Among the recognizable faces sitting courtside at Warriors games — E-40, team owner Joe Lacob, Apple’s Eddy Cue — there’s at least one guy you probably haven’t noticed. Glasses. Curly hair. Sometimes wearing an “Everybody but Buddy” sweater. He has a prime spot next to Draymond Green at the end of the bench.
His name is Brandon Shorenstein, and the 39-year-old is chairman and CEO of one of the most powerful San Francisco real estate dynasties ever created: Shorenstein Properties. His grandfather, Walter, built the company from scratch and at one point owned a quarter of the city’s offices. In the 1990s, Brandon’s father Douglas took over and supercharged the business, expanding it into a national empire.
Douglas might still be in charge today, but in 2015, he died of pancreatic cancer at the age of 60, fast-tracking Brandon, then still in his 20s, to the company’s top job. In 2020, he was named CEO. Then, the walls started caving in.
The very same downtown skyscrapers that built the family’s fortune became burdens on the balance sheet. Since the pandemic, nearly $1 billion in loans the company took out to fuel its real estate purchases during the previous decade have come under distress, creating massive losses for the firm and its investors. In a sign that things had reached an inflection point internally, the company in January cut about 10% of its workforce, including six senior executives — its largest layoff ever.
Some of the largest buildings in the Shorensteins’ portfolio have been offloaded at major discounts or simply seized by lenders. The 62-story Aon Tower in Los Angeles sold for 45% less than its purchase price. The company surrendered the keys to the Capella Tower, the second-tallest skyscraper in Minneapolis. And 1407 Broadway in New York went into foreclosure after Shorenstein defaulted on a $350-million loan.
The list goes on: firesales or seizures in Philadelphia, Chicago, Houston, Denver, and Seattle. In San Francisco, lenders took control of a family asset at 208 Utah St. and have agreed to sell the debt to local firm Redco Development, according to sources familiar with the pending deal. Meanwhile, one of Walter’s favorite downtown jewels, 45 Fremont, is also being marketed by lenders for sale after Shorenstein Properties and its partner defaulted on a $347-million loan.
“I’m getting my ass kicked every day,” Shorenstein told another real estate executive last year, according to a report by the Wall Street Journal.
He’s not alone. Albert Behler, 73, of Paramount Group, bet big on San Francisco skyscrapers and lost. His company is now exploring a sale. Aby Rosen, 65, abandoned a San Francisco hotel after taking public money and recently ceded New York City’s iconic Chrysler Building to his lenders.
But the Shorenstein name means more in San Francisco. Brandon’s grandmother founded the Asian Art Museum. His aunt owns the Curran Theater. His dad chaired the San Francisco Fed. His grandfather even helped keep the Giants in town when they considered relocating in 1993.
Now, the scion of that dynasty is trying to reverse the backslide amid an unprecedented commercial real estate downturn that has left more than a third of the office buildings in San Francisco empty. Rather than wait around, other business leaders have stepped into political advocacy, passing sweeping business tax reform through Proposition M. Developers lobbied for permitting and zoning reform, while pursuing fee deferrals to restart frozen projects.
Brandon, meanwhile, hasn’t taken on the public mantle of a civic leader like his forefathers did. He’s also made mistakes during this tenure as CEO, opting to continue purchasing office buildings during the initial years of the pandemic, setting the company back even further.
Shorenstein declined through a spokesperson to comment on this story. To get an understanding of what led to the company’s current state and its prospects of recovery, The Standard spoke to a dozen real estate sources who have dealt with him and his family over the decades and are privy to the firm’s internal dynamics. They requested anonymity in order to speak candidly.
“Unfortunately for Brandon, he gets criticized twice in this economy,” said the leader of another prominent San Francisco real estate firm. “Once for the mistakes his predecessors made, and again, when he does not speak up or take responsibility.”
Walter and Douglas’ shadow
For someone whose family business is on a precipice, Shorenstein is remarkably hard to pin down, according to industry sources. If any broker, investor, or developer needs to steal some face time, they might have to go to see him at Chase Center or on the back nine at the Meadow Club, a Marin County country club at the foot of Mt. Tamalpais.
“I think he works hard and is handling this as well as he can, but what else is he known for at this point?” asked someone who considers Shorenstein a friend.
In a rare media appearance in the Wall Street Journal last month, Shorenstein said that he now sees new opportunities to capitalize on a down market. “Any investment we made before two and a half years ago isn’t looking great,” Shorenstein told the Journal. “Whereas any investment we made in the past two and a half years is going to look very good.”
