodiProfile120922.jpg" alt="" class="wp-image-105926"/><figcaption class="wp-element-caption">Christelle Rohaut, CEO and co-founder of Codi, is reflected in the pods inside the San Francisco-based startup. | Camille Cohen/The Standard</figcaption></figure>

Elliot O&#8217;Connor, co-founder and CEO of Frontier, a startup that connects companies with freelance AI talent, used Codi to find a flexible office space he rents three days a week.&nbsp;

Elliot O'Connor, co-founder and CEO of Frontier, a startup that connects companies with freelance AI talent, used Codi to find a flexible office space he rents three days a week.&nbsp;

Elliot O&#8217;Connor, co-founder and CEO of Frontier, a startup that connects companies with freelance AI talent, used Codi to find a flexible office space he rents three days a week.&nbsp;

O&#8217;Connor found himself <a href="https://www.economist.com/business/2020/05/16/silicon-valley-in-the-pandemic" target="_blank" rel="noreferrer noopener">essentially stuck in a Vancouver Airbnb</a> during the pandemic because of travel restrictions. When he was finally able to move to San Francisco months later, he found himself again isolated in his apartment as he was trying to get the company off the ground and started to look for ways to get his team together in person.

O'Connor found himself <a href="https://www.economist.com/business/2020/05/16/silicon-valley-in-the-pandemic" target="_blank" rel="noreferrer noopener">essentially stuck in a Vancouver Airbnb</a> during the pandemic because of travel restrictions. When he was finally able to move to San Francisco months later, he found himself again isolated in his apartment as he was trying to get the company off the ground and started to look for ways to get his team together in person.

O&#8217;Connor found himself <a href="https://www.economist.com/business/2020/05/16/silicon-valley-in-the-pandemic" target="_blank" rel="noreferrer noopener">essentially stuck in a Vancouver Airbnb</a> during the pandemic because of travel restrictions. When he was finally able to move to San Francisco months later, he found himself again isolated in his apartment as he was trying to get the company off the ground and started to look for ways to get his team together in person.

At first, he kicked the tires on a traditional lease, but the complicated network of stakeholders and the leg work necessary to find a space proved to be overwhelming. Codi provided a simplified process with more unique options in neighborhoods outside of Downtown. Rather than the six months it can take to typically sign a lease and occupy a space, Codi said its move in time is around four weeks. 

At first, he kicked the tires on a traditional lease, but the complicated network of stakeholders and the leg work necessary to find a space proved to be overwhelming. Codi provided a simplified process with more unique options in neighborhoods outside of Downtown. Rather than the six months it can take to typically sign a lease and occupy a space, Codi said its move in time is around four weeks.

O&#8217;Connor now rents a ground floor office space in the Marina on Mondays, Wednesdays and Thursdays for a handful of local employees at a cost of around $1,500 a month. Instead of being locked into a yearslong lease at the former art studio-turned-office space, he has the option to renew quarterly.

O'Connor now rents a ground floor office space in the Marina on Mondays, Wednesdays and Thursdays for a handful of local employees at a cost of around $1,500 a month. Instead of being locked into a yearslong lease at the former art studio-turned-office space, he has the option to renew quarterly.

O&#8217;Connor now rents a ground floor office space in the Marina on Mondays, Wednesdays and Thursdays for a handful of local employees at a cost of around $1,500 a month. Instead of being locked into a yearslong lease at the former art studio-turned-office space, he has the option to renew quarterly.

“It’s very relaxed and residential,” O&#8217;Connor said. “One really big appeal of their model is that they’re making nontraditional commercial real estate more available and they’re much less cookie-cutter than WeWork.”

“It’s very relaxed and residential,” O'Connor said. “One really big appeal of their model is that they’re making nontraditional commercial real estate more available and they’re much less cookie-cutter than WeWork.”

“It’s very relaxed and residential,” O&#8217;Connor said. “One really big appeal of their model is that they’re making nontraditional commercial real estate more available and they’re much less cookie-cutter than WeWork.”

The office space at Codi, a San Francisco-based startup that helps link companies with short term office space leases for a hybrid work world, on Monday, Dec. 12, 2022 in their Downtown San Francisco HQ and leasing space. | Camille Cohen/The Standard

<figure class="wp-block-image size-full"><img src="https://content.sfstandard.com/wp-content/uploads/2022/12/CodiProfile120922-20.jpg" alt="" class="wp-image-105978"/><figcaption class="wp-element-caption">The office space is pictured at Codi, a San Francisco-based startup that helps link companies with short-term office space leases. | Camille Cohen/The Standard</figcaption></figure>

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