2/16/2013

Boston Properties is not only buying 535 Mission St., the fenced-in lot between the Salt House restaurant and 555 Mission St. but they are going spec…

We keep hearing from analysts how hot the Silicon Valley Office Market is but is it really hot? We respectfully disagree. The 680,000 square foot Samsung building will replace the 200,000 current building at First and Tasman in San Jose. The Facebook Office expansion in Menlo Park and Apple’s new campus is Cupertino not withstanding we see a trend of companies moving from the Valley for San Francisco and even Oakland. The Burlingame office market is depressed and we forecast this trend to increase to the South Bay.

Congratulations to our friend Eric Tao. Avant Housing and equity partner Essex Property Trust have been tapped to build a 400-foot tower on Block 9 in the Transbay District, a 563-unit project that could break ground a year from now. The site is next to the Metropolitan Residential Condos (across the street from the Red Brick Warehouse as the caption picture shows). The Avant/Essex team agreed to pay $43.32 million for the site, which works out to about $100,000 per door for the project’s 420 market-rate rental units. The project also includes 143 units of below-market-rate family units, which are being developed by Bridge Housing. Eric said that the project will cost between $250 million and $300 million to build, depending on what happens to construction materials over the next year.Block 9 is one of 11 parcels (a total of 12 acres) that were freed up when the Embarcadero Freeway was torn down. Proceeds from the sale of the properties to private developers will help pay for the Transbay Terminal, the $4.2 billion “Grand Central Station of the West” under construction at First and Mission streets.

San Francisco’s Museum of Modern Art has leaked a few more details of its extensive $555 million makeover plan. New details for the additional 235,000-sqaure-feet of space reveal that SFMOMA is committed to becoming more integrated with the neighborhood by offering more art viewing space that’s free to the public and an increased number of flexile galleries for live performances and large-scale art pieces. It’s also planning a more robust education program for kids.The new building, designed by Snøhetta, will boast seven levels of exhibit and programming space and 130,000 square feet of indoor and outdoor gallery space.That will include a garden and sculpture terrace on the third floor — claiming to be the biggest public living wall of native plants in the city — and a “white box” space on the fourth floor with what sounds like an innovative lighting and sound system for live art, film screenings and special events.Meanwhile, the seventh and eight floors will have conservations studios and a new outdoor terrace that plays off SFMOMA’s current rooftop sculpture garden.On the ground floor, the museum seems to be doing everything it can to increase access and be more inviting for pedestrians passing by. There will be additional public entrances on Howard and Minna Streets and a street-level pedestrian promenade offering a pathway between SFMOMA and the Transbay Transit Center, which is now under construction.he ground floor facing Howard St. will also have 25-foot-high glass walls allowing for art displays that the public can view from the outside. For now, art planned for the space includes Richard Serra’s towering walk-in spiral sculpture. This space will also have seating for guests or groups.The museum will close this summer for renovations and reopen in 2016.

