Oceanwide Holdings has officially suspended development of one of the two Oceanwide Center towers under construction at First and Mission Streets.

While development of the faceted, 910-foot-tall tower fronting First Street, which will yield 109 condos over 1.1 million square feet of office space and a ground floor “urban room,” is still moving forward and is now expected be ready for occupancy in mid-2023 (at which point it would be the second tallest tower in San Francisco with the highest residential floors), construction on the shorter, the 54-story Waldorf Astoria hotel and condo tower which is slated to rise up to 600 feet in height along Mission Street is now officially on hold, “in light of local market changes and economic uncertainties.”

Comments from “Plugged-In” Readers

  1. Posted by Dave (Seattle dude)

    It is a problematic time for condo development in SF. The Renzo project on Howard has been abandoned as well. SF has the highest construction costs of any city in the world and appreciation is not in the cards for condos in the medium term future. These condo projects were risky to begin with and now may not be financially feasible in SF.

    This begs the question of “The Hub“. Grandiose plans for residential towers which may not be financially feasible anymore? One Oak was abandoned last year. Even more so the Central SOMA plan. As it is, the jobs/housing balance is ridiculous. And, given the growing risk of residential development, will the office component end up being built but not so much the housing component? Hopefully the plan will be stopped in court but, if it isn’t, new office construction in the Central SOMA needs to be tied to actual new residential development. The city needs housing, not offices.

    • Posted by knowledge is power

      The condo tower isn’t the one on hold. The hotel tower is. Did you read the short paragraph above describing this?

    • Posted by Ghostwriter

      @Dave (Seattle Dude) It’s my understanding that the Central SoMa Plan lawsuits have been settled. Are you suggesting that a deal hasn’t been reached?

    • Posted by Spencer

      we need both housing and commercial development. How about upzoning western soma for residential only

      • Posted by Hunter

        Sounds like a plan! There has finally been considerable density going up in the Harrison St. area this year.

    • Posted by intheknow

      The Plan will not be stopped in court. All of the CEQA lawsuits have settled.

    • Posted by Anonymous

      Not sure why you consistently refuse to acknowledge that the jobs:housing ratio in SOMA doesn’t need to be 1:1. The area is adjacent to the region’s largest, most concentrated business district; exactly the sort of place you would expect there to be a ton of office space and jobs. That doesn’t mean you shouldn’t build any housing in the same neighborhood, but you also shouldn’t expect housing in the immediate vicinity to equal the number of workers in the area.

      • Posted by Dave (Seattle dude)

        It may not need 1:1 (jobs/housing) but 7:1 or so which it has is untenable. The argument has been The Hub will provide housing, but the Hub’s future is not a given. It is a less desirable area and the TTC (where this tower, Renzo’s towers and the counterflow tower in RH have been abandoned) and, additionally, the Hub developers have to provide 30% plus BMR units (Hub 2.0). Not sure that is financially doable in todays economic environment.

        • Posted by Hunter

          And 3 major residential buildings are under construction in the Hub now, not including the Conservatory project…so no, the area’s future is not in doubt.

        • Posted by Anonymous

          No, that’s YOUR argument. Not THE argument. There are plenty of places in and near the city that could be built up to provide more than enough housing for the additional workforce projected to utilize this new office space. For whatever reason, you continue to insist said housing must either be in SOMA or The Hub.

        • Posted by Hancock

          I’m confused as to why you keep panning the Hub. Related is completing 550 units at the corner of Mission and South Van Ness while Align has started constructing 400 units at the corner of Otis and 12th Street. And, I’d wager good money that Crescent Heights breaks ground on 1000 units at Market and Van Ness in 2020.

          But what do the above three projects all have in common? They’re rentals, not condos. I’m not here to argue that the condo market is healthy but it’s clear as day that there’s overwhelming residential demand that continues to fuel building. It just might be that you need experienced developers (ala Related, Align and Crescent Heights) producing apartments for rent instead of condos for sale.

    • Posted by JWS

      Dave every time you make this argument (that commercial needs to be disingenuous) you forget that on every housing related thread, you explicitly and repeatedly call for that housing to be abandoned or significantly downsized. Let’s just call a spade a spade, you don’t want to see anything built in SF, housing or not.

  2. Posted by Chris

    From looking at the site, it looks to be the other way around. The shorter tower has started to rise above ground while the site for the taller tower is a very deep hole in the ground. However, I hope this report is correct.

