SF Office-to-Resi Project Faces Foreclosure Proceedings

The first project approved in San Francisco to convert vacant commercial space into housing in the wake of the pandemic has hit headwinds as its developer faces foreclosure proceedings, reported the San Francisco Chronicle. Locally based Group-I, which plans to convert a portion of the roughly 40,000 square-foot Warfield office building adjacent to the historic Warfield Theater on Market Street into 34 new apartments, was served with a notice of default by its lender last month for a $26-million loan.

According to the filing, Group-I has 90 days from the date the notice was posted to cure the default. If it fails to do so, lender Evertrust Bank, through its trustee, may elect to take control of the property or offload it in a foreclosure sale. 

It’s not clear how the default will affect Group-I’s plans to repurpose the century-old office building in the city’s Mid-Market District, the Chronicle reported. The developer initially proposed converting 25,000 square feet inside the building into housing in late 2022. Last summer, new legislation was passed to reduce the regulatory barriers facing office-to-housing conversions.

Photo credit: sanfranman59/Wikipedia.

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