San Francisco’s Montgomery Street could mean a downtown revival
It seemed like the last place you could invest a billion dollars in an office building in October 2020.
Downtown San Francisco symbolized everything that had gone wrong in American cities during the pandemic. The empty office towers. The shops and restaurants are boarded up with plywood. The dirty streets, the petty crime, the eerily quiet transit stations.
But Michael Shvo, the New York real estate titan, decided he had to have one building here, one that has been synonymous with the San Francisco skyline: the Transamerica Pyramid.
Mr. Shvo paid $650 million for the tower on Montgomery Street in San Francisco, long hailed as “the Wall Street of the West” because of its concentration of financial institutions, including the insurance company for which the triangular skyscraper is named. He then spent another $400 million to renovate the tower and turn it into an attraction for businesses and visitors alike.
If his bet pays off, the revamped tower and the blocks underneath could serve as a bellwether for the beleaguered city’s recovery and a roadmap for other city centers struggling to recover from the pandemic. The key, Mr Shvo argues, is turning city centers into spaces where people actually want to be, rather than places where their bosses tell them to be.
“I’ve always believed in San Francisco. The difference was that I was optimistic with a check for a billion dollars in my hand,” said Mr. Shvo, wearing his usual black T-shirt, black jeans and black sneakers as he stood on the 36th floor of the Transamerica Pyramid .
Nearly 200 years ago, Montgomery Street—or the land beneath it, anyway—was the literal edge of San Francisco. When young prospectors arrived in 1849 during the first of many boom times that would come to define the city, San Francisco added several blocks by piling dumps into the bay. Now a 15-minute walk separates Montgomery Street from the shoreline.
A seven-block stretch of Montgomery, from Shvo’s pyramid in the north to Market Street in the south, is dotted with “green shoots,” the botanical term economists use to describe the first signs of recovery. The street is located on the east side of the city, in the heart of the financial district.
From remodeled office spaces to a high-visibility public radio studio, Montgomery Street offers more than just “packing and stacking knowledge workers into giant towers,” says Richard Florida, a professor at the University of Toronto who studies urban development.
Downtowns perform best when they offer a diverse range of music, art, restaurants, shops and meeting places, he explained. Other cities that have emphasized hospitality and entertainment over just offices, such as Austin, Nashville and Miami, have recovered from the pandemic faster than cities with work-oriented downtowns.
“When a place gets boring, even rich people leave,” Florida said. “San Francisco is already beginning its recovery.”
Certainly, the city center still has a long way to go. The office vacancy rate hovers around 36 percent, the highest among major U.S. cities, posing problems for pedestrian traffic and tax revenue. Financial forecasts predict it could take a decade for the city to return to normal. And the much-discussed idea of converting office towers into housing has stalled because it is far too expensive, developers say.
“It’s going to take some time for the market to correct itself, and I think it’s going to be a bumpy 12 to 18 months,” said Robbie Silver, executive director of the Downtown San Francisco Partnership, which pays businesses to clean up the neighborhood and to market. .
Mr Silver said he expected property values to fall further and some building owners to be able to sell cheaply. But he hopes downtown will have affordable rents in the next two years, allowing small businesses in areas like Montgomery Street to flourish.
Mr. Shvo plans to speed up the recovery by offering amenities such as gyms and bars to attract tenants to the 51-year-old Transamerica Pyramid. He also turns the drab lobby into a hive of small businesses, with a raised ceiling and wide openings that create pedestrian passageways. The outdoor park, rarely visited by locals, will feature furniture and new cherry trees.
He predicts three million visitors a year when the transformation is complete.
This part of downtown San Francisco isn’t the hellish landscape you might think based on some social media videos that have gone viral. Businesses pay the Downtown San Francisco Partnership to clean the streets, remove graffiti and collect trash 14 hours a day, seven days a week.
“I won’t say it’s back to 2019, but it’s completely normal,” says developer Oz Erickson, who recently moved his Emerald Fund offices from one building on Montgomery to a smaller, cheaper building across the street .
Sometimes, he said cheerfully, the street is even the epitome of pre-pandemic life: traffic jams.
The architectural firm
In the decade before the pandemic, sleek office towers were in high demand as tech companies and other businesses flocked to the South of Market, or SoMa, neighborhood, blocks from the financial district.
But some companies say they are now drawn to offices with more charm and history on Montgomery Street. Until recently, Gensler, a global architecture firm, spread its employees across three high floors of a more modern SoMa building near the Salesforce Tower. But with cheaper rents available after the pandemic, the company moved to the historic Mills Building, three blocks from the pyramid.
Gensler’s architects designed the perfect office not only for themselves, but one they hoped would serve as a prototype for other employers. Gensler requires its employees to be in the office five days a week, a rarity in San Francisco.
Now the company’s 250 employees all work on the large second floor of the Mills Building, which facilitates collaboration, and they have close-up views of street life outside. The windows open, allowing fresh air to enter.
The front door opens into a gigantic room that looks more like a swanky apartment than an office. On the right side there are comfortable sofas and modern desks. Shelves are lined with plants, books and the original Rolodex that belonged to Art Gensler, the company’s founder. To the left is a kitchen with a marble island, an espresso machine, free snacks and taps of lemonade, beer and kombucha.
Further back, the work areas become increasingly darker and more private, and an employee can decide which of them suits the mood of a given day.
Miao Wang, a 28-year-old architect at Gensler, said downtown San Francisco felt dull and empty when the company was in its previous office tower. Now, she said, she sees pedestrians clambering across intersections, smells morning coffee and bacon and hears street musicians playing guitar and saxophone.
“It just feels so nice,” she said. “I hope more people come back.”
The pop-up for public radio
The staff works in the same Mills Building, on the ground floor where a copy shop was once located the public radio station KALW now records his shows and organizes happy hours, quiz shows and poetry evenings.
KALW is participating in a new effort between the city and a small business nonprofit, SF new deal, which convinces landlords to give up vacant retail space to tenants for creative purposes for three months. The Vacant to Vibrant program has attracted bakeries, boutiques and artist studios.
James Kass, KALW’s executive director, said pedestrians regularly entered the station to view the temporary space. But, he noted, the station had to spend far more than the $8,000 it received in city grants to make the space functional, such as adding booths that block the sound of flushing toilets.
Sandra Halladey, an intern at KALW, said she hoped the city would figure out how to convert empty office space into long-term housing for artists and workers who have been priced out of the city.
“If we don’t invite people like this to live here, we’ve lost,” Ms. Halladey said.
Wade Rose, the president of Advance SF, a business group that wants to revitalize San Francisco, said unique shops and experiences were the norm before downtown became a more sterile office environment littered with chain stores.
“The unique stores left because the rent became too high,” he says. “We need to support very interesting human experiences, and you’re starting to see glimpses of that.”
The public square
Half a block off Montgomery Street, between the radio station and the Transamerica Pyramid, an alley next to an electrical substation has been transformed into a public square called Landing at Leidesdorff.
It features a giant mural honoring William Leidesdorff, a businessman who arrived here in 1841 and is considered the founding father of San Francisco. Outdoor furniture and lighting have been added, and live music and fitness classes are offered.
On a recent evening, dozens of people sat in lawn chairs watching a trippy winter-themed light show projected onto the substation’s facade.
“Downtown has often felt cramped and stiff, the place where people stuck in offices go,” said Suzy Garren, a 50-year-old landscaper who lives in Oakland, adding that she has rarely had any reason to venture to the neighborhood. cart. “This is the 2023 version of what makes San Francisco cool and interesting.”
And then she spoke words that may never have been used before to describe the financial district.
“It reminds me,” she said, “of Burning Man.”