On February 15, StreetsBlog.org had a great feature on Congestion Pricing and we do believe congestion pricing should be adopted ASAP in SF. London adopted congestion pricing 10 years ago and the results are fantastic. In London, Cars and trucks pay £10 (roughly $15.60) to drive into or within the charging zone between 7 am and 6 pm on weekdays. The zone is London’s Commercial and Financial hub and, at 8 square miles, rivals Manhattan’s 8.5-square mile Central Business District. Taxis are exempt, as are qualifying low-emission vehicles. Cars registered to zone residents, who account for 2 percent of Greater London’s 7 million people, pay one-tenth the standard charge.London’s system deploys 1,360 closed-circuit cameras at 348 sites within the charging zone and on its boundaries to record the license plates of vehicles entering and moving within the zone. The plates are continuously matched against a database of monthly accounts, and “spot” payments are made via Internet or at kiosks, drawing down accounts or billing license-plate holders. This cumbersome system arose not only from the absence in the U.K. of electronic toll collection systems such as E-ZPass when the system was launched a decade ago, but also from the decision to charge for car trips entirely within the zone in addition to vehicle entries. A byproduct is the relatively meager net revenue available for transport improvements.In its first few years, the London charging scheme was a solid traffic buster  with 15-20 percent boosts in auto and bus speeds and 30 percent reductions in congestion delays. Most of those gains appear to have disappeared in recent years, however. Transport for London (TfL), which combines the functions of our NYCDOT and MTA and which created and operates the charging system, attributes the fallback in speeds to other changes in the streetscape and traffic management:TfL established that the primary reason for the continued reductions to traffic speed, which would otherwise have been unexpected given falling traffic levels, was a substantial increase in interventions that reduced the effective capacity of the road network for general traffic. These interventions ranged widely, including policies to increase road safety, improve the urban realm, and prioritise public transport, pedestrian and cycle traffic, as well as a large-scale increase in road works by utilities and general development activity. Without those “interventions,” which include extensive Olympics-related works, travel speeds likely would be a good deal higher than before the congestion charge. In any event, London isenjoying improved travel choice, access, dependability and safety, as my Congressmember friend observed.

  • The London Underground runs 5 percent more train-miles on the Tube, and traveler delays are down around one-third, versus a decade ago
  • Bus usage reached a 50-year high in 2011, with 30 percent more service and 20 percent less waiting compared to 2000-01
  • Bike trips increased 79 percent from 2001 to 2011, after having stagnated between 1993 and 2001
  • Travel fatalities and serious injuries were the lowest on record in 2011 although cycling casualties have risen in recent years, perhaps owing to increased cycling

The bus service gains stem from bus fleet expansion and provision of bus lanes, the former financed by congestion charge revenues, the latter enabled by the initial reductions in auto traffic attributable to the charge itself. Here’s how an FHWA team of experts summed up London’s congestion revenues and expenditures for one recent year (2008): Revenues from the congestion charge were £268 million (US$435 million) in 2008. When accounting for expenses (about 50 percent), the congestion charge generated about £137 million (US$222 million) in the same year, which by law must be spent on transportation in greater London. Of the 2008 net revenues, 82 percent went for bus improvements, 9 percent for roads and bridges, and the remaining 9 percent for road safety, pedestrian and cycling facilities, borough plans, and environmental improvements.

On February 15, the Registry reported that as technology companies drive commercial real estate leasing in San Francisco, unprecedented demand from tech workers is compelling the for-sale condominium market. Forty percent of the new-condo buyers that his company is seeing are employed by the technology industry, said Alan Mark of The Mark Co. Traditionally those in the financial sector represented the largest class of purchasers. Yet condo developers are not producing inventory. At the height of the late-great housing boom as 2007 closed, condo developers were offering 3,000 units for sale in the city. Since then, the number of available units has fallen in a nearly straight line. Today that figure is 212—and more than half, 108, are already under contract to sell. Fewer than 400 condominiums are under construction today, according to Mark company data, even though nearly 5,000 more condominiums have been approved.Yet, the city’s construction pipeline is made up almost entirely of apartments—3,700 in all are under construction today—and San Francisco apartment rents have been flat for three quarters.That condo developers have not stepped up to increase production in the city has surprised him, said John “Jack” Robertson, vice president of development for the Bay Area Division of Lennar Urban. “Bosa Development is an exception at the Madrone Mission Bay, he said. They “took the risk and seemed to have hit a home run.” The 329-unit development, which began construction in February 2011, has sold out.Lennar Urban is the development force behind San Francisco’s Shipyard and Candlestick Point on the city’s southeast bay waterfront. The redevelopment, including the demolition of the football stadium, contemplates 12,000 new homes, 3.15 million square feet of office and research and development space, nearly a million square feet of retail, a hotel and community facilities.Lennar is taking offers now from developers for the first lots, Robertson said. It will be up to each of them to decide whether to build rental or for-sale housing. “We really regret not begin able to start construction 24 months ago at either of these master-planned communities when we would have been entering a market with no inventory to compete against,” he said. The for-sale housing market in San Francisco recovered “like a boomerang,” said Rick Holliday of Oakland’s Holliday Development.  in the southeast quadrant.

