A long-stalled project that was once slated to become part of San Francisco’s next booming tech district could be the site of 1,500 new homes under a proposal to build two high-rise apartment towers in the city’s South of Market neighborhood.
Local developer Strada Investment Group has submitted plans for two residential buildings, one with 785 homes and the other with 715 homes, at 88 Bluxome St., which once housed the city’s oldest and largest tennis club, according to city planning documents. About 10% of the units would be reserved for very-low-income residents in San Francisco.
The developer is the first to take advantage of a new zoning law passed earlier this year that did away with pre-pandemic restrictions requiring a minimum amount of office space at large sites in the neighborhood. Former Mayor London Breed introduced the changes last year as part of multiple efforts that aimed to encourage more residential development in housing-starved San Francisco.
San Francisco, with one of the highest rates of rent growth in the country, now has record-high average rents of $3,260 per month, nearly twice the nation's average.
The proposal, if approved, would make way for one of the largest housing projects to break ground in recent years in the city. Currently, there are no housing projects of this size under construction in San Francisco.
The city is woefully short of affordable housing. San Francisco is supposed to build 82,000 housing units by 2031 as part of its plan to meet state-mandated requirements to help solve California’s housing shortage. But despite a slew of measures that is supposed to result in more housing development, there are not enough construction cranes on the city’s skyline to meet those goals. In 2024, just over 1,200 units were completed, according to city data, of about half the 2,593 homes produced in San Francisco in 2023.
Office downturn
Alexandria Real Estate Equities, a real estate investment trust that develops life sciences and tech campuses across the country, acquired 88 Bluxome St. in 2017 for $130 million with plans for a 1 million-square-foot office development.
In 2019, with demand for office space surging in the nation’s booming tech capital, social media firm Pinterest signed a sprawling lease to occupy nearly 500,000 square feet in an ambitious mixed-used project at the site that mostly wasn’t even approved yet. When the company pulled out of the deal the following year, it was widely seen as a turning point for San Francisco’s office market.
The project slated to rise at the site stalled with the onset of the COVID-19 pandemic, and the formerly industrial SoMA neighborhood of warehouses and nightclubs that was supposed to become the city’s next bustling tech center languished as the city’s office market froze and failed to bounce back even after the pandemic. In fact, none of the major commercial developments approved under the Central SoMa plan, a 2018 rezoning of the neighborhood that was supposed to encourage the area’s transformation into an extension of the city’s then bustling Financial District, have broken ground.
In 2025, the neighborhood is finally starting to recover, as an upturn in leasing conditions across San Francisco — primarily fueled by tech companies, especially in the artificial intelligence sector — suggests that the city’s beleaguered office market is finally moving past its most difficult phase, according to a recent CoStar analysis.
Over the past 18 months, SoMA has seen an uptick in leasing and a decrease in tenant departures. As a result, the office vacancy rate has stabilized at 25.8% as of the second quarter of 2025, still higher than the city as a whole, which is just under 23%.
Meanwhile, limited housing development is translating into scarcity-fueled rent hikes. The apartment vacancy rate has dropped to 4.9%, the lowest level of the past 10 years, while rents have surged 4.3% in the past year.
Turning the corner?
San Francisco now has one of the highest rates of rent growth in the nation. As a result, the average rent in San Francisco has finally surpassed the peak reached in 2019.
Many new developments have received approvals and are ready to move forward once economic conditions improve. In particular, the South of Market submarket has 25 proposed projects totaling over 5,000 units awaiting development, according to CoStar.
Strada, the company behind the proposal at 88 Bluxome St., is currently constructing another residential high-rise in Central SoMa, with a 16-story building going up two blocks away at 555 Bryant St.
San Francisco Planning Department records show that Strada plans to split the 88 Bluxome St. property into three parcels, with an apartment tower apiece on the separate parcels and a third reserved for a future affordable housing project with 150 units for very low-income residents. The two market-rate towers would have 58 and 51 floors and include a mix of studios as well as one-, two- and three-bedroom units.
The previous project planned for the site was to include 12 indoor subterranean tennis courts as a replacement for the San Francisco Tennis Club following a community uproar about the destruction of the historic club. The new proposed apartment plans did not provide any information about a tennis club.
Officials have taken a number of other moves in recent months to enable the conversion of more of its 51 million square feet of empty office space into housing the city says it desperately needs, including easing taxes and city-imposed fees to ease the cost of such projects, which often simply don’t pencil out for developers, they say. San Francisco has lagged behind other cities that have had more success in promoting office-to-housing conversion projects, such as New York, Washington, D.C., and Los Angeles.