Transamerica Pyramid Redo Defies Expectations in San Francisco

When times are tough, symbolic shows of strength can be important.

In the depths of the Great Depression in 1930, some defiant real estate developers cast aside the gloom and decided to see if they could build the Empire State Building in a year.

They laid railroad tracks directly to the construction site where 34^th Street meets Fifth Avenue from the steel mills of eastern Pennsylvania. The I-beams were still warm from the furnaces when the steelworkers lifted them off the rail cars and riveted them together to form King Kong’s favorite perch.

The “eighth wonder of the world” wasn’t the big lovesick ape but the building itself, which when it was topped off with what was planned to serve as a zeppelin dock was the tallest structure in the world.

Construction on the Empire State Building began on St. Patrick’s Day in 1930. Contractors Carrett Brothers & Eken aimed to get to the finish line in 18 months, ahead of the Chrysler building that was going up eight blocks to the northeast.

A crew of 3,400 construction workers earned $15 per day building 2.5 floors every week. They completed the tallest building in the world in a record time of 1 year and 45 days.

Today, which building do you think of when you picture the San Francisco skyline? The Pyramid, of course.

That’s right, this week’s demonstration of grit in the face of gloomy “doom cycle” soothsaying by real estate analysts is coming to you from the City on the Bay’s iconic Transamerica Pyramid.

In the midst of all the hand-wringing about how to cure the ghost town in downtown San Francisco, the 50-year-old landmark that is synonymous with the city is undergoing a $1B luxury renovation, Bloomberg reported.

If you venture up to the 48^th floor of the Pyramid, a conference room that commanded panoramic views of San Francisco Bay has been demolished to make way for a 45-seat sky bar that will open only for the tower’s clientele.

That’s right, Class A buildings aren’t as egalitarian as they were in the 1930s. The flight to quality means world-class amenities for tenants: Bloomberg describes the renovation of the Pyramid as an “upscaling transformation.”

Any way you look at it, this is a bold bet that the office market in a city with 31% office vacancy is on its way back: Michael Shvo, who led an investor group that bought the Transamerica Pyramid in 2020 for $650M is doubling rents and investing $400M revamping the three-building complex.

Did we say defiant? “The whole idea that people are trying to write off San Francisco is total nonsense,” Shvo told Bloomberg. “It’s one of the most important cities in the country and this is the most important building on the West Coast.”

The renovation of the property is being led by architects Foster + Partners. In addition to the sky bar, they’re adding an on-site gym and fitness center with a view of Coit Tower; another floor will have a coffee bar and “lounging library” to “give people a place to work and relax outside their offices.”

The lobby will be equipped with a restaurant for clientele of Core, a members-only club that has signed a 20-year lease to take over three floors of the Pyramid.

The most important building on the West Coast has signed five leases in the $200 to $250 per SF range since the renovations were announced, more than twice the average for San Francisco’s top-tier buildings.

According to the report, vacancy rates for high-end trophy buildings are about 10% less that the city average and effective rents at the most coveted addresses have stayed close to pre-pandemic rates.

The 853-foot Pyramid sits at the edge of the Financial District, an area hit hard by the hollowing out of offices and an exodus of retail stores. The Pyramid is 30% vacant, the report said.

The renovations to Transamerica Pyramid, 2 Transamerica and an adjoining redwood park will be completed by the end of this year. 3 Transamerica will be renovated next year.