A New York City-based real estate investor with a history of ownership in the region plans to invest as much as $250 million in equity in trophy San Francisco properties.The Pennsylvania Public School Employees’ Retirement System has approved a commitment of up to $100 million for Paramount Group Real Estate Fund VII. Paramount plans a total equity raise of $600 million to $1 billion and is looking to invest up to 25 percent each in San Francisco and Washington, D.C., with the remainder in New York City, according to a document from the Pennsylvania retirement system. The overall investment strategy for Fund VII is to invest in trophy office buildings that have property-specific issues that Paramount can effectively manage to generate value-add returns. The investor projects a net internal rate of return for investors in the commingled fund of 10 percent to 14 percent and a doubling of equity. There will be 60 percent debt placed on the commingled fund.The pension fund stated in a board document that Paramount focuses on these markets due to lower vacancy rates, higher rental rates and resiliency. The investor also believes that these markets can be volatile, which creates opportunity for experienced operators. It expects the mismatch between maturing real estate debt and the amount of financing available in the next several years to generate good chances to buy well. The only asset Paramount owns in the San Francisco market now is the 1.6 million square foot One Market Plaza office building where it also has a regional office.Paramount has a nationwide office-building portfolio valued at $10 billion, according to a pension-fund document. The fund manager sold $4.5 billion of its portfolio in 2006 and 2007 when it believed investors were overpaying for properties. Paramount employs 210 people.

We are big fans of Go Daddy.com which plans to double its employee count in Sunnyvale to 80 by yearend and expects to add even more workers in 2014 as the Scottsdale, Arizona, company claims Silicon Valley as its new “tech hub.” Even as Go Daddy christened its 8,160-square-foot downtown Sunnyvale offices Feb. 11, the company’s chief executive said it had acquired the valley’s M.dot Inc. and has already begun searching for additional office space.The new Sunnyvale location also houses workers from Outright.com, a cloud-based financial-management application company that Go Daddy acquired in July of 2012. Outright, which was located in Mountain View, had 200,000 small-business customers at the time of its purchase.The new Go Daddy offices, on the ground floor of the Sunnyvale City Center, join a growing cluster of high-profile high-tech companies locating in the central Silicon Valley town, in this case near Sunnyvale’s rapidly evolving Town Center, adjacent to a Caltrain station.Apple Inc. and Nokia Inc. each have leased a full office building of 156,000 square feet at the Sunnyvale Town Center. Just outside of Go Daddy’s front doors, San Francisco’s BRE Properties and Carmel Partners are building hundreds of apartments. An existing Target and Macy’s anchor an expanding retail cluster. More than a dozen homegrown restaurants line the town’s traditional downtown core, South Murphy Avenue, two blocks away. Go Daddy employees live both in the apartments nearby and commute from San Francisco. A mile away, huge earth moving equipment and workers in hard hats navigate around huge piles of construction debris including jagged concrete pieces and tangled rebar. LinkedIn Corp. has cleared a huge site of multiple commercial buildings at West Maude and North Mathilda avenues and is buildings its new corporate headquarters campus. Down the street, the steel beams of a curved midrise building replacing an old U.S. Post Office have been formed to house another operation for Apple Inc.

