The debut of an ambitious mixed-use development aimed at revitalizing San Francisco's Mid-Market neighborhood has been pushed to next year, a move that could time its opening with an economic recovery from the coronavirus pandemic.
Developer L37 has rescheduled the planned opening of the $380 million hotel, condominium and retail project at 950 Market St. to roughly the second quarter of next year, about a year later than originally expected. The project's 236-room Line Hotel, which is designed to anchor the mixed-use development, accounts for about half of the new hotel rooms slated to open throughout the San Francisco area before the end of this year, according to CoStar's hospitality analytics company, STR.
San Francisco-based L37 did not respond to CoStar News' requests for comment, but a city planner confirmed the updated timeline details.
Throughout the western Bay Area, hotel occupancy has fallen by more than 60% over the past year to about 33.6%, according to CoStar. The region has been one of the country's hardest-hit hospitality markets amid the pandemic-induced drain in business, leisure and convention travel. San Francisco's strict COVID restrictions have put an additional damper on the beleaguered industry.
Average daily rates among hotel properties in the San Francisco and Silicon Valley regions hit a record high of about $250 per night at the end of 2019. However, by March and April last year, it fell by nearly 52% to settle at about $120 per night.
Even before the Mid-Market project broke ground in early 2019, it became a hopeful anchor for the San Francisco neighborhood teetering on the edge of shedding its gritty image.
Despite being home to offices for a plethora of tech corporations including Twitter and Adobe, the Mid-Market neighborhood has sputtered along as adjacent areas such as SoMa and Mission Bay have attracted most of the interest from growing tenants, retailers and renters.
Prior to the pandemic's outbreak last year, developers have funneled hundreds of millions of dollars into the Mid-Market area as part of a gamble on its ultimate revamp.
The upscale 131-room Proper Hotel opened in late 2017. The 1,900-unit Trinity Place multifamily development is on its last phase, with plans to deliver the final 500 units at some point this year. Developer Shorenstein completed its 300-unit luxury condominium project at 1066 Market St. in the latter half of 2019.
A few doors down from L37's site is the 6x6 mall, a 250,000-square-foot indoor shopping center that has sat completely empty since it finished construction more than three years ago. The parent company of furniture retailer Ikea purchased the property in September for almost $200 million with plans to eventually anchor the 945 Market St. mall.
The Line Hotel-anchored project's delay may be another setback for the region, but the area could ultimately gain momentum from Ikea's impending debut, the opening of a nearby Whole Foods Market as well as the city's expected economic recovery.
New York-based management company Sydell Group is planned to step in to operate the Line Hotel as the next addition to Mid-Market's burgeoning hospitality scene.