    • Posted by BTinSF

      You are correct the shorter tower has had more work done so far but is also the one being put on hold. That this is the case is made a little more logical by the recent erection of TWO cranes for the taller 1st St tower. This is strong evidence that, at least as of last week, they plan to continue working on that (the taller) tower.

  3. Posted by Miraloma Man

    I wonder if this will end up like the giant hole on Market Street just west of Octavia that became home to several unwanted cranes during the last recession.

  4. Posted by NF

    Holy run-on sentence

  5. Posted by Paul Walnutszki

    The reporting is correct, the shorter tower was always slated to be completed first – they finished the foundation pours on that this past summer and the taller tower’s foundation was just completed a couple weeks ago, I think in a couple months we’ll see it coming out of the ground.

    Wondering if they can scrap the hotel to make it more profitable? That’s always a big cost for developers…

    • Posted by There we go, SF

      More likely the entire thing turns into hotel, and is deeply value engineered.

    • Posted by Dave (Seattle dude)

      I believe hotel development is less risky than condo development in SF these days. Several residential developments have been converted to hotel developments. Most of the hotels going up are not large so, while a hotel at this site might be feasible, I suspect a 52 story hotel is not. I assume the reason they are going ahead with the taller structure is because of its large office component.

  6. Posted by c_q

    oh great. so rebar sticking out of the ground along mission for years I presume?

    • Posted by BTinSF

      No. I’m guessing that, barring additional financial reversals for Oceanwide Holdings, it finishes the towers sequentially rather than simultaneously, the taller one first.

      • Posted by Orland

        I doubt the holdup on the hotel/condo structure will last even that long.

    • Posted by Paul Walnutszki

      Pretty sure they’re going to cap it off so I don’t think it’ll look like it currently does, right?

  7. Posted by 101

    With China reining in their companies and restricting the flow of money out of China, I am surprised they don’t sell off the project. Their LA project is stalled (restarted?) and there was word floating around Oceanwide finances are softening.

  8. Posted by Hancock

    I admit that I’m a San Francisco booster but I don’t believe that these delays are a bellwether for San Francisco’s economy or the housing market. While plenty of projects are under way, the notably delayed or cancelled projects are being handled by firms either inexperienced in the US construction market or inexperienced in high-rise construction.

    For example, Chinese developer Z&L Properties has had multiple projects delayed throughout this cycle and not because there’s weak demand for housing. Check out the Chronicle’s reporting on Z&L.

    And, more specifically, the San Francisco Business Times routinely cites the Chinese government’s clampdown on capital outflows as negatively impacting Oceanwide Center in particular.

    Also, One Oak is often cited as a cautionary tale for San Francisco’s current housing market. But One Oak’s original developer, BUILD, has never built anything over six stories and they’re currently also pursuing their India Basin and 469 Stevenson projects.

    Am I a booster? Sure. But I’m also confident that the struggles of inexperienced developers aren’t indicative of the market’s health.

    • Posted by Notcom

      Fair enough…but isn’t it also possible that more experienced developers would never have proposed them in the first place ?? i.e. that they really aren’t viable .

    • Posted by Shorts taker

      Take it in the shorts!

    • Posted by JWS

      Not to mention re: One Oak not going forward, 1500 Mission and the City Ballet School site are both going forward. At least in the short term, those projects are just as good indicators for the current feasibility of the Hub towers waiting on approval, if not better since they are also by prominent developers rather than small scale local ones.

  9. Posted by francis

    What happens to the Prop M allocation if an office project gets stalled?

  10. Posted by cheap seats

    That misaligned perspective is still annoying, five years later…

  11. Posted by Jack Baker

    This likely has more to do with difficulty getting money out of China than anything else (as happened on Oceanwide’s project in LA).

  12. Posted by Paul Walnutszki

    Chinese developers that don’t partner with U.S. firms are destined for cost overruns – their management style just doesn’t gel well with the U.S. building industry. Oceanwide took on a pretty ambitious project with minimal experience working in the U.S. – this was bound to happen. The First Street Tower will most definitely get built, they’ve got an office tenant lined up from what I’ve heard – the big question is whether Oceanwide will have enough cash to finish it up on their own… I think regional developers have probably all given lowball offers to take this off their hands…

  13. Posted by Richard

    When the commercial real estate sector begins to falter, it’s a pretty good bet a recession is on the horizon. Commercial real estate takes years to assemble capital and by the time it comes together the economic upcycle is nearing, if not already at, its end.

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