Our friend Hamid Moghadam’s Prologis has acquired a more than 1,200-acre parcel in the city of Tracy at the foot of the Altamont Pass.The acquisition comes on the heels of the Prologis announcement that it would build a more than one million square-foot fulfillment center for Amazon.com in Tracy. But Prologis Northwest Region President Scott Lamson said there is no cause and effect or relationship between the two transactions other than his company’s abiding interest in doing business in the East Bay town.The Prologis acquisition is part of the well-known Cordes Ranch and is contiguous to the Patterson Pass Business Park, which Prologis developed along Interstate 580. The Cordes Ranch property, which fronts Interstate 205, is not expected to be fully entitled until August. It should render 1,040 acres of developable land once roads and other infrastructure are complete. The purchase is also significant for what it signifies within Prologis, which is distilling its land portfolio. The company recently completed an analysis of its land holdings and has concluded that it should sell $200 million worth while keeping tracts valued at $1.7 billion, its chief financial officer, Thomas Olinger, told analysts on the call. So even as it is culling elsewhere, it is buying in Tracy.

As mentioned above, we think that contrary to what you hear, the trend in Commercial Real Estate will be away from the Valley and in the direction of SF, Oakland and Emeryville, California.   Emeryville is now close to completing one of the country’s most extensive, robust, and massive broadband fiber backbones. By employing a private partnership, Emeryville has also created an Open Access fiber network that actually offers a wider choice of internet providers at a reasonable cost. Dubbed “EmeryConnect, the new system developed by PAXIO, Inc., offers a huge broadband capacity for both businesses and residential users throughout the City.Four points of presence (POPs) in Emeryville already deliver two terabytes of broadband capacity on high-speed fiber to businesses such as Pixar Animation Studios, Novartis, Bayer HealthCare, Lawrence Berkeley National Laboratories, Clif Bar, Peets, Whole Foods, Ex’Pression College, and scores of retailers at its new Bay Street retail center among others.Two terabytes of speed means that a single Emeryville user could download all the books in United States’ Library of Congress or 3,000 high definition movies in just about one minute. The City is perhaps best known as being the home of Pixar Animation Studios, but has long had a reputation as a regional center for artists and artisans. Emeryville has also become a center in the East Bay for retail, hospitality, and commercial businesses. In addition to having several regional retail centers and major retailers (including fashion, furniture, house goods, and more), the City is home to several hotels, theatres and top-notch restaurants. In addition, major corporations, such as Novartis, Bayer, State Farm Insurance, and Leapfrog, in addition to Pixar have made Emeryville their home. Emeryville prides itself on being at the center of bio-technology and is home to several cutting edge innovators, including the Joint BioEnergy Institute (JBEI), part of the U.S. Department of Energy.The City is also a transportation hub, sitting at the crossroads of Highways I-80, I-580, and I-880. The City’s Amtrak Station is among the top 10 busiest in the nation, serving both intercontinental and intra-city (commuter) rail-lines. The City’s free Emery Go-Round shuttle carries riders from the MacArthur BART station and then throughout Emeryville and the City is home to several Flex-Car (car share) pods.

2/5/2013

Much happened in the SF Real Estate Market in the last couple weeks.

The Divisadero Street neighborhood knows as the Western Addition and rebranded as Nopa has drawn many businesses. SF Business Times reports that Wine Kitchen restaurant is opening along with the Mill a coffee shop and Barrel Head a brewery.They join retailers Rare Device and San Franpsyco  and restaurants such as MiniBar, Little Star Pizza, Regazza, Mojo Bicycle Café, the Independent. Rents have skyrocketed to around $40 per square foot.The new Bi-Rite Market and Creamery under construction at 542-550 Divisadero is the street’s most anticipated newcomer.The neighborhood is also awaiting a few potentially mixed-use development projects that have been put on hold. The biggest question is the fate of the Harding Theater, which has been sitting vacant for a decade. While several proposals have been offered, neighbors report the landlord isn’t biting.There’s also the redevelopment of the Department of Motor Vehicles on Fell Street, which was given to Build Inc. to turn into a mixed-use project with housing and retail in 2008. That project was put on hold because of the down economy, but industry sources say it should pick up again soon.

Next Month, Sam Zell’s Equity Residential, the Chicago based REIT will close on the acquisition of 60% of the portfolio currently owned by Archstone. Sam Zell is now one of SF’s biggest apartment developer. Note that AvalonBay will acquire the remaining 40% of Archstone’s portfolio.

