Luxury San Francisco apartment complex next to 'X' HQ could default on mortgage
SAN FRANCISCO — When luxury high-rise NEMA opened 10 years ago, it was meant to attract tech giants and revitalize the Mid-Market area. But like major retailers and companies, it's failed to regain its footing.
The area has dealt with property crime, homeless encampments and open-air drug markets.
The 754-unit building, which sits across the headquarters of X, formerly Twitter, is now at risk of "imminent default" on its $384 million mortgage, according to real estate data firm Trepp.
The company stated that "the borrower has stated in writing that the property's cash flow no longer can cover the monthly debt service. The comments note that the servicer is holding more than $23 million in collateral reserves."
During our brief time outside NEMA on market and 10th, KPIX reporter Betty Yu observed a man rolling around in a chair in front of oncoming traffic. He later wheeled himself into a construction zone.
Another man was seen casually strolling in front of the apartment entrance on 10th Street with a toy gun.
Outside nearby businesses, homeless people camped out.
"Living in NEMA's wonderful, I mean it has everything you could ever ask for in an apartment building," said resident Seth Bond. "It's a little odd coming down to the street level, and seeing open-air drug markets."
Bond moved in in January and was offered six weeks of free rent. Still, he said rent is substantial.
Apartments.com and similar sites list 470-square foot studios for nearly $3,200 a month. Compass data shows San Francisco rents at the end of Q2 in 2023 are roughly the same as this time last year.
During our interview with Bond, a man interrupted and started yelling obscenities.
"When there's a lot of people around it feels generally safe, but again you have individuals like that who come up and are a little agitated," said Bond.
Several other commercial tenants including Westfield San Francisco Centre and two major Union Square hotels have stopped making payments and surrendered their properties amid a slow recovery. Nearby Whole Foods announced its closure in April, after one year.
"My experience, it's been positive and negative, there's both sides; there's people like you've seen that are characters, but there's also people that are nice, that will help you if you're lost," said Cow Hollow resident Demian Diaz. "I'm also new to the city, just moved two months ago, so maybe I haven't seen the worst of it all."
Diaz said he often runs errands in the Mid-Market area.
In 2022, NEMA was 91% occupied, according to Trepp, but its current occupancy rate is unclear.
"I had an idea of what I was in for just moving to San Francisco in general," said Bond. "But I guess I didn't really appreciate how dramatic it would be."
KPIX reached out to developer Crescent Heights. We did not receive a response.
