Home US 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

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

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An empty commercial space is seen in San Francisco as the city has been hit by homelessness, drug use and major tech companies fleeing to work from home after the pandemic. Ian Jacobs, 47, heir to the Reichmann real estate dynasty, is now looking to buy empty office buildings in California City.

A real estate mogul is set to buy an estimated $900 million worth of San Francisco office space that has been left empty due to homelessness, crime and 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 its fortune from building famous skyscrapers in New York City, London and Toronto, and other wealthy families and investors to address the city’s decline.

He has made commitments of $75 million for the new business venture that has been dubbed “Project Uris.” According to his marketing materials, Jacobs has told investors that the Bay Area project could take ten years.

‘His entire professional career has revolved around value investing in the public markets. “This is the first time you can invest value in real estate,” said Max Raskin, Jacobs’ adviser on the project. Wall Street Journal.

An empty commercial space is seen in San Francisco as the city has been hit by homelessness, drug use and major tech companies fleeing to work from home after the pandemic. Ian Jacobs, 47, heir to the Reichmann real estate dynasty, is now looking to buy empty office buildings in California City.

An empty office building is seen in San Francisco as the Bay Area hit a record 34 percent vacancy rate. Jacobs plans to buy empty buildings like this in his new plan called 'Project Uris'

An empty office building is seen in San Francisco as the Bay Area hit a record 34 percent vacancy rate. Jacobs plans to buy empty 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 the properties would cost to build, according to its marketing materials.

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

He spent most of last year raising commitments from his family, other Toronto-based real estate groups and received further funding from family offices in Latin America and the United States.

The tycoon has stressed that the opportunity to buy empty buildings in the Golden State could close soon if the Federal Reserve decides to cut interest rates in the new year.

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

Jacobs has submitted offers on several properties, but no deals have been finalized, sources said.

The Reichman family honed their craft as entrepreneurs while Jacobs’ great-uncles, Paul and Albert, developed the World Financial Center in the Big Apple and Canary Wharf in London.

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

In 1977, the family empire decided to conquer New York and purchased 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 the properties would cost to build.

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

Jacob's great-uncles, Paul and Albert, developed the World Financial Center in the Big Apple and Canary Wharf in London. In the photo: the building under construction.

Jacob’s great-uncles, Paul and Albert, developed 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 boomed and the buildings they purchased were valued at ten times what they originally paid for.

San Francisco has seen an increase in vacant office buildings and storefronts across the city in recent times.

In October, Microsoft joined the Bay Area ‘tech-xodus’, advertising up to 49,000 square feet of its offices for sublease as the city continues to fall into a ‘doom loop.’

Meta and LinkedIn also subleased their office spaces in the city as vacancy rates hit a record 34 percent in September as stores were pushed out of the city center by rising crime.

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

Chris Roeder, CEO 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, who have more homes.

At the same time, the city has also battled 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.

Microsoft's office at 555 California Street, where offices of up to 49,000 square feet are rented after they joined the city's 'tech-xodus' in October.

Microsoft’s office at 555 California Street, where offices of up to 49,000 square feet are rented after they joined the city’s ‘tech-xodus’ in October.

Sleeping people, discarded clothing and used needles are seen in San Francisco that have impacted the dramatic increase in office vacancies

Sleeping people, discarded clothing and used needles are seen in San Francisco that have impacted the dramatic increase in office vacancies

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

At the time, the city was struggling financially and was on the verge of bankruptcy, until Gilbert stepped in and purchased properties.

He began purchasing and developing properties through his Bedrock real estate company. Today, the company has around 100 properties that have raised $5.6 billion and increased the residential population to 98 percent occupancy.

A staggering 19.6 percent of office spaces in the United States are unoccupied – the emptiest they have been in the last 40 years.

No office space was leased in major U.S. cities at the end of the fourth quarter, and the number of vacant spaces increased 18.8 percent compared to last year, according to Moody’s Analytics.

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