Most investors are fleeing the downtown San Francisco real estate market, but Ian Jacobs is closing in. Call it a family tradition.

Jacobs is heir to the Toronto-based Reichmann real estate dynasty, which made its fortune buying properties in a nearly bankrupt country. New York City during the 1970s. A bargain-hunting stock investor who once apprenticed with Warren Buffett, Jacobs has mostly avoided the family business — until now.

The 47-year-old spent much of last year securing financial commitments from relatives and other wealthy families to acquire office buildings in San Francisco, people familiar with the matter said. Now Jacobs must prove wrong the prevailing idea that downtown offices, especially those in San Francisco, will never be full again.


“We know the Reichmanns,” said the head of a Latin American family office that invests in the venture. “They are a very reliable partner.”

An aerial view of the San Francisco skyline on May 30, 2023, in San Francisco, California. ((Photo by Brandon Sloter/Getty Images)/Getty Images)

San Francisco is the epicenter of a nationwide commercial real estate meltdown. The transition to working from home has crushed demand for downtown office space. Homeowners abandoned properties and defaulted on mortgage payments. Loan losses flowed through the financial system, hitting bank and insurance company stocks.

This year is expected to be worse than the last for office space nationally. The situation in San Francisco is particularly challenging because its economy relies heavily on technology companies that have now embraced remote work. Some say the city is heading toward a “destructive cycle,” with rising vacancies driving more businesses to leave.

Jacobs has lined up commitments of $75 million for his first deals, people familiar with the matter said. Ultimately, it hopes to buy 3 million square feet of office space at prices about 70% below what it would cost to build the properties, according to marketing materials for the project seen by The Wall Street Journal. Recent building sales in San Francisco have averaged between $200 and $300 per square foot, implying total purchases of $600 million to $900 million.


The plan is called “Project Uris,” a nod to Reichmann's 1977 purchase of eight buildings in Manhattan from Uris Buildings Corp. through his company Olympia & York Developments. Like San Francisco today, New York City struggled with crime, corporate flight, and political dysfunction. Five years later, the resurgence of Wall Street boosted the local economy and the buildings were valued at 10 times what the Reichmanns had paid.

The Reichmanns are an extended family of Orthodox Jews who have become famous for their real estate acumen and religious philanthropy. Jacobs' great-uncles, Paul and Albert Reichmann, developed Canary Wharf in London and the World Financial Center in New York. The empire grew to $10 billion in 1991, collapsed when debts drove Olympia & York into bankruptcy, and then slowly recovered to at least $880 million in 2005.

Most of the descendants of Jacobs' generation — he has dozens of cousins ​​— studied at local parochial schools known as yeshivas and later began working in real estate with their families. After yeshiva, Jacobs moved to New York, where he took a job as a stock analyst at Goldman Sachs and then entered business school. There he decided to work for the biggest name in value investing: Warren Buffett, chairman of Berkshire Hathaway.

Warren Buffett, chairman and CEO of Berkshire Hathaway Inc.

Warren Buffett, chairman and CEO of Berkshire Hathaway Inc., speaks during an interview with Bloomberg Television in New York, U.S., Wednesday, August 30, 2017. (Christopher Goodney/Bloomberg via Getty Images/Getty Images)

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BRK.B BERKSHIRE HATHAWAY INC. 398.10 -0.23 -0.06%

Berkshire Hathaway, Inc. Class B

“He wrote Warren a letter that said 'you are my role model and I would like to make you a value proposition – I will pay you $500 a week for the opportunity to intern for you,'” said Robert Salamon, one of Jacobs' cousins.

Buffett declined the offer and returned the $500 check. But he hinted that he could find a project for Jacobs if he were ever in Omaha, Nebraska, where Berkshire is located. Jacobs showed up in the summer of 2002 and got a job doing financial analysis for his idol. After Jacobs left to start his own investment firm in 2009, Tracy Britt took over.

Penny stocks were plentiful after the 2009 financial crisis, but Jacobs saw fewer opportunities as low interest rates drove up stock prices. Sometimes he would go years without buying anything, people familiar with the matter said. It's a lesson he learned from Buffett, who held back when valuations were high and pushed ahead during crises.


Stock prices fell in 2022 when the Federal Reserve raised interest rates, then rebounded, prompting Jacobs to return to Reichmann's old playbook: buying office real estate on the cheap.

Jacobs told investors that San Francisco could take 10 years to recover, according to his marketing materials. The key to the trade will be to buy cheap and hold out until the tech companies return.

San Francisco

San Francisco is the epicenter of a nationwide commercial real estate meltdown (iStock/iStock)

“His entire professional career has revolved around value investing in the public markets,” said Max Raskin, a Jacobs consultant on the project. “This is the first time he has managed to make worthwhile investments in real estate.”

Jacobs raised commitments for his strategy from the Reichmann family and other Toronto real estate clans. Additional funds came from US and Latin American family offices.


The biggest short-term risk Jacobs flagged to co-investors is that the window of opportunity closes before he can buy. Rising interest rates have frozen property sales, making mortgages more expensive, but many think the Federal Reserve could cut rates this year. That could prompt fund managers and other institutional investors to return to San Francisco, they said.

Even as rates remain high, Jacobs is an outsider in San Francisco, competing with wealthy locals also looking to buy cheap buildings. He made offers on some properties but did not complete any deals, people familiar with the matter said.