Early in the pandemic, San Francisco’s commercial real estate market was in freefall. Most office workers were working from home while some residents were fleeing the city entirely. Misery and addiction filled in downtown’s empty spaces while pundits called San Francisco a failed city.
For some investors, this nightmare was an incredible opportunity.
With property values tumbling, a small group of buyers jumped at the opportunity to scoop up office towers at bargain bin prices. Thanks to the AI boom and San Francisco’s recovery narrative, led by cheerleader-in-chief Daniel Lurie, those investors now stand to make multiples on their investments.
“I’ve made my whole career betting on San Francisco’s cycle and its inevitable recovery after a severe downfall,” developer and fast food magnate Greg Flynn said.
Flynn had taken a loss on two office buildings — 222 Kearny and 180 Sutter — he bought at the top of the market in 2019. But rather than give up and seek greener pastures in other markets, Flynn doubled down on San Francisco and in 2023 bought the abandoned Huntington Hotel for $38 million. No one would write a loan to buy SF commercial real estate, he said, so he had to buy the hotel all-cash.
The next year, he picked up a Class B office building at 631 Howard St. for about $36 million, and in 2025, the Market Center towers for $177 million. His firm, Flynn Properties, purchased those buildings at steep discounts from their previous sale prices. Market Center traded at 76% below its previous value.
Flynn said putting together the financing for the purchase was “one of the hardest things I’ve worked on.”
Three years later, Flynn has no regrets. The Huntington Hotel reopened in March after a renovation that cost twice as much as the building itself and is now “going gangbusters,” Flynn said. Part of that success is related to the broad return of conferences and conventions to the city. Meanwhile, 160,000 square feet of new leases have been signed at Market Center and there are “active conversations” to lease portions of 631 Howard to multiple tenants.
He wasn’t the only one with conviction during the worst of the doom loop. Glenn Gilmore, founder of the developer Brick & Timber Collective, raised a fund in 2023 with the intention of spending $500 million on office buildings in San Francisco.
Brick & Timber has so far spent $32 million to buy an office complex adjacent to the Transamerica Pyramid in 2024, and another $30 million on renovating it. The firm has leased more than half the building, mostly to venture capital tenants, Gilmore said. He added that his firm was able to upgrade the interiors for the eight-story building in prime Jackson Square because it sold for a fraction of its last sale price; Gilmore estimated the building alone would have cost closer to $90 million pre-pandemic.
Despite this win, Gilmore said it’s been hard to close other deals due to “fragility” in the debt markets and high construction costs. Interest rates, which have remained elevated for much of the decade, are another factor.
“We’ve been very close on a number of [deals], but just haven’t been able to quite make the returns work,” Gilmore said.
Those challenges don’t seem to be stopping Cyrus Sanandaji of Presidio Bay, which scooped up 60 Spear St., an old Class B office tower that his firm plans to reopen next year as an “office resort” called the Spear.
Presidio Bay purchased the former Matson Navigation building in 2023 for $41 million and has spent more than that on the renovation, for a total cost of about $100 million so far. Tenants already include the popular Arsicault Bakery, a rooftop restaurant operated by Please Management, and co-working firm Canopy. Menlo Park-based Norwest Venture Partners is the anchor tenant.
“They were looking to expand and really plant the San Francisco flag,” Sanandaji said. “We’re fortunate that they saw the vision and leased a full floor.”
Presidio Bay’s investment in the building represented the firm’s confidence, even in 2023, that San Francisco officials would address quality of life issues and court the business community again, rather than tax it, Sanandaji said.
He and the other bottom buyers all credited Mayor Lurie with aiding the recovery of the city’s office market.
Presidio Bay hasn’t stopped placing real estate bets even though prices are trending up again. This year, the firm nearly purchased the San Francisco Centre Mall and this month took over the former Federal Reserve building at 301 Battery St.
Despite the uncertainty at the time, San Francisco’s recovery has proven a winning bet.
“I think you’d be hard pressed to find someone that bought anything 2023 onwards who has not benefited from the recovery,” Sanandaji said.