McCourt to Back 41-Story Office and Hotel Tower in Downtown

McCourt Partners has ploughed an undisclosed equity stake in a 41-story office and hotel tower planned by Related California on the edge of Jackson Square.

The Los Angeles-based investor struck a deal with the Irvine-based unit of Related Companies to co-develop 390,000 square feet of offices atop a 200-room hotel at 530 Sansome Street in the North Financial District, the San Francisco Chronicle reported.

The approved tower would be built a block from the Transamerica Pyramid and replace Fire Station No. 13, which will be reconstructed. The project, pending construction financing and sufficient pre-leasing, would be completed in 2030, according to market insiders cited by the Chronicle.

The developers are betting on the first office and hotel tower in decades in the North Financial District despite a San Francisco office vacancy of 34.4 percent, among the highest in the nation, according to Cushman & Wakefield.

The 575-foot project, dubbed the Jackson, would dovetail early signs of recovery after years of rising office vacancies following the pandemic. Related CEO Gino Canori told the Chronicle the rectangular glass spire would reflect the “renewed growth, dynamism and momentum of San Francisco.”

It’s not clear what led McCourt, at this juncture, to support the project. The tower is the only new office project north of Market Street, where leasing has improved faster than across downtown.

“This joint venture reflects our conviction in San Francisco’s resurgence,” Jordan Lang, president of McCourt Partners, told the Chronicle. Despite high office vacancy, he said perceptions around San Francisco are shifting for the better and investors are returning.

“This is one of the most exciting projects in the country — it’s in a very unique location in the city, being on the north side of the Financial District with all that’s happening in Jackson Square and the invigoration north of Market Street,” he said.

McCourt Partners, a real estate development firm founded in 1977 by Frank McCourt, has 30 million square feet of properties valued at more than $30 billion, according to its website, including a 2,300-acre master planned development in Arizona.

Another project includes plans by McCourt and Dallas-based Lincoln Property to redevelop Golden Gate University’s downtown San Francisco campus with a 46‑story office or mixed-use residential tower, pending approvals.

Both the Jackson and Golden Gate projects make up two of four planned office towers that need to land the tenants and the financing needed to break ground, according to the Chronicle.

Commercial developers are doubling down on artificial intelligence firms setting up shop in downtown and neighborhoods like Mission Bay. Related says the Jackson would likely draw tenants that want location and prestige – largely finance, private equity and professional services firms.

“We are out in the market talking to office tenants for pre-leasing and there is a lot of interest,” Nick Vanderboom, chief operating officer for Related, told the Chronicle. “Most of the competing buildings in the market are 40 to 50 years old.

“We see the opportunity to provide brand new, modern office space with floor to ceiling glass, modern amenities, and a building that is sustainable — all the things that top tier tenants are looking for but can’t find in San Francisco.”

– Dana Bartholomew