Unpaid Contractors Sue as Partly Renovated S.F. Office Building Is Sold

Unpaid Contractors Sue as Partly Renovated San Francisco Office Building Is Sold

Contractors that renovated the 100.000-sq-ft Sharon Building in San Francisco, built in 1912, say they are owed millions by a developer.

Photo, slightly cropped: Google Street View

Owners of an elegantly detailed San Francisco office building sold it to their lender in October at a huge loss. The companies that completed about $13.5 million in renovations and upgrades to the Sharon Building, constructed in 1912, are suing in state court, claiming they are owed a total of $4.7 million and are still waiting to be paid even after the property changed hands.

Swift Properties, which paid about $68 million for the 100,000-sq-ft building in 2018, sold it at auction for $15 million to Cross Harbor Capital, according to public data and local news reports.

CrossHarbor on its website said it had provided Swift with a $71.4-million "office loan" for the building, only part of which appears to have been spent on construction and renovations.

Swift's huge loss on the sale is another symptom that the post-pandemic plunge in downtown real estate occupancy, followed by a surge in interest rates, has hammered office building owners and developers.

Skyline Construction in April had filed suit against Swift and Cross Harbor for the unpaid money. Five subcontractors also filed lawsuits against the firm, the renovation prime contractor, in June and July seeking payment for their work. Another specialty contractor also sued the developer directly and has no claim against Skyline.

All the contractors also have filed liens against the property, and a judge is currently evaluating a motion by Skyline to combine the lawsuits.

In its complaint, Skyline says that of the $4.7 million it is owed, much is tied to $2.5 million in owner-initiated change orders and includes what is owed to subcontractors. The work was performed in 2021 and 2022.

"Swift and CrossHarbor requested and induced Skyline to continue and undertake additional work on the project without intending to and/or without acting in good faith to issue payment,'" Skyline says in its complaint.

An attorney for the owners did not reply to requests for comment. Skyline could not immediately provide a comment on the litigation or project. A person who answered the phone at utility and electrical contractor Andrew M. Jordan, which in its June lawsuit says it is owed $647,000, refused to convey a request for information to the firm owners.

Deputy Editor Richard Korman helps run ENR's business and legal news and investigations, selects ENR's commentary and oversees editorial content on ENR.com. In 2023 the American Society of Business Publication Editors awarded Richard the Stephen Barr Award, the highest honor for a single feature story or investigation, for his story on the aftermath of a terrible auto crash in Kentucky in 2019, and in 2015 the American Business Media awarded him the Timothy White Award for investigations of surety fraud and workplace bullying. A member of Investigative Reporters and Editors, Richard has been a fellow on drone safety with the McGraw Center for Business Journalism at the Craig Newmark Graduate School of Journalism at CUNY. Richard's freelance writing has appeared in the Seattle Times, the New York Times, Business Week and the websites of The Atlantic and Salon.com. He admires construction projects that finish on time and budget, compensate all team members fairly and record zero fatalities or serious injuries.