Hudson Pacific Explores Historic Residential Conversion at 901 Market Street

Hudson Pacific Properties plans to convert the historic 901 Market Street into residential units, leveraging Mayor Daniel Lurie’s new 2026 downtown tax incentives.

By: AXL Media

Published: Mar 10, 2026, 9:06 AM EDT

Source: https://therealdeal.com/

A Strategic Pivot Amid Commercial Vacancy

The decision to re-entitle the upper floors of 901 Market Street comes as San Francisco grapples with nearly 27 million square feet of vacant office space. While the local economy has seen a recent surge in leasing activity driven by the artificial intelligence sector, that demand is predominantly focused on newer, "Class A" office stock. Historic buildings with larger footprints and older infrastructure often struggle to compete for high-growth tech tenants, leaving properties like 901 Market underutilized.

During a February 2026 earnings call, Hudson Pacific Chairman and CEO Victor Coleman confirmed that the company is officially removing the property from its "in-service" office tally to focus on the residential pivot. The ground floor remains anchored by Ross Dress for Less, maintaining a retail presence at the high-traffic corner of Fifth and Market, but the transition of the upper floors highlights a broader effort by institutional owners to stabilize portfolios following a year of significant financial headwinds.

Policy Catalyst: The Downtown Revitalization Financing District

The timing of Hudson Pacific's proposal aligns with a major legislative push by Mayor Daniel Lurie. In February 2026, Lurie signed the "Downtown Revitalization Financing District" into law, a tax-increment financing mechanism specifically designed to make complex conversions financially viable. The district allows developers to capture a portion of the increased property tax revenue generated by their projects to offset high upfront development costs—such as seismic retrofits, new plumbing stacks, and electrical upgrades—over a 30-year period.

This new policy framework is intended to bridge the "feasibility gap" that has historically prevented such projects from penciling out. Under the program, the city projects that approximately 50 downtown buildings could be suitable for conversion, potentially adding 4,400 new residential units. Hudson Pacific’s 901 Market project is one of the first major tests of this incentive structure, serving as a potential blueprint for how private capital can leverage public policy to revitalize the city's urban core.