Yammer’s new space occupies 80,000 square feet, taking the entire third floor at 1355 Market St., the 11-story, 1937 Art Deco edifice which is also home to Twitter. The structure is part of a two-building complex called Market Square which the Shorenstein Co. is completely renovating. When Shorenstein acquired Market Square, a 1 million-square-foot office and retail complex in San Francisco’s transitional Mid Market neighborhood it was  a merchandise mart catering to home furnishings manufacturers, distributors and retailers, Market Square was just 12 percent occupied across its two buildings.The former owners’ vision was to convert both buildings to higher end office and retail space but plans were curtailed by the sharp market downturn in 2008. By 2011, Shorenstein had negotiated to buy Market Square and use its capital to renovate it to Class A office standards. At the same time, Twitter.com, the San Francisco social media firm, was looking to expand into a new headquarters location. A deal was consummated and Twitter moved into its space in summer 2012 and has since expanded several times. Since Twitter signed, Market Square has added three other major tenants: CallSocket, a high-tech incubator providing real estate and financing for startups; One Kings Lane, an online membership-only retailer.

The Bay Area has some of the lowest vacancy rates in every Real Estate category. According to SF Business Times  as retailers take on more space, what’s left is less than desirable  leaving little to offer new stores and curbing further growth.The market absorbed 485,000 square feet of space in the fourth quarter of last year, shopping center vacancy held steady at 5.9 percent, reflecting no changes from previous months. That’s partially because more than 583,000 square feet of new space came to the market during the same period, and the majority of that space was pre-leased, such as Paragon Outlets in Livermore. But it’s also because the remaining available is least desirable for retailers.At just 3.3 percent, San Mateo County is leading with the lowest shopping center vacancy rate in the region.San Francisco is next, with a 4 percent vacancy rate and very few good spaces left to meet demand. With asking rents around $46 per square foot, the city is also the most expensive market in the region. And other than some development on mid-market, it’s unlikely that San Francisco will see much retail growth.Areas that should see more growth are those with a larger amount of developable land, such as Santa Clara County, the East Bay and North Bay.The North Bay’s vacancy stands at 4.9 percent, while Santa Clara had a 6.4 percent vacancy rate. The East Bay’s loss of 48,000 square feet also has led to a 6.4 percent occupancy rate. However, the area posted the largest annual retail gains, with 510,000 square feet of absorption.New developments will lead to more desirable space for retailers hoping to set up shop especially in SF. We also think that older and neglected neighborhoods will see a renovation of their retail stock e.g. Hayes Valley, Van Ness etc.

Emerald Fund  is ready to start the $200 million transformation of 100 Van Ness from a concrete office tower which was the former headquarters of AAA to about 400 deluxe apartments.

2/8/2013

Much has happened in Commercial Real Estate in SF in the last two weeks:

About 18 months after buying 115 Sansome St. for $230 a square foot, Harvest Properties according to SF Business Times is selling the building for about $400 a square foot.The 15 story, 126,716-square-foot building was constructed in 1912 as the headquarters of the Standard Oil Company. Harvest marketed the building as an alternative to SoMa creative space.

SF Business Times also reports that SKS Investments is seeking a buyer for a Transbay development site approved for the second-tallest tower in the zone fast becoming San Francisco’s new central business district: 181 Fremont St., which was recently entitled for a 54-story mixed-use tower with 417,000 square feet of office space and 74 deluxe condominiums. The property is currently occupied by a 41,000 square foot building that houses the technology incubator RocketSpace.

The Fremont Street property could command upwards of $75 million, based on comps in the Transbay neighborhood. Hines and Boston Properties are paying $190 million, or $135 a buildable square foot, for the Transbay Tower site at First and Mission. Kilroy Realty Corp. paid $130 per buildable foot for the site at 350 Mission St., which was subsequently pre-leased in its entirety to Salesforce.

