A New York developer is pushing forward on plans to build two high-rise apartment towers in San Francisco’s South of Market neighborhood in what could result in a major burst of activity for the city’s otherwise stagnant construction pipeline.
Tishman Speyer submitted an update for its project at 655 Fourth St. that would include two high-rise residential towers that would collectively result in more than 1,100 housing units, according to San Francisco Planning Department filings. The revised proposal no longer includes the hotel and office components included in earlier versions of the proposal, which the developer began pursuing nearly a decade ago.
The latest version, if approved, would result in two towers that would each surpass more than 400 feet. One would span 38 levels, while the other would top out at 40 levels, and combined would include a mix of studio, one, two and three-bedroom units. The project would require the demolition of the three existing buildings and seven surface parking lots to make room on the site, which is right across the street from Caltrain and Central Subway stations.
Nearly 10,000 square feet of street-level retail and amenity space would also be included in the revised project.
The new plans mark a significant shift in Tishman Speyer's outlook for San Francisco's commercial real estate market, which prior to the pandemic was fueled by the nation's priciest office rates and a bustling tourism economy.
In the years since Tishman Speyer began to pursue the project, however, the pandemic and subsequent economic shifts have resulted in a record amount of vacant office space, plummeting valuations and a battered hospitality market, all of which have all but drained the city's development pipeline. The developer said in its revised application that the changes are a direct result of the pandemic and attempt to ensure the project's feasibility as the firm tries to navigate the current uncertainty.
"These changes will create a more viable project," a Tishman Speyer spokesperson said in a statement, adding that the New York developer "is committed to moving the project forward at the point and time that make sense.”
Tishman Speyer acquired the SoMa site for $40 million in June 2019. The Fourth Street project is estimated to cost upwards of $500 million to construct, according to planning documents.
While the city struggles with an office vacancy rate that has skyrocketed past 30%, multifamily demand has been far more steady. Still one of the priciest markets in the nation, a typical unit in the city commands more than $3,000 per month, according to CoStar data, roughly double the national average.