S.F.'s next skyscraper push tests a risky bet: Offices can still lead downtown's comeback

Last month, inside the "Rubberband" room in architecture firm Gensler's San Francisco headquarters a group of design, real estate and marketing heavyweights discussed their plans for 50 First Street - a 910-foot office tower that could help define the city's next chapter.

The concept behind the Rubberband room is simple: to "stretch ideas without breaking," said Randy Howder, Gensler's regional managing principal. It's an apt analogy for the long-stalled project formerly known as the Oceanwide Center, a development conceived during the city's last tech boom, pushed to its limits by financial upheaval and then upended by a pandemic that reshaped how offices are used. Now, the project is being updated for a new era of work - an effort that calls for the careful balancing of both ambition and restraint in a changed city.

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The site's new ownership group, led by Dan Kingsley and Jay Yang of the San Francisco Recovery Fund, is working with an all-local team - Gensler on design, Field Operations on public space, veteran branding strategist Rich Silverstein on marketing and Rudy Gonzalez representing the Building Trades- focused on a single goal: to build the first major office tower in downtown San Francisco since the pandemic, and, in doing so, test whether the city's office market is ready to rise again.

Discussions like the one inside the Rubberband room underscore a simple truth about San Francisco's future: Efforts to convert empty offices into homes, despite municipal incentives and encouragement, have barely budged, making it clear that downtown's direction will largely be shaped by market forces, in boardrooms and design studios. Not at City Hall.

In those rooms, "feasibility" is a key word, and the conclusion emerging from them is consistent: for new, large-scale ground-up development, office remains the only product that pencils - despite roughly one-third of downtown's offices still sitting empty. Which means Kingsley and Yang will need to sign a lease with an anchor tenant to secure financing for their project near Salesforce Tower.

They aren't the only ones grappling with that reality. Three other developers with plans for downtown office skyscrapers are jockeying for tenants and financing - and in some cases, entitlements.

Lincoln Property Co. has pitched a new tower at Golden Gate University; Hines is planning another on the former PG&E headquarters site that could eclipse Salesforce Tower in height; and Related California is steadily advancing its hotel and office project in the North Financial District. Each seeks to capture a slice of the city's rebounding office market, and two of the three projects could rise within three blocks of 50 First Street, putting pressure on Kingsley and Yang's team to move quickly, while offering a building that meets the evolving expectations of the next generation office tenant. (Major projects typically take about 18 months to design and permit and about three years to build, pushing some of these tower plans into the next decade.)

Not every team is opening up its planning process like this group. But behind the scenes, there's broad agreement on what it takes to get a tower built: tenants willing to pay the rents needed to support construction - now estimated at over $1,200 per square foot.

Even with AI firms leasing large blocks of space today, future demand remains uncertain, with many companies opting for shorter-term deals. And the narrow pool of tenants that can support rents that may exceed $150 per square foot is not always searching for large blocks of space like the tech giants of the last real estate boom. But that could shift as leases come due.

JPMorgan, with its current lease in the Financial District expiring in the next five years, has become a prime target for developers racing to secure anchor tenants. Winning headlining tenants like that bank could make or break projects like 50 First Street.

"A lot of tenants are waking up to the fact that their leases are coming up in 2029, 2030, 2031 and there aren't any other new buildings coming along," a developer with insight into the market told the Chronicle. "So does it matter who's first? Yes it does."

Kingsley said the 50 First Street project has already reached a key milestone, with conceptual design complete and schematic work launched last week as the team targets a mid-June submission to city planners for a compliance review. The project also has a notable head start: Its foundation is already in place from the previous development team, potentially shaving years off the timeline and several hundred million dollars from the project's costs. As a result, the tower could be delivered in as little as three years, according to its developers.

Some in the local real estate community remain skeptical that the San Francisco Recovery Fund will ultimately take 50 First Street through construction, suggesting that the group could sell its re-entitled project to another developer that would build it - a well established play in downtown's development cycle.

But Gonzalez, the longtime labor leader representing the Building Trades, said the team has committed to using union labor and is fully prepared to see the tower through. "The fact that Dan Kingsley is involved means dirt is going to fly."

From Gonzalez's view, the 50 First Street tower's timing relies in large part on the city. "I am going to remain cautiously optimistic that the city will be as excited about this project moving forward as we are, which means everything when you're talking about moving permitting at a rapid clip."

The project site already has something its competitors lack: a construction fence that runs along its perimeter, wrapped in colorful, optimistic signage that reads, "Rising soon."

The most significant shift for the 50 First Street project is in the program itself, which has deliberately pivoted away from the mixed-use complexity of building two skyscrapers with luxury condos and a hotel above offices simultaneously, and toward what the team sees as the strongest remaining demand in the market in a single structure.

Howder, of Gensler, said the 50 First Street tower isn't being tailored to any single tenant, yet. Instead, the team is developing a "unique set of amenities" designed to attract a range of office users while creating public spaces that will draw the city in. The firm has built offices for clients from AI startups to law firms, each with distinct priorities. "An AI company is much more indexed on in-person collaboration and event spaces," Howder said, noting that tenants in general are moving away from the traditional core-and-perimeter office model. After the pandemic, the team is setting new goals around energy efficiency, indoor air quality, volume and views: "We're going to be leading where the market will be going," he said.

