Presidio Bay Starts San Francisco “Office Resort” Conversion

A developer’s office renovation in the heart of San Francisco’s Financial District aims to take tenant amenities to the next level as office demand heats up with the AI boom.

Presidio Bay Ventures started construction at 88 Spear Street, an 11-story, 56-year-old office asset the firm acquired for $41 million, the San Francisco Standard reported. When it picked up the 166,500-square-foot property two years ago, it committed another $50 million to renovating the building. That would put the cost at $300 per square foot.

The renovation will add two floors to the building, previously known as 60 Spear Street, including a rooftop event space and restaurant with a panoramic city view, and in the basement, a luxury spa with a sauna and two pools. The updates include an open-floor-plan lobby with an Arsicault Bakery location.

Presidio Bay is the latest to redevelop a San Francisco office building into an upscale destination for tenants wanting offices swirling with amenities.

Demand is building, but there is no new supply, said Presidio Bay Managing Principal Cyrus Sanandaji. The firm calls the development an “office resort” among the trend of “flight to experience.”

“When every building has the same amenities, nothing differentiates one from the other,” he said. “What you have then is just a commodity. And there’s already plenty of that.”

Mayor Daniel Lurie is hoping to make it easier for office building owners to create amenity spaces for tenants, in hopes of beating down San Francisco’s office vacancy numbers. Lurie proposed legislation in May that would let downtown building owners bypass the approval process and transform ground-floor commercial spaces zoned for retail into nonretail office amenities like gyms and lounges.

Sanandaji said the process for this project was speedier than usual, and the building is projected to open in about a year.

“Three years ago, San Francisco was redlined,” he said. “Now, investors are looking around the country for the best place to get a return, and they’re finding it here, where there are sales to be had and the market is about to run up.”

Each floor at 88 Spear is about 17,000 square feet, with floors three through six connected by a staircase.

“We’re not going to pigeonhole ourselves in terms of tenants,” said CBRE’s Conor Famulener, who’s in charge of leasing. “We have lofty expectations for the rents we want to hit, so it has to be a group that’s excited about what’s going on there.”

— Chris Malone Méndez