The Bay Area hotel market’s hotel woes are piling up.
Two of the biggest hotels in San Francisco, the Hilton Union Square and Parc 55, are expected to sell in foreclosure in the latest distressed lodging sale in the Bay Area. The Hilton Union Square, at 333 O’Farrell Street, is the city’s largest hotel with 1,921 rooms; the Parc 55, a Hilton property at 55 Cyril Magnin Street, is among the top five with 1,024 rooms, according to the San Francisco Business Times.
The foreclosures come after Park Hotels & Resorts, an affiliate of Hilton Worldwide Holdings, defaulted on its $725 million mortgage on the properties in 2023. Earlier this month, a judge approved a request to extend a court-appointed receiver’s ability to sell the properties until Oct. 29, marking the fourth time the sale deadline has been extended.
The past year has been rough, to say the least, for hotels across the Bay Area trying to stay afloat as foreclosures and loan defaults abound.
Last month, lender Invesco took back the 500-room Oakland Marriott City Center in a foreclosure proceeding that valued the building at $70.2 million, or $140,400 per key. That was preceded in May by BrightSpire Capital’s seizure of the 541-room Signia by Hilton in downtown San Jose in a foreclosure valuing the property at $80 million, under $148,000 per key. In October, the 162-room Courtyard Oakland Downtown sold for $10.6 million, just $65,400 per key and a 76 percent drop from its prior value.
Foreclosure claimed the 142-room Hyatt House Pleasant Hill in June, while the 128-room Hyatt House Pleasanton was seized through foreclosure the month prior. In April, the dual-branded AC Hotel and Residence Inn in downtown Oakland went back to lenders in a streamlined foreclosure process after Hawkins Way Capital defaulted on a $112 million loan tied to the property. At the same time, the 112-room Hyatt Place/Newark Silicon Valley is in default and could be taken by its lender through a foreclosure.
In Berkeley, Kubera Hotel Properties’ 113-room University Inn & Suites in Berkeley went into foreclosure in June. Down south in San Jose, a two-hotel complex consisting of a Motel 6 and a Super 8 by Wyndham defaulted on a $21.7 million loan.
Some hotels have closed their doors entirely. Last summer, the Hilton Oakland Airport Hotel shut down abruptly, while in January, the 145-room Waterfront Hotel in Oakland’s Jack London Square also suddenly shuttered. The Radisson Oakland Airport has also permanently closed.
Hotel sales in California dropped 7.4 percent in the first six months of the year from the same period the year prior, according to Atlas Hospitality Group. In the Bay Area, the largest hotel sales in Alameda County and Santa Clara County in the first half of the year were foreclosure sales: The Oakland Marriott City Center and Signia by Hilton in San Jose.
Mark Zuckerberg angers neighbors
Residents of Palo Alto’s Crescent Park neighborhood are hopping mad at neighbor Mark Zuckerberg.
The Meta CEO dropped more than $110 million on at least 11 houses next to each other in the tree-filled neighborhood since moving there in 2011. He constructed a compound across five of those parcels, while other buildings are used for things like parties and an unpermitted private school. Underground, Zuckerberg and his family have access to 7,000 square feet of so-called basement space, which neighbors regard as a bunker.
Zuckerberg’s neighbors are speaking out about their experiences sharing their environment with one of the world’s richest people.
“No neighborhood wants to be occupied,” neighbor Michael Kieschnick, whose home is tucked between Zuckerberg-owned lots, told the New York Times. “But that’s exactly what they’ve done. They’ve occupied our neighborhood.”
The city of Palo Alto has seemingly allowed Zuckerberg’s unfettered expansion in the area, purportedly going so far as to let him get around local regulations and even have police block off street parking used by residents.
“He’s been finding loopholes around our local laws and zoning ordinances,” Greer Stone, a member of the Palo Alto City Council, told the outlet. “We should never be a gated, gilded city on a hill where people don’t know their neighbors.”
Kirschnick put it more bluntly: “Billionaires everywhere are used to just making their own rules — Zuckerberg and Chan are not unique, except that they’re our neighbors,” he said. “But it’s a mystery why the city has been so feckless.”
GSA closes office campus sale
The General Services Administration has completed its sale of the Rockaway Grove office campus in Menlo Park.
San Francisco-based developer Presidio Bay bought the 17-acre property, previously occupied by the U.S. Geological Survey, for $137 million. The sale comes as the GSA is reducing office space across the country following the Department of Government Efficiency’s headcount cuts at federal government agencies.
Presidio Bay is floating a mixed-use development for the site. The campus could accommodate 600 to 1,000 units of housing and 600,000 to 800,000 square feet of commercial space. The city of Menlo Park is required to permit nearly 3,000 new units of housing before 2031 as part of its Housing Element.
Palo Alto offices sell at pre-pandemic price
The sale price for a downtown Palo Alto office building is reminiscent of pre-pandemic glory days.
First Citizens Bank & Trust bought the offices at 250 University Avenue for $82 million. The sale by Inspire Real Estate Holdings works out to $1,969 per square foot. The building spans four stories across 38,000 square feet.
In downtown Palo Alto, other office buildings that sold for similar per-square-foot prices before the pandemic include 192 Lytton Avenue for $23.1 million, or $2,551 a square foot; 530 Lytton Avenue for $117.5 million, or $2,156 a square foot; 150 Forest Avenue for $26 million, or $2,153 a square foot; and 385 Sherman Avenue for $138 million, or $2,030 a square foot.
Office property sales in Palo Alto in recent years have ranged from lows, like Hudson Pacific Properties’ sale last year of an office campus 4001-4009 Miranda Avenue for $23 million, or about $126 per square foot, to highs like the 2023 purchase of 2555 Park Boulevard in south Palo Alto for $58 million, or about $2,000 per square foot.
Santana Row prepares to sell more apartments
Another apartment complex at San Jose’s Santana Row is headed for the market.
Federal Realty Investment Trust is preparing to list the 212-unit Misora luxury apartment complex for sale. It would follow a transaction in May in which Hines bought the 108-unit Levare apartment complex in Santana Row for $73.9 million, or $348,600 per unit.
Misora was built in 2014 and spans 222,000 square feet. It features amenities like a lap pool, lounging pool, spa, fireplace lounge, rooftop deck and outdoor barbecue and dining space. If Misora sells for a similar per-unit price as Levare, it would total more than $145 million.
Housing construction at Santana Row isn’t slowing down. Last month, Federal Realty announced plans for a 258-unit apartment complex at 358 Hatton Street, making it the first new housing development at Santana Row in a decade.
Pebble Beach manse sets Monterey County record
A three-story estate in Pebble Beach set a record.
The ocean-view mansion at 1522 Riata Road sold for $18.1 million, or $2,498 per square foot, making it the highest-value transaction in the seaside county so far this year. The home was listed for under $12 million in 2022. It topped out other high-end purchases in the county including a Carmel Highlands estate that sold in June for $14.8 million, a home in Carmel that sold for $15.5 million that same month, and another Carmel estate in April that was bought for $17.5 million.
Built in 1927, the record-setting home sits on a 2.2-acre lot and spans 7,250 square feet with a four-car garage and views of the Pacific Ocean and Pebble Beach Golf Links.
As of June, the median listing home price in Pebble Beach was $3.5 million, representing an 8 percent drop year-over-year. The median sale price was $2.8 million with homes spending about 10 weeks on the market.
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