San Francisco Business Times
Shvo kicks off $250 million overhaul of Transamerica Pyramid CenterSarah Klearman , Mar 22, 2022
TODD JOHNSON | SAN FRANCISCO BUSINESS TIMES
Michael Shvo’s vision for the future of the Transamerica Pyramid took a big step toward becoming reality this week.
Shvo’s eponymous Manhattan-based development firm on Monday began work on a $250 million renovation of the 48-story Transamerica Pyramid at 600 Montgomery St., Shvo said in an interview Tuesday.
The project also involves the renovation of the adjacent 505 Sansome St. office building and renovation and expansion of the historic 545 Sansome St. office building, he told me. The Transamerica Redwood Park, which sits between all three structures, is also getting a makeover.
The renovations, designed by London-based architect Foster + Partners, will bring the Transamerica Pyramid Center “into the next century,” Shvo said, while honoring the design of the existing buildings. No changes are planned to the facade of the 523,000-square-foot pyramid, a midcentury marvel completed in 1972 that was the city’s tallest building until Salesforce Tower was completed in 2018.
Construction fencing started going up this week. Hathaway Dinwiddie Construction is listed as the general contractor for the initial building permits; the entire project is slated to be completed by the middle of next year, he said.
“At Shvo, we are focused on buying iconic properties that evoke an emotional reaction in tenants,” Shvo said. “So with that, we are starting — and it’s all starting now — the renovation of the park, the renovation of the building… to make this the true heart of San Francisco, which it has been previously and it will be in the future.”
See a slideshow of the renderings from Foster + Partners below.
Shvo, through a venture with Deutsche Finance America and a group of European investors, bought the site for $650 million in October 2020. Shvo spoke with my colleague Laura Waxmann the following spring about his plans to upgrade the site, though at the time he did not disclose details.
He said Tuesday that Shvo has plans to execute extensive upgrades to the Transamerica Pyramid’s entrance and its lobby, where it will add a host of retail amenities, including a flower shop, bookstore and cafe. The company will convert the top floor of the Pyramid from office space to a private bar and lounge for tenants and curate amenity floors to feature fitness and gallery space in the building. That’s in addition to the three floors the company leased to Core:, a luxury members-only club, at the end of last year.
The $250 million price tag will extend to additional renovations to the office buildings at 505 and 545 Sansome.
The structure at 505 Sansome, a 20-story, 191,12-square-foot building built in 1981, will get a new lobby, new retail storefront and a restored entrance facing the redwood park.
As part of phase one of the renovations, Shvo will also upgrade the landscaping at the three properties and at the redwood park that anchors the site, which spans an entire block in downtown San Francisco bounded by Washington, Sansome, Clay and Montgomery streets.
“The entire city block is going to get new life and new energy while restoring the historic buildings, respecting the architecture and really applying the work Pereira did,” Shvo said, referencing original architect William L. Pereira.
Shvo’s $8 billion portfolio also includes a host of luxury properties, including the hotel Aman New York and a pair of Mandarin Oriental Residences in Beverly Hills and New York City. The firm’s renovation of the Transamerica property will encourage a blurring the line between the luxury residential and office categories, Shvo told me.
The goal is to offer tenants what Shvo calls an elevated office experience: office space that doesn’t feel or operate like an office. The Transamerica Pyramid will be “one of the greatest examples” of Shvo’s working thesis that tenant experience and customer service will be the driving factor in deciding how successful companies are in returning their employees to office in a post-pandemic world.
Michael Shvo is the founder, Chairman, and CEO of Shvo
“I don’t believe the hybrid model is something that will work for a lot of companies, and definitely not for a lot of the tenants we will have in our buildings,” Shvo said. “If you make their office experience as good as if not better than their residential experience, their home experience, you’re giving companies another tool to bring employees back to work.”
Shvo, who is firm in his belief that the Transamerica Pyramid is “the greatest building in San Francisco,” says there will be no other office property like his in the city’s market. And the allure of that offering seems to already have garnered momentum: Over the last 12 months, the firm has successfully leased 150,000 square feet at the property at rates over $100 a foot, Shvo told me.
He declined to identify individual tenants, citing the sensitive nature of the deals, but said rents in the Pyramid had doubled since the company purchased the building. JLL is the leasing agent.
“This is all in anticipation of what’s about to come from Shvo and Foster,” he said.