Monarq may turn a 96-year-old office building in Downtown Oakland into a hotel.
The locally based investment firm has filed preliminary plans to convert the 14-story property at 1624 Franklin Street into a hotel, the San Francisco Business Times reported.
Monarq, led by Mollie Westphal, bought the 70,000-square-foot Class B building at the end of 2019 for $24.8 million, or $350 per square foot.
And it’s doing fine — at 65 percent occupancy, with no loan maturity deadline, Belal Kaddoura, development manager for the firm, told the newspaper.
Asked about his hotel plans, he said Class B and C offices are having a particularly hard time in Oakland.
“Everybody is having these conversations,” Kaddoura told the Business Journal. “At a time like this, it’s about taking a step back and asking what is really the highest and best use for the city, the owner, the space itself.”
The idea of office conversions for housing has become popular since the pandemic sent workers packing and office vacancy rates soaring. But a hotel conversion represents an outlier.
Preliminary data shows city-wide office vacancy in Oakland rose to 23 percent in the third quarter, though by summer it had climbed to nearly 36 percent in its Greater Downtown.
Oakland has yet to see an office-to-housing conversion plan, perhaps because its Downtown is already home to thousands of homes, according to the Business Journal.
Kaddoura said that Monarq, too, is treading lightly about a hotel conversion without knowing if it would be financially feasible. The nearly century-old building would need major renovations before it could be used as a hotel.
Still, he said, if there’s a possibility the conversion might work, Monarq wants its foot in the door.
— Dana Bartholomew
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