The Fremont Street project is part of the Transbay Transit Center District Plan, which consists of 145 acres surrounding the new Transbay Transit Center currently under construction. In total the plan calls for more than 2,600 housing units and more than 3 million square feet of office space.

SF Business Times also reported that two towers will rise at 1411 Market Street with 754 residential units. This is at the corner of Market and Tenth right next to Market Square.

SF Business Times also unveiled Forest City’s plans for the redevelopment of the 69 acre site at Pier 70: a proposal for over two million square feet of office space, 275,000 feet for “artisans, retailers, designers, and boutique manufacturers,” and up to 1,000 new housing units. Phase one of the project, which would commence in 2016, includes the conversion of the hisoric 100,000-square-foot Building 2 into about 100 units of housing and the conversion of the historic 160,000-square-foot Building 12 into “a loft-style creative office building with a ground floor marketplace that spills out into the public plaza,” the Market Square.Office and residential components of the project would be concentrated to the north and south of the site with new buildings rising up to 235 feet, while a public promenade would be built along the bay.

Boston Properties has completed its acquisition of the 535 Mission Street development site next to Salt House for $71.0 million and expects to recommence construction on the approved 27 story office tower in the next few weeks hoping to finish the project by the fall of 2014. Having prepped the site for construction in 2008 Beacon Capital Partners stopped consturction with the markets in turmoil and rents headed down. The 378 foot tower will yield approximately 307,000 square feet of office and retail space.

1415 Mission at the corner of 10th Street is fully entitled for 117 residential units (studios, one-bedrooms, and two-bedrooms) and underground parking for 46 (self) or 101 (valet). We expect  a building permit any day.

As we previously reported there is a very good chance what you know today as the Cal Train station along will be eliminated along with the railyards, the ramps at 6th and Brannan and 4th and King and a stretch I-280 north of 16th. In its place there may be 30 acres of land with mixed use neighborhoods complete with  housing, offices, entertainment, and hotels…

801 Brannan across from Hoogasian flowers and present site of the SF Concourse and One Henry Adams will be the site of five six-story/sixty-eight-foot buildings with up to 819 residential units over ground floor retail and 798 parking spaces. In terms of unit mix: 455 one-bedrooms, 315 two-bedrooms, 20 three-bedrooms, and 29 lofts as proposed. It could be also revised to four buildings with up to 821 units (107 studios, 319 one-bedrooms, 316 two-bedrooms, 69 three-bedrooms, and 10 lofts), up to 150 of which would be affordable. There are 682 spaces for cars (including 6 for carshare) and 729 spaces for bikes.The project would yield 50,000 square feet of ground floor retail/commercial and 70,000 square feet of open space, at least two-thirds of which would be publicly accessible.

Socket Site reports that The San Francisco Giants’ plan to develop San Francisco’s Seawall 337, also known as the Giants Parking Lot A by 2015.The 27-acre development would yield up to 1,000 housing units, 125,000 square feet of retail (down from 240,000), 1.7 million square feet of office space (up from a million), a garage with 2,690 parking spaces, and over eight acres of public open space. Once the Term Sheet is endorsed, the Giants can commence the formal Planning process (entitlements, environmental impacts, design approval, etc.) with the team hopeful that they will still be able to break ground by 2015, finishing the development by 2022.

Three parcels in the mid-market are for sale and offers are due on February 15. They consist of 970 Market Street and 2 other parcels between 966 and 974 Market Street. Seller is Dallas based Hedge Fund Lone Star. The 25,557 square foot site is not entitled but has potentially over 100 feet of Market Street retail frontage along with perhaps 250 residential units or over 250,000 gross square feet of office and retail space.

72 Towsend also known as the home of Federated Media will soon add seven stories and seventy-four units atop the existing 31-foot building. Construction should start in March according to Socketsite and end in 2014

San Diego-based Westcore Properties has spent $868.6 million for multiple properties in the Bay Area and Sacramento. The company also sold about $246 million worth of properties last year.

