S.F. has a stunning shuttered museum for sale. Turning it into something new won’t be simple

There is nothing in San Francisco like downtown’s Contemporary Jewish Museum: Its audacious iridescent dark blue tilted cube protrudes from the 1907 brick of a former PG&E substation that anchors the institution near Third and Mission streets, juxtaposing modern architectural ambition and industrial history.

So trying to figure out what the place is worth may be more a question of art than science.

The 63,000-square-foot property at 736 Mission St. officially hit the market Wednesday, listed by real estate brokerage Newmark with no asking price.

In another market, the building might fetch $100 million. Today, in a downtown cultural district still recovering from the pandemic – with depressed real estate values, weakened foot traffic and strained arts funding – the buyer pool shrinks to a narrow question: Who can take on a large, vacant cultural space and make it work?

The property, which is San Francisco historic landmark No. 87, also comes with a restrictive covenant dating back to its transfer from the city’s former Redevelopment Agency under the Yerba Buena redevelopment plan, limiting its use to cultural or institutional purposes. This means no offices, housing or hotel – not that converting to any of those uses would be easy.

“This is not like selling an office building where you can say, ‘Well, these are the 20 people that are out there looking for this asset right now,'” said veteran commercial broker Mark Geisreiter, of Newmark. While it is “difficult to point to that exact right user today,” Geisreiter said he is confident the perfect buyer will emerge.

“We are going to let the market figure out where the market values it,” he said.

The building’s sale is critical to the museum’s survival as a brick-and-mortar institution, said Director Kerry King.

“This is our most significant asset,” King said. “We need to monetize it to have a future.”

The goal: Clear roughly $13.5 million in remaining debt from a $47 million construction loan tied to the building’s 2008 renovation and expansion – financial strain that ultimately forced the museum to lay off 80% of its staff and close its doors a year ago. The museum has reduced its debt by roughly 50% after dipping into its unrestricted funds, but its bid to reopen has not materialized.

Paying off lenders won’t be enough. Attendance, which drives grants and philanthropy, has been slipping for years, King said.

And right next door sits a stark reminder of what can happen to stagnant arts and culture organizations: The troubled former Mexican Museum space – about 50,000 square feet – remains empty, with no clear plan from the city, which owns the space, for activation.

“COVID was not kind to the arts organizations. And so obviously this is, unfortunately, a reflection of that,” said Geisreiter, of Newmark. The firm has said in a statement about the 736 Mission listing that the Jewish museum will transition from the building once its sale closes.

There may be an opportunity for the museum to lease-back a portion of its space under a new owner. But the “bigger goal” is to find the right buyer for the property, Geisreiter said, calling it the “most incredible real estate” he’s ever toured.

“Every property has got its own unique sets of challenges and opportunities,” he said. “There are certainly some restrictions with the deed, but buildings go through metamorphosis with the cities. Our job is to expose the property to the entire world, and we do think we’re going to get a variety of different users that are interested in it.”

The plan is to put the property in front of “like-minded” cultural organizations, but also entertainment groups and other potential buyers. If one proposal does not fit the “precise use of the building,” then that will warrant a dialogue with stakeholders – including the city, he said.

Groups like Community Arts Stabilization Trust (CAST) have pushed a different model: acquiring and stabilizing real estate, then matching it with arts tenants – often multiple – who share space, costs and programming. The approach has helped projects like the Warfield Building nearby on Market Street, where nonprofit arts organizations co-locate in a single, mission-driven hub.

But that model has limits.

“Even with CAST’s approach of wrapping buildings around programs and missions, there is no plug-and-play situation where you can put a new group – or group of tenants and partners  – to make a space magically work,” said Catherine Nguyen, CAST’s director of communications, adding that there are “no simple solutions between the situations with the Contemporary Jewish Museum and the Mexican Museum.”

“Both are complex and not easily solved without marshaling a lot of resources,” she said.

With the Jewish museum and its neighbor both in limbo – as well as the San Francisco Museum of Modern Art, which is also located in the Yerba Buena cultural district, freezing its popular Free First Thursday program – the stakes extend beyond a single vacant space. The cultural district itself is at risk.

