San Francisco’s $1.2 billion Hayes Point tower stops construction over rampant crime and homelessness
The developer behind a major construction project in San Francisco has halted construction due to poor market conditions as crime and the homeless continue to deter shopkeepers and shoppers from downtown.
Hayes Point, a $1.2 billion tower in the heart of San Francisco, has been put on hold “until markets normalize” after developer Lendlease admitted it couldn’t find enough tenants in the struggling subway.
The announcement is a major blow to the downtown area, where at least 95 retailers have packed up and left since the start of the COVID pandemic.
Nearly 7,000 households per month also fled the city at its peak in August 2020, when soft crime policing and facilitation of widespread homelessness sparked resistance.
The crisis has now seemingly spread to the city’s real estate market, as Lendlease general manager Arden Hearing said he would ‘pause construction at Hayes Point until markets normalize and we are able to secure early lease commitments , or a capital partner, or both.’
The Hayes Point Tower (seen in a rendering) has been abandoned after developers failed to secure enough potential new tenants
Before it was interrupted by the mounting problems in San Francisco, the building was to become a mixed-use complex, with 333 residences stacked on top of 290,000 square feet of office space
A map shows the top companies that have left or are planning to leave San Francisco in recent months. Westfield, the most recent to announce his departure, will be giving up its huge mall – and several residents have already said they plan to follow suit
Hayes Point was one of the few remaining construction projects underway in San Francisco, and its halt comes as a major shock to city officials after taking steps to revitalize the downtown area around it.
Recent moves include simplifying the office-to-residential conversion process and lowering rates in the hopes of kick-starting construction projects, the company said. San Francisco Chronicle.
The tower, which is expected to be completed in 2026, would become a mixed-use complex, with 333 residences stacked on top of 290,000 square feet of office space.
Arden Hearing, general manager of Lendlease, said the project is on hold until the developer can find capital or more tenants
An art space and shops were also planned on the ground floor, although it’s unclear which stores will be vacated by the time it “possibly” restarts in 2024 after brands such as Brooks Brothers, Ray Ban, Christian Louboutin, Lululemon and Nordstrom have left the area because of the untamed crime wave.
The crime epidemic has developed in the city to the point where one Target location has been forced to enclose its entire product range behind safety glass.
The tower’s apartments may also struggle to bring in projected revenue, with the ZIP code targeting house prices falling by 12 percent between 2022 and 2023.
Lendlease CEO Tony Lombardo spoke at a meeting about the earnings report when the decision to pause was announced, saying the decision to halt the project was to “discover” the investment after it had already cost $260 million , reports Driving construction.
The block also comes after Lendlease was also forced to lay off about 10 percent of its global workforce in mid-July. Despite the downturn, Lombardo added that “from a capital perspective, good returns are still being seen in that (Hayes Point) project.”
The dirt and squalor at the intersection of Jones and Eddy Streets in San Francisco’s Tenderloin District, where awakened leadership has allowed homelessness to run rampant
An analysis of official numbers and other research shows San Francisco could lose hundreds of millions of dollars from a corporate exodus and failure to recover from Covid
Announcing the move on Monday, Hearing said Lendlease would “monitor the markets as he explores options for a possible 2024 restart,” adding that the project manager would still continue in the background so “Hayes Point is well positioned once construction is complete’. resumed.’
But the building’s struggle with its surroundings ironically comes after Hearing reportedly bragged about its amenities last September.
He said it is a rarity as a multi-purpose residential, retail and office building, which would be viewed “as a vertical ecosystem, within the neighborhood ecosystem.”
Hearing also said one of the benefits of the project was that it will be at “the top of probably the most transit-rich location in the city,” but it remains to be seen where people – if anything – will travel in the decaying city.
San Francisco has been marred by the combination of a severe downturn in the tech industry coupled with wakeful policies that fuel crime and homelessness.
Along Market Street and Mission Street, near where the Hayes Point Building is being erected, homeless people are flocking in front of an IKEA store
Outdoor use of Class A fabrics is widespread among San Francisco’s burgeoning homeless population, leading others to avoid the city’s downtown
A woman lies unconscious in front of a children’s playground. Even luxury areas like Russian Hill, which is part of the Hyde Street cable car route, and tourist spots like the Golden Gate Bridge have been affected
Despite official reports that San Francisco’s crime rate is on the decline, a former district attorney claimed in May that the city’s liberal district attorney’s decision not to prosecute many crimes skewed those numbers.
The problem has driven countless shopkeepers out of the area, as rampant crime in downtown San Francisco has caused countless shopkeepers to throw up their hands and leave.
In April, Whole Foods announced it was closing its locations, while Anthropologie and Office Depot also left. And when the Westfield Mall announced it was joining the band of companies to flee the city, it flatly told the Washington Post that the subway problems were creating “unsafe conditions for customers, retailers and employees.”
The mall said “these major issues are impeding an economic recovery for the area.”
When the pandemic first hit, California’s problems with homelessness and breaking the law led Gap to be the first to announce his departure in August 2020.
This was quickly followed by H&M and Marshall’s, but Whole Foods looked defiant when it opened a new “flagship” location on Trinity Place in the city’s Tenderloin District in March 2022, hoping to revive footfall after two years of draconian COVID-19 restrictions severely affected businesses in the area.
But a Whole Foods spokesperson said the store closed in April due to concerns about staff safety. “We are closing only our Trinity location for now,” the spokesperson said in a statement.
“If we feel we can ensure the safety of our team members in store, we will evaluate a reopening of our Trinity location.”
Industry groups have noted the problem with theft, with the National Retail Federation saying organized retail crime is costing stores about $100 billion a year, according to a survey of 2022.
In 2021, retailers saw a 27 percent increase in theft by organized crime gangs, the study found. To address the problem, they invested more money in safety and security measures to protect employees, customers and goods.