  • $13 million (or $76 per square foot) for Central Plaza in Union City, a 170,000-square-foot mixed-use project.
  • $45.6 million (or $75 per square foot) for the Kato Industrial Park in Fremont, a 605,000-square-foot industrial park on 42 acres with room to expand.
  • $110 million (or $225 per square foot) for the 488,000-square-foot, 24-story Clorox headquarters building at 1221 Broadway in Oakland City Center.
  • $700 million (or $58 per square foot)  in and around the greater Sacramento area.

 

The Chronicle reports that Autodesk Inc. is adding 27,000 square feet of office space on Pier 9 off the Embarcadero in San Francisco,The new space will add to 108,000 square feet at One Market for a total of more than 287,000 square feet in San Francisco, the report says.

Yelp already the anchor tenant in San Francisco’s 140 New Montgomery St. building, has agreed to take an additional floor in the historic office tower, bringing its total presence to 110,000 square feet.Yelp retains an option to lease a 10th floor. As it stands now, Yelp is to occupy floors four through 12 of the building beginning Oct. 1.Yelp committed to an eight-year occupancy, with an annual rental rate that begins at $54 a square foot and rises to $66.41 a foot by the eighth year. The landlord granted an initial $5.8 million, or $60 a foot, tenant-improvement allowance, according to records filed by Yelp with the U.S. Securities and Exchange Commission. The building is approximately two-thirds pre-leased.

The Registry reported that Boston Properties  is so bullish on the future of San Francisco that it is investing more than twice as much capital in the city’s office market as it is in the rest of the country combined…The Boston-based company has owned the iconic Embarcadero Center since 1998, is redeveloping 680 Folsom St., which is leased to Macys.com and Riverbed Technology, and is building the 1.4 million square foot Transbay Tower with the Hines company. A Boston Propery executive citing a new book from University of California, Berkeley, economist Enrico Moretti, “The New Geography of Jobs,” said, “Commodity suburban office space is becoming obsolete.”

Kevin Brannan, managing director of JLL’s tenant-advisory group  is not as optimistic and  argued that the market was overly reliant on Salesforce.com Inc. and less financially creditworthy technology tenants for strength in large-scale leasing. “We looked at the 24 largest leases signed in the last two years in excess of 100,000 square feet. Thirteen of the 24 were tech leases. Five of them don’t have credit. Five are Salesforce, and three have credit that aren’t Salesforce,”he said. Of the remaining 11 leases completed with nontechnology companies, the only expansion was by the city of San Francisco. “So, it is thin,” he said. At the same time, multiple tech companies including Airbnb Inc. and Zynga Inc. have oversubscribed to real estate, Brennan said. Based on a net increase in occupancy of 3.4 million square feet in the last two years and an allocation of 175 square feet for each employee, San Francisco companies must create not quite 20,000 jobs—excluding the 7,500 jobs that Salesforce.com’s leasing indicates it expects to create, he said: “I think we are going to see big block subleases.”

Trumark Urban plans to build more than 550 for-sale condominiums in San Francisco neighborhoods from Cow Hollow to the Dogpatch.Trumark Urban, a spinoff condo developer launched by the Trumark Cos., has secured six sites, entitled and in the process of becoming so, in the Nob Hill, Cow Hollow, Hayes Valley, Mission District, South of Market and Dogpatch neighborhoods. Construction is set to start as early as Srpring.These six projects represent an investment commitment of more than $300 million through build-out. Additionally, Trumark Urban is actively negotiating to acquire other projects that would allow them to break ground this year. Their goal is to have a pipeline of more than 1,000 condos in San Francisco by the end of 2013.According to Polaris Group, a land-acquisition, entitlement-services and sales company for California condominium developers, there are five for-sale condominium projects under construction in San Francisco with 302 units and 19 apartment developments with not quite 3,600 units. Another 38 condo projects with 4,413 units have been approved, according to Polaris. Twenty-one additional apartment projects have been approved, with 4,665 units.

