Oakland’s biggest hotel now belongs to its lender, the latest bit of evidence that things are continuing to get worse before they get better for the San Francisco Bay Area’s struggling hospitality market.
In February, the 500-room Oakland Marriott City Center hotel defaulted on a loan from Invesco CMI Investments, which had bought the debt the previous spring. Now public records show that the lender, an affiliate of global real estate player Invesco Real Estate, has purchased the downtown hotel at a foreclosure auction for $70.2 million, about half the price it last sold for back in 2017, before the COVID-19 pandemic knocked the wind out of the region’s once-thriving hotel industry.
The hotel’s previous owner, Gaw Capital, acquired it for $143 million in 2017. Invesco CMI bought the loan in May 2024 from the original lender, Nataxis New York Branch, per public records.
The 21-story hotel at 1001 Broadway houses a newly renovated headquarters and practice facility of the Golden State Valkyries, the Bay Area’s new WNBA team. The 31,800-square-foot facility was the Warriors’ practice home before the NBA team relocated to San Francisco’s Chase Center in 2019. The hotel also boasts 90,000 square feet of meeting space and connects to the East Bay's largest corporate event venue, the Oakland Convention Center.
The city's largest mural graces the side of the building, a 14,500-square-foot painting of a young Black girl done by artist Victor Ash in 2021 to represent the fight against global food insecurity.
The U.S. hotel industry is grappling with a rapidly evolving landscape in the wake of macroeconomic uncertainty and labor issues as well as changing guest preferences. But even as the U.S. hospitality market bounced back from the pandemic in recent years, the Bay Area’s hotels have lagged behind those in other major U.S. markets, as years of negative national press dampened tourism and business travel.
While San Francisco still ranks in the top five nationally for room rates, the average daily rate, or ADR, is more than 10% below 2019 levels.
Hotel casualties
Oakland hotels in particular have been hit by concerns about crime, a weak office market and the loss of three major sports teams in the last few years.
Oakland’s quirky Waterfront Hotel at Jack London Square shut down, as did the sprawling Oakland Hilton Hotel near Oakland International Airport late last year. An 18-story dual-branded Marriott hotel, also in downtown Oakland, was seized by its lender a few months ago after it defaulted on a $101 million loan in 2024 just over a year after opening.
Los Angeles-based Hawkins Way Capital set out to develop the dual-brand hotel concept in Oakland’s Uptown neighborhood in 2019, when the area was experiencing a boom as an influx of tech start-ups and their employees flooded in and new restaurants and bars opened.
Six years later, the picture is very different. Bay Area technology companies retained remote work policies long after the end of the COVID-19 pandemic, which has suppressed corporate travel. In San Francisco, several large downtown properties have been unable or unwilling to pay off maturing loans taken out before the COVID-19 pandemic hit in 2020, including Hilton hotels in the Financial District and Union Square and the Parc 55 San Francisco.
Those hotels suffered a double whammy courtesy of a citywide hotel worker strike last year. The Four Seasons Hotel San Francisco at Embarcadero faced the auction block in October 2024 after its owner, Westbrook Partners, fell behind on payments on a $72.5 million loan.
Bright spots
Some are predicting a turnaround for San Francisco's hospitality sector in 2025, as three major sporting events set to take place in the Bay Area in the next two years are expected to net the region more than $1 billion in economic output, boosting commercial sectors that have struggled to recover from the pandemic.
Several large-scale real estate developments in and around Oakland are also expected to stimulate hotel demand in the near and medium term, such as Brooklyn Basin, a $2 billion redevelopment of Oakland’s waterfront into a mixed-use hub with 3,700 homes, parks and retail spaces.
A similar mixed-use project is the Mandela Station development at the Bay Area Rapid Transit's West Oakland station, a mixed-use project that is ultimately set to include 760 apartments plus office and retail space.
A local consortium of investors, the African American Sports & Entertainment Group, has floated an ambitious redevelopment plan for the Oakland Coliseum, the former home of the Oakland Athletics baseball team, which is expected to revitalize the area and boost hotel demand. The popular Oakland Roots and Soul soccer teams are playing at the 1960s-era venue while they pursue plans for a more permanent home.