Real-estate tycoon looks to buy $900MILLION worth of San Francisco office space as companies and residents flee downtown amid homelessness, crime and work-from-home

A real estate mogul plans to buy an estimated $900 million worth of office space in San Francisco that is sitting vacant due to homelessness, crime and the work-from-home culture.

Ian Jacobs, 47, heir to the Reichmann real estate dynasty, has decided to expand his family business to California.

Jacobs has worked with his real estate company – known for their fortunes after creating landmark skyscrapers in New York City, London and Toronto – and other wealthy family and investors to tackle the deteriorating city.

He has committed $75 million to the new venture dubbed “Project Uris.” According to his marketing materials, Jacobs has told investors that the Bay Area project could take a decade.

‘His entire professional career has been dedicated to value investing in public markets. This is the first time he has been able to invest value in real estate,” Max Raskin, Jacobs’ advisor on the project, told the newspaper. Wall Street Journal.

There’s talk of a vacant office building in San Francisco, while the Bay Area hit a record 34 percent vacancy rate. Jacobs’ plans to buy vacant buildings like this in his new plan called ‘Project Uris’

Jacobs’ goal is to buy 3 million square feet of office space for about 70 percent less than what it would cost to build the properties, according to his marketing materials.

Recent building sales in San Francisco have been between $200 and $300 per square foot, meaning Jacobs’ plan is to spend about $900 million, according to the Journal.

He has spent most of the past year raising commitments from his family and other Toronto-based real estate groups, and received further funding from Latin American and American family offices.

The tycoon has emphasized that the possibility exists to buy the vacant buildings in the Golden State. These could close soon if the Federal Reserve chooses to cut rates in the new year.

The effect could make other investors and fund managers want to return to the city, his co-investors said.

Jacobs has submitted bids on a number of properties, but no deals have been closed yet, sources said.

The Reichman family refined their craft as enterprising businessmen as Jacob’s great-uncles Paul and Albert went on to develop the World Financial Center in the Big Apple and London’s Canary Wharf.

Today, Canary Wharf’s cluster of skyscrapers is instantly recognizable and home to some of the world’s largest banks, such as Citigroup, Barclays, Credit Suisse and HSBC.

In 1977, the family empire decided to take on New York and bought eight buildings in Manhattan, at a time when crime was rampant in the city.

Jacobs’ goal is to buy 3 million square feet of office space in San Francisco for about 70 percent less than what it would cost to build the properties.

Jacob’s great-uncles Paul and Albert went on to develop the World Financial Center in the Big Apple and Canary Wharf in London. In the photo: the building under construction

Five years after the purchase, the local economy was booming, and the buildings they purchased were valued at ten times what they originally paid.

San Francisco has seen a recent increase in vacant office buildings and retail properties across the city.

In October, Microsoft joined the Bay Area’s “tech exodus,” subletting up to 500,000 square feet of its offices as the city spirals further into a “doom loop.”

Meta and LinkedIn are also renting out their office spaces in the city as vacancy rates hit a record high of 34 percent in September as shops were driven out of the city center by increased crime.

San Francisco – which has long been popular with technology companies – was also hit hard by the pandemic with its high density of office space.

Chris Roeder, executive director of Jones Lang LeSalle in San Francisco, told Al Jazeera: “Almost 80 percent of the space in downtown San Francisco is office space, unlike New York or most other cities, which have more residential .’

At the same time, the city is also grappling with rampant fentanyl use and fatal overdoses. In the first five months of 2023, there were nearly 346 overdose deaths in the city – an increase of more than 40 percent from the same period in 2022.

The homeless population has also taken over the city, driving out businesses and even residents as a result.

The Microsoft office at 555 California Street, where offices of up to 49,000 square feet are available for rent after joining the city’s “tech xodus” in October

In San Francisco, sleeping people, discarded clothes and used needles are seen that have influenced the dramatic increase in office vacancies

Another business magnate, Dan Gilbert, the founder of Quicken Loans, took on a task similar to Jacobs’ when he moved his businesses to downtown Detroit in 2010.

At the time, the city was struggling economically and was on the verge of bankruptcy until Gilbert swooped in and bought property.

He began buying and developing real estate through his real estate company Bedrock. Today, the company has approximately 100 properties that have managed to raise $5.6 billion and increase the residential population to a 98 percent occupancy rate.

As many as 19.6 percent of American office spaces are vacant; the emptiest number in the last forty years.

According to Moody’s Analytics, office spaces in major U.S. cities were unrented at the end of the fourth quarter and the number of vacant spaces increased 18.8 percent from last year.