“With all the recent losses to San Francisco’s arts scene, there is a real concern about what sort of change this will bring to such an important location and cultural corridor,” Nguyen said. “We need more, not fewer partners, standing. We stand to risk a lot more arts institutions absent strong civic and cultural infrastructure and investment.”

The city’s Office of Economic and Workforce Development, or OEWD, won’t have a role in selecting a new steward for the museum property, but is willing to meet with potential buyers. The department recognizes the property as a key site in the Yerba Buena neighborhood, which it said has been a focus of its recent downtown revitalization efforts.

King, the museum’s director, said her wish for the area going forward is for it to develop an even “stronger sense” of identity as an arts and culture hub.

“We weathered the pandemic with temporary infusions of investment, but what’s been missing for a while is a long-term vision for sustaining arts and culture in San Francisco,” said Sunny Angulo, executive director of Propel, a civic group advancing community-driven solutions to improve quality of life in the city. Angulo is concerned about placing the focus heavily on public space activations, rather than supporting grassroots arts organizations in an expensive city. She also worries about a “lack of community input into who will lead” its vision for the arts and culture sector.

A spokesperson for Mayor Daniel Lurie’s office said the administration is “focused on creating the conditions for downtown’s recovery – drawing people from across industries back to the heart of our city,” and will “continue ensuring arts and cultural institutions remain a part of our recovery.”

“A thriving arts scene is critical to San Francisco’s economic resurgence. The work we’ve been doing to drive new business and foot-traffic to the neighborhood is building momentum,” said OEWD Director Anne Taupier, adding that “strengthening Yerba Buena’s reputation as a cultural hub” drives downtown’s comeback.

There are signs the neighborhood overall is recovering.

Scott Rowitz, executive director of the Yerba Buena Partnership, said the neighborhood is experiencing strong economic growth, with 30 new leases signed in the past year and foot traffic is up: There were 4.6 million visits to the neighborhood in the past 90 days, up 15.5% over the same period last year, according to Placer.ai.

A spokesperson for the Yerba Buena Center for the Arts said the venue has seen steady growth in interest, with weekly attendance to recent shows double that of prior comparable exhibitions.

The neighborhood has seen the closure of multiple chain stores – CVS, Specialties, Walgreens, Peets, and Starbucks – but those spaces are being filled mostly by locally-owned mom and pop businesses like Street Taco, Whole Cakes, Chapter Cocktail Lounge, Bruno’s Italian Taste, Elaichi and Zasta; all of which are opening between March and June. The past year saw the arrival of Oink & Oscar at Yerba Buena Lane, Jane on Third at SFMOMA, and Brother Beer Co. and West Coast Sourdough at Metreon.

But leases signed by bakeries and AI companies won’t necessarily make it easier to find a cultural group with the deep-pockets and ambition to take on the Jewish museum’s former home.

Rowitz said the momentum in the neighborhood could help.

“A lot of folks are putting an anchor down here and we don’t have anything else like that property,” he said. Even since the museum closed the building has continued to rent out spaces about twice a month to private groups ranging from weddings to bar mitzvahs to corporate retreats to receptions for companies in town for conventions. “For the right entity that has the interest in arts, culture, entertainment sphere it’s a perfect opportunity.”

Geisreiter, the Newmark broker, said he is encouraged by new investors planning to revitalize the three largest commercial anchors in and around the Yerba Buena area: The now-shuttered former Westfield mall at 865 Market St., the nearly vacant office tower at 415 Natoma St. and the Metreon mall that abuts the Yerba Buena Gardens.

He said that those projects, along with the Jewish museum building’s sale, will become the “four horsemen of the renaissance of that neighborhood.”

“Name another little sub-market with major investors that are placing huge bets within a four square block radius,” Geisreiter said. “It tells you a lot about their confidence in finding tenants and people that want to live there.”

This article originally published at S.F. has a stunning shuttered museum for sale. Turning it into something new won’t be simple.