From tech hub to empty husk: How S.F. building shows city’s latest cycle of boom to bust

The stubby, 16-story tower atop the five-story base has a certain blunt rigor. The scene along Market Street does its best to be inviting, no easy task within two blocks of misery-filled United Nations Plaza. Overall, though, it's hard to imagine why anyone would want to work here — and no surprise that the tech firms that briefly made this a coveted address have packed or are packing their bags.

Once again in San Francisco, as in all cities, the underlying power of place is reasserting itself.

Or to put it in real estate terms: location, location, location.

I visited 1455 Market this week before Tuesday's hellacious deluge and after the news that Reddit will soon move out of the space that it occupies in the 45-year-old structure. The internet forum will relocate by September to 303 Second St., a 10-story office complex at Folsom and Second streets.

There are no grand views in Reddit's next home, and the 1988 complex has a suburban feel. But it's a short walk to the Embarcadero in one direction and the Giants' ballpark in another. There's a spacious plaza in front and ever-sumptuous South Park is nearby.

In other words, 303 Second sits within an area that bustles in boom times and feels pretty good even in the city's murky here-and-now. Walking a few blocks to work can be fun, not depressing.

Compare this to the area around Reddit's current home at Market and Eleventh. The one attraction to outsiders is the sublime lure of Littlejohn's Candies — if you haven't gone, you should — and there's a Muni stop close at hand. Otherwise you see empty storefronts, and sidewalks largely empty except for the people striding through on their way somewhere else, or individuals plagued by mental illness or drug abuse.

The mood was different when Reddit arrived at the end of 2019, joining such proudly disruptive 21st century brands as Uber, Square (now known as Block) and WeWork. The arrival seemed to provide more evidence that long-tawdry Mid-Market was being reborn as tech's Miracle Mile. All systems seemed go-go.

Problem is, the stretch of Market Street near Van Ness Avenue always has been a faint star in northeast San Francisco's constellation of attractions. That's why 1455 Market Street looks the way it does, including that base with floors that cover nearly 2 acres: the Bank of America purchased the land in 1974 to build a computer center to process checks and deposit slips and all those other scraps that once constituted daily financial life. The massive machinery whirred behind windowless walls; an immense vault was hidden within. Even the floors of the tower are more that half an acre, designed to pack as many workers inside as possible.

Other chunky, back-office-type buildings joined it in the 1980s, the idea being that corporations needing cheap space with large floors could build it in San Francisco rather than the East Bay. Then technology advanced to the point where remote workers could be in Oklahoma or India as easily as San Ramon, and the boxy behemoths began emptying out. Mid-Market's decline deepened.

Factors at this scale — more than the relatively modest incentive for Market Street-based firms in 2011 that became known infamously as the Twitter tax break — explain why tech firms flocked to the blocks between Fifth Street and Van Ness Avenue for a decade or so. There were few other options.

Consider the testimony of Victor Coleman, chairman of Hudson Pacific Properties, which purchased 1455 Market in 2009 from the Bank of America.

"The reality was that the city didn't have a lot of square footage available, so growth had to go in this direction," Coleman told Bloomberg in 2013. "People told me I bought the ugliest building in San Francisco, but that's great because the only way to go is up."

The catch being that what goes up, can come down. Uber built itself a sharp-looking headquarters in Mission Bay, with Chase Center to the south and a waterfront park going in to the east. Square is migrating to Oakland's Uptown, in a cool remake of a former department store. WeWork, which, before the pandemic, seemed intent on leasing every available square foot of space in every prosperous American city, now has "only" 10 San Francisco locations.

Once Reddit goes east, the only large tenant left will be Muni's transportation management center.

Theoretically, this makes 1455 Market a candidate to be an incubator for how unneeded office buildings can help the pandemic-stricken downtown towards a resilient future. The test case we need! But with its awkward dimensions  and dicey location, I can't picture a scenario where a conversion from office to apartments or cultural spaces  would make sense. Even the floors of the tower are more than half an acre in size, designed to pack as many workers inside as possible.”

Give Hudson Pacific credit — the Los Angeles-based real estate firm that bills itself as "focused on epicenters of innovation" on its website — lightened up the behemoth's presence as much as it could. The retail strip along Market has a high sloped entrance to invite you in. The windowless base that shielded computers has been punctured by windows in certain locations. By all accounts, the office spaces are top-notch.

But in today's San Francisco, where the office vacancy rate approaches 30% and companies like Salesforce and Facebook are offering multiple floors of their office space to any takers, there are plenty of other options.

That's how cities work. In boom times, economic tides rise so far and so fast that it seems as if they never will stop. Then comes a recession or worse, and those same forces recede.

With luck, downtown San Francisco's tide has reached its low point. But here's another urban truth: We never can tell what the future might hold.

Reach John King: [email protected]; Twitter: @johnkingsfchron