L
ocation alone does not guarantee success in real estate; timing is equally decisive. The 5M office tower—a 25‑story glass edifice at 415 Natoma Street—occupies a prime spot in downtown San Francisco, bordered by Union Square, Moscone Center, I‑80, and a thriving tech corridor. Yet, three years after Hearst Corp. and Brookfield completed it, the building remains largely vacant, prompting the question: why is this gleaming new tower underused?
The answer lies in its completion date. The ribbon‑cutting in 2022 coincided with a period when major tech firms were trimming office space rather than expanding. Zendesk had pledged to occupy 90% of the 648,000‑square‑foot property but withdrew after the pandemic. New office inventory at that time could have positioned 5M favorably for a future rebound, but the market was not receptive.
The project also added a public park and a 300‑unit residential building, yet the commercial core remains a shell. The emptiness reflects a broader commercial real‑estate reality: many companies are either too early‑stage for the tower’s large floor plates or can secure cheaper, more flexible spaces in Mission Bay or the Financial District, which offer better views and lower safety concerns. Lowering rents is not straightforward; the building’s financing was based on pre‑pandemic revenue projections, so the owners must charge enough to service those loans. Adding furnishings or upgrades would only increase the cost pressure.
Tenants in San Francisco have largely turned to subleases from firms like Uber or Meta, which offer move‑in‑ready, affordable spaces with shorter terms. The average rent for a comparable office in the area is about $68 per square foot, according to Cushman & Wakefield, but Hearst and Brookfield would need to charge more than double that to cover their expenses. Only the most affluent tenants, such as those willing to pay the premium for the Transamerica Pyramid, would consider the high rates.
The 5M site, covering four acres, also hosts the 302‑unit apartment building The George and a public park. The project was approved a decade ago, and the site has remained largely dormant. City officials have even approached out‑of‑state universities to fill the space with students. Vanderbilt University is reportedly evaluating the location, though no formal interest has been confirmed. A 2024 Chamber of Commerce study identified the site as ideal for academic use due to its transit access and potential for student housing, noting that developers have approval for a 400‑unit condominium at 110 Fifth Street.
In a March update to city planners, the developers said they were preparing the site but would not break ground until “favorable economic and investment conditions” returned. Meanwhile, a 95‑unit affordable senior housing complex at 967 Mission Street will begin construction this year, supported by low‑income housing tax credits, bonds, and city funds. Despite the stalled 5M tower, other developers have proposed new skyscrapers: Related Companies plans a tower at the historic fire station in Jackson Square, and Hines is eyeing the former PG&E headquarters at 77 Beale Street. Their strategy is to wait until the market becomes financially viable.
Hearst Corp. first proposed the Fifth and Mission redevelopment in 2008, partnering with Brookfield to finance the project. Both companies declined to comment on the current situation. Marty Cepkauskas, Hearst’s senior director of real estate, explained that the pandemic and persistent vacancies have undermined the original revitalization plan. The Chronicle will relocate next year from the 5M site to a Hearst‑owned building in the Financial District, a move that will further reduce activity in the area.
Local business owner Tess Diaz‑Guzman, who runs JT Restaurant in the Mint Mall adjacent to the tower, has served the community for nearly 30 years. She continues to provide meals for residents and the homeless, even when customers cannot pay. The economic downturn has left many businesses and residents struggling, especially in SoMa, where recovery lags behind the Financial District and Mission Bay. Alex Sagues, a CBRE broker listing retail space at 5M, notes that while the location is excellent, the building’s current state is a “big ship to turn around.”
