Tall obstacles: Attempt to convert historic building faces hurdles
Hearing set on proposal to redo historic Hearst Building
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: roland.li@sfchronicle.com Twitter: @rolandlisf