Construction starts on first big office project since 2020
For the first time in more than two years, a major San Francisco office building has started construction, a rare sign of activity in a market hit hard by the pandemic and remote work.
Local developer Urban Land Development began demolition last week at 531 Bryant St., where it is replacing an existing building with six stories of office space. The 50,000-square-foot project will include pandemic-friendly features such as outside air circulation and outdoor terraces. Construction is expected to be completed in July 2023.
Susan Sagy, managing director at Urban Land Development, touted the project’s proximity to South Park and existing venture capital and tech firms.
“Tech firms want to be there, and will always want to be there,” she said. The building’s relatively small size makes it a good fit for a single tenant that wants total control over the building’s interior design and amenities, she said. There’s space for meetings, dining and leisure, such as a yoga room.
The city’s last major project to start construction was the San Francisco Giants and Tishman Speyer’s Mission Rock, whose first phase is nearing completion. Visa signed a lease for a new headquarters at the project before the pandemic in 2019.
Since then, San Francisco’s office vacancy rate has soared from around 6% to a record high of nearly 24%, according to real estate brokerage firm CBRE. A slew of major projects not far from 531 Bryant St. in the Central SoMa area have yet to start construction. Tech firm Pinterest paid $90 million to cancel a major lease at one of the unbuilt projects, 88 Bluxome St.
Sagy said the lack of new office supply will benefit 531 Bryant St. Urban Land Development is seeing an increase in office demand, signing three recent leases at its 150 Post St. property near Union Square.
The long-delayed Central Subway project is also slated to open this fall and includes a station at Fourth and Brannan streets, a few blocks from the project, which will help link it to Market Street and the rest of the city, she said.
The building includes two retail areas: one facing Zoe Street with two small microunits suitable for entrepreneurs and another on Bryant St. that could house a restaurant or cafe.
Sagy said remote work policy “will sort itself out” and that she expects that companies will continue to seek office space, even if workers stay home for part of the time.
“San Francisco is a great city. It will continue to be a great city,” Sagy said.