Yet the team won't be competing in the "amenitization arms race" taking place at some of downtown's older office buildings said Yang, of the Recovery Fund: "We will be the first trophy office building built since the pandemic. We differentiate by default."

Richard Kennedy, partner at landscape architecture firm Field Operations, said the pandemic has amplified people's desire for access to greenery, fresh air and natural light. He cited the High Line in New York City, one of the firm's projects, as proof that impactful public spaces don't need to be enormous. In San Francisco, Field Operations designed Tunnel Tops Park, a series of elevated green spaces atop the Presidio Parkway tunnels that has become a popular destination for recreation and community gatherings.

"If you're lining up a view, make sure you get a shot of the sky between buildings," Kennedy said, pointing to the recent Transamerica Pyramid renovation, including Redwood Park, as an example of a "more transparent ground plane" that makes even office buildings feel vibrant and social - a principle the team hopes to bring to 50 First Street.

Rich Silverstein, the advertising guru, admitted candidly that he doesn't know how to build the building. "But someone has to market it," he said.

During the depths of the pandemic, Silverstein launched the "It All Starts Here" campaign, a civic-minded effort aimed at bolstering confidence in San Francisco's downtown revival. The campaign meant to signal to outsiders watching downtown's unraveling that San Franciscans had not given up on their city. It was through that initiative that Silverstein connected with Kingsley.

"And this building is going to represent, to me, the rising of the city - again," Silverstein said. "You can't miss it."

Other developers, too, are reading the market's shifting signals. Tenant demand was recorded at 8.1 million square feet at the end of March, up from 6.4 million square feet a year ago, while sublease vacancy has fallen by almost half since topping out in mid-2024, according to brokerage Cushman and Wakefield. The firm said it expects at least one new office or mixed use development to break ground this year.

Across the Financial District, a handful of builders are beginning to move in parallel, pushing forward their own visions for new office towers in a consequential race to capture the city's next growth cycle.

Ray Lawler, head of Americas with Hines, said that over the five decades in which the development firm has invested in San Francisco it has seen the market "fluctuate and ultimately recover stronger each cycle."

Last year, Hines pivoted from long-standing plans to transform a corner of the former PG&E headquarters near the Embarcadero, a multi-building campus also known as the Matson Block, into a residential tower at 77 Beale St., proposing instead to construct the West Coast's tallest office tower at that address.

"The city is showing meaningful signs of recovery: Companies are returning to offices, emerging sectors like AI are fueling leasing momentum and investment activity downtown is strengthening," Lawler said.

At 1,225 feet, Hines' planned tower requires a height exemption from the city. The project also involves the broader redevelopment of the block, with plans to restore historic buildings, add ground floor retail and convert smaller structures into housing. Hines said it expects to have its entitlements at the end of the year, at which point it will select an architect.

But before Hines can start building its massive tower, it must first demolish the existing 30-story, 1970s-era tower on Beale Street - a costly and complicated endeavor that will require navigating tight city streets, strict regulations and high labor costs. The developer purchased the larger project site from PG&E in 2021 for $800 million - a basis that will weigh on the project's viability. Hines did not respond to questions about the status of its conversations with potential tenants.

Three blocks down from Beale Street, a proposal by Lincoln Property Co. and partner McCourt Partners to redevelop the Golden Gate University campus at 536 Mission St. is also moving through the entitlement process. That plan would demolish the existing seven‑story structure and replace it with a new 46‑story skyscraper - either a 700‑foot office tower with about 1.3 million square feet of space or a slightly shorter mixed‑use tower combining offices and hundreds of homes.

JPMorgan leases a close to 300,000-square-foot office next door at 560 Mission St., and real estate insiders say relocating or expanding within a new tower at 536 Mission could be an attractive and relatively easy move for the bank.

But whether the development will align with the bank's timing is unclear. Documents filed with the city's Planning Department show that the developer is expected to provide information and revisions requested by the department in the coming months. A document laying out its construction phasing shows that demolition at the site may not occur until August 2028. Planning officials confirmed that this schedule is just an estimate, and that no entitlement hearing has been set for the project.

Lincoln Property declined to comment on its timelines, though a spokesperson for the company confirmed the project is advancing.

Meanwhile, north of Market Street and on the edge of the historic Jackson Square district, Related California is making headway on its mixed-use plan for 530 Sansome St.: a 41-story, roughly 554-foot tower featuring 390,000-square feet of office space over a 200-room luxury hotel, designed by local architecture firm Skidmore, Owings & Merrill. Unlike some of its south Financial District competitors, the developer has secured entitlements for the project, which involves the relocation and replacement of Fire Station No. 13 at the site as part of a public‑private partnership with the city.

Related is marketing its tower as The Jackson, has hired brokerage CBRE to lure in tenants and is communicating that the high-rise will be ready for occupancy in 2030, market insiders have confirmed to the Chronicle. At least one pre-lease deal could be progressing: A venture capital firm is said to be in talks for about 70,000-square-feet of the tower's unbuilt office component, and the developer is reported be in ongoing talks with several global hotel brands that do not yet have presence in the city. Related declined to comment on its leasing efforts and project timelines when contacted by the Chronicle.

Each project is distinct on its own. But in an increasingly competitive market that for years has been defined by hesitation, momentum may be the biggest advantage.

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