Real estate investors are optimistic about San Francisco as the city’s planning commission green-lights the biggest hotel for downtown in years.
During its Sept. 11 meeting, the commission unanimously approved a towering boutique hotel at 570 Market St. At 211 rooms and 29 stories, the hotel would not be the tallest new hotel in the city (the recently approved 530 Sansome St. project is taller in height), but a planner for the city told SFGATE that it’s the largest hotel approved recently in terms of room count.
The project was initially proposed in 2019 when tourism numbers broke records year over year in San Francisco. However, the pandemic and high construction costs soured hotel investment in the city. In 2023, investors for the city’s two biggest hotels – Hilton Union Square and Parc 55 – defaulted on their loan, citing the city’s “clouded and elongated” path to recovery. Two years later, investor speculation appears to have shifted for San Francisco.
In preparation for the meeting, the project’s sponsor, Frontier Group LLC, commissioned an analysis from CBRE, a firm that specializes in commercial real estate. The CBRE report found that San Francisco is forecast to have the greatest revenue per available room in all of Northern California this year, at 8.4%, which far outpaces the national average of 1.3%. Analysts attributed this largely to the return of business travel and industry conventions.
“CBRE published a detailed report and subsequent addendum projecting that this type of high-end, view-oriented hotel would open into a strong and viable market,” planning staff member Jonathan Vimr said during the meeting. “Particularly in light of the fact that [this project] could not realistically be delivered for several years.”
Renderings show 570 Market in downtown San Francisco. (Screenshots via Danny Forster and Architecture)
The hotel was strongly opposed by next-door neighbor Chelsea Pacific Group, which owns the Chancery Building, a seven-story office building. The Chelsea Pacific Group submitted its own economic analysis that found that the hotel would hinder the success of other hotels in the area, according to Travel and Tour World.
At the meeting, Chancery representatives expressed concerns over privacy, construction noise, dust and the amount of light the new hotel would block from its building. Architect Danny Forster said the designers addressed some of the concerns from several different angles by staggering and angling the windows to avoid direct lines of sight. Still, as is, the project already meets code requirements.
Commissioner Amy Campbell said in the meeting that she fully supported the hotel. “This is in the heart of downtown. This is our primary commercial corridor. This is where we welcome tourists and visitors. This is how we can accommodate conferences,” she said. “If there’s a business model here that’s going to make this hotel survive, then I think it’s irresponsible to turn down this project if it’s got economic livelihood.”
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