That’s partly because of how long it will take for imperiled mortgages to come due. “I do think we’re seeing, basically, more pain over the next two years,” said Rosen, adding that the hard times and defaults might last longer. What does seem clear: “We’re not even close to the bottom yet,” said Ken Rosen, chairman of the UC Berkeley Haas Fisher Center for Real Estate and Urban Economics. It’s still too early to say what will happen to the downtown commercial properties or how far the area will slide, but a city estimate said annual tax losses could reach nearly $200 million. Meanwhile, Veritas Investments, the city’s largest residential landlord, is also struggling in the post-pandemic environment and has defaulted on loans tied to thousands of rent-controlled apartments. That, in turn, threatens property and business tax revenue, the public services they fund and an overall quality of life in the city. To become involved: Send feedback, ideas and suggestions to can lower the prices of the ailing properties, as well as their financially sound neighbors, combining with other forces - like remote work, layoffs, departing companies and a growing list of shuttering major retail stores - to push down the overall value of the city’s downtown real estate. SFNext is Chronicle coverage devoted to the city's most vexing problems. The lapses, called defaults in some cases, can result in banks and other lenders seizing the buildings to recoup their losses. The combined market value of those properties is unclear, though the city’s assessed values used for determining property taxes put it at around $3.3 billion. Since the beginning of the pandemic, the owners of 13 downtown office buildings, hotels and other major commercial properties have missed loan payments or are otherwise in dire financial straits, a Chronicle analysis finds. Adam Pardee/Special to The Chronicle Show More Show LessĪ harbinger of San Francisco’s possible fiscal calamity is coming into view: Owners are walking away from their emptying, unprofitable downtown buildings. The owner of Club Quarters Hotel, a Blackstone Group real estate fund, has been delinquent since mid-2020 on paying off a 2017 loan for this building. Adam Pardee/Special to The Chronicle Show More Show Less 9 of9 properties in a portfolio held by landlord Columbia Property Trust, which has defaulted on $1.7 billion in loans for the bunch. The building at 201 California St. is among seven U.S. Adam Pardee/Special to The Chronicle Show More Show Less 8 of9 has defaulted on its loan for this 360,000-square-foot office building. WeWork bought the property for $330 million in 2019 as it expanded and occupies more than one-quarter of the building. Adam Pardee/Special to The Chronicle Show More Show Less 7 of9 By March, a WeWork affiliate was 60 days delinquent on a $17.5 million loan for the 56,000-square-foot office building. Adam Pardee/Special to The Chronicle Show More Show Less 6 of9įor nearly a decade, WeWork occupied seven stories of 25 Taylor St. Columbia sued Twitter, a tenant at 650 California St., in December for allegedly not paying rent, but the case was dismissed in February. Adam Pardee/Special to The Chronicle Show More Show Less 5 of9Ĭolumbia Property Trust, landlord of the 33-story building at 650 California St., which was worth $479 million as of 2021, has defaulted on $1.7 billion in loans tied to a portfolio containing this and another San Francisco property, as well as five in other cities. The owner stopped mortgage payments in June. It and the Parc 55 hotel, both owned by Park Hotels & Resorts, account for around 9% of the city’s total supply of rooms. The 1,921-room Hilton Union Square is the city’s biggest hotel, and reopened in May 2021 after the pandemic forced it to close for 14 months. Adam Pardee/Special to The Chronicle Show More Show Less 4 of9 Remote work, layoffs, departing companies and a growing list of shuttering major retail stores has pushed down the overall value of San Francisco’s downtown real estate. The Yotel San Francisco at 1095 Market St. Adam Pardee/Special to The Chronicle Show More Show Less 3 of9 The owner plans to give up the hotel and stopped mortgage payments in June. The Parc 55 San Francisco, the city’s fourth-largest hotel, reopened in May 2022 after being closed for two years. Adam Pardee/Special to The Chronicle Show More Show Less 2 of9 defaulted on its mortgage during the pandemic. The former owner of the Hotel Huntington at 1075 California St.
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