Hearst pauses plan to build 400 condos in SF’s SoMa

Hearst has shelved its blueprints for 400 condominiums approved for construction in San Francisco’s South of Market, citing poor market conditions and high construction costs.

The New York-based media company and owner of the San Francisco Chronicle has paused its plans to build the highrise at 110 Fifth Street, the San Francisco Business Times reported.

The building was to mark the second phase of a $1 billion development known as 5M that Hearst developed with New York-based Brookfield Properties between Fifth, Mission and Howard streets.

Hearst is the sole developer of the project’s second phase. No future timeline was disclosed.

The condo tower “doesn’t pencil because of market conditions and construction costs,” an unidentified Hearst spokesperson told the Business Times. 

Hearst owns the Chronicle building at 901 Mission Street, next to the project site. 

The firm sold part of the 4-acre 5M property to Forest City Realty Trust, later bought by Brookfield Properties, in 2018 for an undisclosed sum.

But it kept the Chronicle building and the future condo building parcel, now partially occupied by the San Francisco Examiner’s former home.

The first phase of 5M was completed last spring, when Brookfield finished The George, a 302-unit apartment complex, and a 25-story, 648,000-square-foot office tower at 415 Natoma Street. Brookfield also renovated two historic properties, the Dempster and Camille buildings.

In the era of remote work and tech layoffs, one in three offices in the city are now vacant — with a glut of subleases flooding the office market. San Francisco this year faces a wave of office defaults, experts say, because of soaring vacancy rates and a drop in value of older buildings. 

“A lot of projects are hitting the pause button right now,” Dan Sider, chief of staff at the San Francisco Planning Department, told the Business Times.

Brookfield’s office tower at 415 Natoma, the only offices built in the city in 2021, has struggled to find tenants. Its sole renter, Thumbtack, took up 20,000 square feet in 2021.

That means the tower is just 3 percent occupied, according to the Chronicle.

Hearst’s 200,000-square-foot building at 901 Mission Street is now fully leased, but two leases by Yahoo and Autodesk will expire this fall and aren’t being renewed, the Chronicle also reported, leaving the building 60 percent vacant.

— Dana Bartholomew