We have long observed that SF Art galleries are leaving Union Square because of rising rents fueled by San Francisco’s tech boom. Tenants at 49 Geary for example indicated a 32 percent rent increase from $31 a square foot to $45 a square foot as the reason why they are moving their galleries South of Market in the Dogpatch or in Portrero.

 255 California St. the 14-story 175,000-square-foot building sold for $76 million, a 44 percent increase over the $43 million paid for it in 2010.

Forest City according to Socketsite proposes a project that spans a 4-acre site roughly bounded by Mission, Fifth, Howard and Mary Streets at the nexus of San Francisco’s South of Market Area (SOMA). The project included over a million square feet of office space, 750 new dwelling units, and 150,000 square feet of ground floor retail, educational, and cultural uses. Forest City plans five new buildings ranging from 50 to 400 feet.mAs part of the project,the Chronicle building, theMission Street building and the Dempster Printing Building at 447-449 Minna Street would be rehabilitated while six other buildings on the site would be razed to make room for the new construction.

The square footage of renovated space and new construction would total 1.85 million square feet. In addition, the project would include up to 888 parking spaces for cars in three subterranean levels, around 270 spaces for bikes, and 34,000 square feet of privately-owned publicly accessible open space including 22,000 square feet atop the Chronicle building which would be accessible to the public during business hours and to tenants and residents between 8:00 a.m. and 10:00 p.m.

Seven existing surface parking lots on the site with a total of approximately 256 parking spaces would meet their demise. And Mary Street between Mission and Minna Streets would be closed to vehicular traffic and converted to a pedestrian alleyway.

Public planning meetings for the project are slated to start in two weeks. Assuming all approvals by the end of next year, construction could commence as early as 2015 and be finished by 2026.

The Regisry reports that Martin Building Co.owner Patrick McNerney says he is in no way spooked by the fat pipeline of new apartments slated for delivery in San Francisco over the next two years. San Francisco-based Martin expects to plow $60 million into the city’s multifamily market in the next 16 months to build 121 apartments in the city’s gentrifying Mid-Market neighborhood.That includes the $8 million that the company paid for the 1415 Mission St. site plus the cost of development. The Mission and 10th Street project is to include a rooftop gym and a barbeque pit.

Cassidy Turley estimates there are more than 15,000 apartments under construction in the Bay Area today and that 5,400 of them will be delivered in San Francisco in the next 30 months or so. The developer expects to start construction in May or June and to take about 16 months to finish. Martin Building will be developing the property with its own capital and construction financing from the U.S. Department of Housing and Urban Development. McNerney declined to provide details. Fifteen percent of the units, or 18 of the total number, will be set aside as “affordable” under a requirement from the city.

North East Medical Services has paid $2.85 million, or $258 a square foot, to acquire the approximately 11,000-square-foot office building located at 369 Broadway St. in the Jackson Square District.The North Waterfront-Jackson Square district has not participated in the property boom to the same extent as the city’s South Financial and South of Market districts. The vacancy rate for office buildings in this part of San Francisco is above 11 percent and rents are in the low $40 a square foot range.

A Chicago-based private equity real estate investment firm plans to eschew zoning that would allow it to build up to 44 condominiums on a prominent corner at the cusp of the Union Square, Chinatown and Financial District in San Francisco. Instead, Pearlmark Real Estate Partners plans to reposition 300 Grant Ave., fully leased to a mix of retail and office tenants now, to accommodate one to three larger-format retailers. It may retain offices on the top, or third, floor. It is directly across the street from the Banana Republic flagship store.The 39,000-square-foot location including a basement fourth floor is within a block of the main Chinatown gate, which is easily visible from its corner at Sutter Street and Grant. The street is generally less congested than those closer to Union Square, making for an exceptional pedestrian shopper experience.

 

 

 

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