Mayor Lurie Unveils Swath of New Legislation

It was a week of highs and lows in the Bay Area.

There was the greenlighting of San Francisco’s first office construction project since the pandemic, the solidification of the city’s status as the world’s leading hub for artificial intelligence, and the federal mortgage blacklist affecting nearly two dozen condominiums across the city.

San Francisco Mayor Daniel Lurie and Board of Supervisors member Danny Sauter introduced legislation that would approve the first post-pandemic office construction project in the city.

The duo is hoping to firm up a development agreement for Related California’s 41-story mixed-use tower at 530 Sansome Street. If approved by the San Francisco Planning Commission, the tower would have 390,000 square feet of offices and a 200-room five-star hotel as well as a new fire station next door at 447 Battery Street. There would also be three levels of underground parking and a new public plaza outside.

It’s expected to generate $13.5 million in new revenue for the city general fund annually and contribute about $8 million in fees to support transportation, child care and public infrastructure. Once completed, it will employ 1,600 people and bring in $816 million in direct economic impact each year.

Lurie also unveiled new, San Francisco-specific density bonuses to enable market-rate developers to build affordable housing more easily.

Bay Area brings in 52% of world’s AI VC funding

The Bay Area brought in 52 percent of the world’s venture capital funding centered around AI last year, according to new reports from JLL and Pitchbook. The region saw nearly $70 billion of the total $134.6 billion that went to AI firms in 2024. Meanwhile, 57 percent of the $13.6 million in VC funding that went to robotics and drone endeavors was dedicated to AI companies working on those products.

San Francisco and the Bay Area continue to deal with high office vacancies, but the forthcoming AI boom could turn the region’s fortunes around.

Today, there are 41 ongoing leases for AI companies across the Bay Area totaling 2.4 million square feet, up from just six leases for 280,000 square feet in 2021. OpenAI has been leading the way, building up an office lease portfolio of 800,000 square feet in San Francisco and planning to add another 200,000 to 300,000 more square feet to its Bay Area holdings.

CBRE recently forecast that AI companies could grow to occupy as much as 21 million square feet of offices across the Bay Area over the next five years, more than quadrupling the 5 million square feet of owned or leased offices occupied today. At the same time, between 50,000 and 60,000 new jobs could prompt a massive influx of AI-savvy workers from all over the country and the world by 2030. If it comes to fruition, it would slash the city’s 36 percent office vacancy rate in half.

Fannie Mae, Freddie Mac blacklist 19 SF condos

Fannie Mae and Freddie Mac added 19 San Francisco condominiums to its mortgage blacklist.

Applicants will have a hard time getting a mortgage from the government-sponsored agencies, according to law firm Allcock Marcus. Mira, the twisting 39-story residential tower near the Embarcardero, is among those blacklisted, according to the San Francisco Standard, though Allcock Marcus did not disclose individual addresses of the properties in question.

Of the 19, four were flagged for pending litigation, 10 were dinged for critical repairs or deferred maintenance, and the remainder were hit for things like ownership or resale restrictions to commercial space violations.

Tourbineau snatches San Mateo offices at 70% discount

Tourbineau Real Estate Partners is adding the five-building Tower Plaza complex in San Mateo to its portfolio.

The Seattle-based firm bought the 2121 South El Camino Real property for $22 million in an all-cash deal through a deed in lieu of foreclosure. The property spans 207,678 square feet on 3.4 acres and marks Tourbineau’s first acquisition in San Mateo. The transaction works out to about $106 per square foot.

Rialto Capital Management bought the complex in 2019 for $77 million before defaulting on its loan and transferring ownership to TPG Real Estate Finance Trust.

“[This] is an empty slate,” Ben Wong, chief investment officer for Tourbineau, told the San Francisco Business Times. “This was the one [property] we were most excited about.”

Bishop Ranch to tear down offices for housing

Sunset Development Company is planning to tear down offices at Bishop Ranch and replace them with housing as part of its ongoing makeover of the San Ramon office park into a mixed-use walkable community.

The developer filed applications to tear down 761,000 square feet of office space to make way for two new residential communities. It would add 485 new units of housing to the property across two sites.

At its Canopy office complex at 3000-5000 Executive Parkway, Sunset looks to build a 412-unit residential community comprising 255 detached townhomes and a 157-unit five-story apartment building. Of those, 62 will be deed-restricted affordable housing and at least 22 will be for very-low-income tenants only.

An additional 73 units would be built at 2 Annabel Lane. It would replace a 109,000-square-foot office building with 64 townhome condominiums and nine accessory dwelling units.

— Chris Malone Méndez