He was later teased by some industry peers for posing for the paper wearing an $80,000 watch. “There’s a little bit of schadenfreude going around for sure,” quipped a developer after the story came out. “I mean, grandson potentially pissing it all away? C’mon.”
That reputation is a far cry from the one his grandfather developed. Walter came to San Francisco after World War II and built his fortune by being the go-to broker for some of the city’s elite of the time, including the Bechtel and Swig families and companies like IBM and Metropolitan Life.
Eventually, some of those clients would end up bankrolling Walter as he developed and/or purchased his own downtown skyscrapers, such as 555 California. Along the way, he became an influential Democratic Party donor who influenced mayors and advised presidents.
“Walter was a tough SOB,” recalled one former Shorenstein employee who worked with him in the 1980s. “He ruled that company with an iron fist and behaved in a way that would absolutely be considered archaic today.”
By the time the 1990s arrived, Walter’s son Douglas, a relatively calmer presence, took over and put his own spin on the business by pursuing investors outside of his father’s circle. In 1993, he started the first Shorenstein Realty Investors fund, where he recruited college endowments, large foundations, and wealthy individuals like Tom Steyer to invest with the company in real estate around the nation.
Shorenstein Properties would chip in about 10% of its own money into the fund and invited employees to join in as well. This strategy, which is now more commonplace, pushed the company to new heights and added to the Shorensteins’ clout. They would roll out a new version of the fund almost every year until 2022, eventually totaling more than $10 billion in investment.
During his tenure, Douglas preferred to target Class A office buildings that were near or fully leased; but as time passed, and investors demanded higher returns, the company’s buying strategy got riskier and more speculative, said a source with direct knowledge of the business.
If things broke right, the high-wire act paid off handsomely. That was the case in 2015, when the company sold a former furniture showroom at 1355 Market St. in San Francisco’s troubled Mid-Market for double the amount it had invested in the property after it was transformed and leased to Twitter. Shorenstein stayed on as property and leasing manager and continued collecting fees.
After Douglas died, this business model continued under the stewardship of one of his top lieutenants, Charlie Malet, a controversial figure within and outside the company because of his abrasive personality.
By the turn of the decade, when Brandon finally ascended to CEO, the Shorenstein portfolio was as big and successful as it had ever been.
“How much of that was skill though?” said a veteran office broker. “How much of it was actually just an overheated market?”
End of an era?
When the pandemic hit, most real estate firms pulled back or diversified their holdings. But under Brandon’s direction, the company continued to invest in offices, failing to realize that interest rates would soon spike or that the largest users of office space had already pulled back their presences by half.
One deal in 2021 involved buying an old cannery building in Seattle that had been converted into a tech office for $185 million. Just three years later, the building’s main tenant, Zulilly, shut down and laid off all of its workers. Shorenstein defaulted on the property, and the Vanbarton Group reportedly purchased the debt for $25 million, taking control of the property from its previous owner with plans to convert it into housing.
On top of big loans coming due, Shorenstein-owned properties in the Bay Area, such as America Center West in San Jose and 601 City Center in Oakland, are struggling to fill large vacancies, according to sources in those markets.
Meanwhile, at the company’s headquarters on the 16th floor of the Russ Building in downtown San Francisco, many junior staff and middle managers prefer to avoid Malet. The chief investment officer has a penchant for belittling colleagues in front of others, a former employee said.
Shorenstein, meanwhile, isn’t as confrontational. Another source with knowledge of his thinking described him as deferential at first after his father’s death, but increasingly assertive as he’s grown into the role. Despite Malet’s looming presence, Shorenstein ultimately has final say in the company’s decisions.
“He’s got a good head for numbers,” said the former employee. “But I’m not sure he’s passionate about owning real estate. He inherited a lot of decisions that he had no control over.”
Since 2023, the company has made new office investments in Miami, Boston, Atlanta, and Dallas with what is left of the company’s last fund. It is not clear if Shorenstein intends to open a new investment vehicle anytime soon.
Regardless of his company’s current state, Shorenstein, like his predecessors, is keeping himself deeply rooted in San Francisco. On the day that the Wall Street Journal splashed his face on an article, he was, where else, but courtside at the Chase Center for Game 4 of the Warriors and Rockets playoff series.
On TV, he could be seen flexing after a Jimmy Butler and-one and furiously twirling his index finger at the referee after every call against the home team.