Tall ob­sta­cles: At­tempt to con­vert his­toric build­ing faces hur­dles

Hear­ing set on pro­posal to redo his­toric Hearst Build­ing

San Francisco Chronicle Late Edition - - BAY AREA - By Roland Li

A years-long ef­fort to con­vert the his­toric Hearst Build­ing into a hotel in down­town San Francisco faces op­po­si­tion from neigh­bors and de­sign chal­lenges re­lated to ex­ist­ing long-term leases.The 1909 build­ing at 5 Third St. was once home of the San Francisco Ex­am­iner and cur­rently in­cludes of­fices and re­tail shops. In 1938, famed ar­chi­tect Ju­lia Mor­gan re­designed the build­ing’s en­trance, lobby and roof.

Prop­erty owner Hearst Real Es­tate worked with de­vel­oper JMA Ven­tures to pro­pose a high-end hotel con­ver­sion with 170 rooms in 2016. Hearst Corp. owns both Hearst Real Es­tate and The Chron­i­cle.

Hearst Real Es­tate re­ferred re­quests for com­ment to JMA Ven­tures. Todd Chap­man, pres­i­dent of JMA, said the hotel change will help bring vi­brancy to the area and let more peo­ple ex­pe­ri­ence the his­toric build­ing.

The project won’t change the his­toric

ex­te­rior of the build­ing and won’t in­crease its size, but planned ad­di­tions in­clude a rooftop bar and fourth-floor out­door ter­race, and event space on the sec­ond floor. A full seis­mic up­grade is also planned, along with im­prove­ments along Steven­son Street. The project bud­get ex­ceeds $100 mil­lion, he said.

“Peo­ple don’t re­ally feel com­fort­able com­ing back here,” said Chap­man, re­fer­ring to the Steven­son Street side of the build­ing. “We want this to re­ally glow.”

The his­toric Ju­lia Mor­gan en­trance on Third and Mar­ket will re­main. A new lobby en­trance open­ing on Steven­son Street is planned, but the space is oc­cu­pied by the Lark bar, which has eight years left on its lease.

“We love where we are. It’s a phe­nom­e­nal lo­ca­tion,” said Brian Sheehy, co-founder of Fu­ture Bars, which owns the Lark. “We’re not go­ing any­where.”

Fu­ture Bars owns two other busi­nesses in the Hearst Build­ing: news­pa­per-themed bar Lo­cal Edi­tion and spir­its shop Cask, which Sheehy said also have long-term leases.

Lo­cal Edi­tion has a ca­pac­ity of 250 and is one of Fu­ture Bars’ best-per­form­ing lo­ca­tions, he said.

Sheehy said he sup­ports the pro­posed hotel con­ver­sion as long as it doesn’t dis­rupt his busi­nesses. “It’s still a very, very com­plex puz­zle,” he said. “They still have a lot of work to do.”

Chap­man said the de­vel­op­ers will con­tinue to work with Sheehy and the other ten­ants and honor their leases. Star­bucks, Sub­way and T-Mo­bile oc­cupy the other re­tail spa­ces.

“While the best project lay­out would have us lo­cate a new hotel lobby on Steven­son, if we are un­able to find a so­lu­tion that works for Brian, we have other work­able de­sign op­tions for the lobby that re­main con­sis­tent with our goal” of more pub­lic spa­ces, Chap­man said.

The project faces op­po­si­tion from a group called Friends of the Hearst Build­ing, which filed an ap­peal against the project call­ing for ad­di­tional city re­view on the project’s en­vi­ron­men­tal im­pact, a process that usu­ally takes a year or more.

Rachel Mansfield-Howlett of Santa Rosa law firm Provencher & Flatt is rep­re­sent­ing the ap­pel­lants, whose iden­ti­ties weren’t dis­closed. She didn’t re­spond to re­quests for com­ment.

“We’re con­fi­dent we’ll work through it, be­cause we’ve got all the his­toric (preser­va­tion) peo­ple en­gaged, and peo­ple feel good about the project,” Chap­man said.

Yasin Salma, owner of a nearby build­ing at 163 Jessie St., is also ap­peal­ing the project. In a let­ter to the city, Salma wrote that the hotel will il­le­gally change the build­ing’s first floor from re­tail to valet park­ing for the hotel.

A Plan­ning Com­mis­sion hear­ing on the project is sched­uled for Fe­bru­ary.

JMA Ven­tures pre­vi­ously ren­o­vated San Francisco’s his­toric Ghi­rardelli Square and de­vel­oped the Down­town Com­mons re­tail and en­ter­tain­ment cen­ter in Sacra­mento that in­cludes the Sacra­mento Kings’ Golden 1 Cen­ter arena.

Hearst Real Es­tate and de­vel­oper For­est City Realty have a much larger San Francisco project at Fifth and Mis­sion called 5M. The project calls for new of­fices, and mar­ket-rate and af­ford­able hous­ing near The Chron­i­cle’s of­fice at 901 Mis­sion St. (The Chron­i­cle is a ten­ant of Hearst Real Es­tate but is not in­volved in the project.) It was ap­proved in 2015 but has been de­layed af­ter op­po­nents sued the city over the project, seek­ing a new en­vi­ron­men­tal re­view. A court ruled in the project’s fa­vor in 2017, but op­po­nents have since ap­pealed the de­ci­sion.

San Francisco has a hotel short­age, thanks to strong tourism and busi­ness travel, and it’s dif­fi­cult to get new ho­tels ap­proved, said Alan Reay, pres­i­dent of At­las Hos­pi­tal­ity Group, an Irvine hotel bro­ker­age. The $551 mil­lion Moscone Cen­ter ex­pan­sion, which fin­ished this month, is ex­pected to in­crease hotel de­mand even more this year.

“I think the city is def­i­nitely un­der­served,” Reay said. “It’s such a long ges­ta­tion pe­riod in San Francisco to get any­thing through, ap­proved and fi­nally con­structed.”

Only one hotel opened last year in San Francisco, the 42-room Lodge at the Pre­sidio. There are 49 pro­posed ho­tels, with a to­tal of 7,056 rooms, un­der city re­view, ac­cord­ing to At­las Hos­pi­tal­ity Group.

Two ho­tels — Yo­tel at 1095 Mar­ket St. and Vir­gin Hotel at 250 Fourth St. — were set to open last year but will open in 2019, ac­cord­ing to their web­sites.

Reay thinks the Hearst hotel project would be suc­cess­ful be­cause many trav­el­ers pre­fer stay­ing in his­toric build­ings. He es­ti­mates that the project could com­mand nightly room rates of $185 to $200.

Chap­man agrees that the city needs more rooms.

“There’s not enough hotel rooms, es­pe­cially with an ex­panded Moscone,” he said. Roland Li is a Chron­i­cle staff writer. Email: [email protected]­i­cle.com Twit­ter: @rolandl­isf

Scott Straz­zante / The Chron­i­cle

The own­ers of the Hearst Build­ing in San Francisco are work­ing with a de­vel­oper to con­vert it into a hotel.

Scott Straz­zante / The Chron­i­cle

The Hearst Build­ing en­trance, lobby and roof were re­designed by Ju­lia Mor­gan in 1938. There are no plans to change the Third Street en­trance, above, but plans call for a rooftop bar and other changes. At left, a stair­well in the his­toric build­ing.

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