Here’s what happened in the San Francisco Bay Area Commercial and Residential Real Estate Market since 2/10:
The Hines Salesforce tower is 60% leased. We hear that everyone except Salesforce is paying about $100 per square foot per year. Salesforce leased the bottom half.
A condo or apartment tower consisting of 330 units will be built at 95 Hawthorne site of the SF passport agency almost across the street from Blu.The corner of Folsom and Hawhtorne by the Riverbed building is getting a lot of new developments assuming of course the market does not correct. 655 Folsom will be about 90 apartments over commercial on the site of Canton Seafood is also in the plans along with a condo project on top of the Hines building which is adjacent to Blu.
The Central Soma Plan has not yet been approved despite the fact that all major developers have purchased parcels hoping they will be able to raise height limits. If the real estate market corrects many of these projects will not be economically feasible to build and the question will be what are developers going to do with those lots?
Many of us who have dealt with Federally owned leases or fee simple properties have been particularly frustrated. For example, we tried to lease the vacant cafeteria of a building owned by a prominent East Coast developer in SF. The developer was very helpful but indicated the property was part of a Federal Lease. We approached the GSA Office in SF who was very helpful as well and set up a meeting with all Federal stakeholders. One entrenched Federal Agency’s rep refused to let us lease the property despite the fact that it has been vacant for years and argued that priority for running the space should be given to a Federal agency helping the blind. No one dared argue how the blind could run a cafeteria. Needless to say, we were delighted when congressman Jeff Denham introduced HR 4465 to make the Feds sell vacant or underutilized properties. We are tracking the bill and will share update with you.
The Transbay Transit Center had some setbacks. One was the fact that none of the contracts assigned the cost of maintaining the gardens to a group. Developers refused to pay indicating it was not part of their contract. Someone at City Hall dropped the ball and we have yet to find who the person is and who will pay for the maintenance of the gardens. This is akin to the person at City Hall who did not charge the NFL any impact fees for the Super Bowl. BTW, the Mayor refuses to divulge the name of the individual(s) even when pressed by Aaron Peskin… Now we that Transbay is borrowing a $171M as a bridge loan which will cost taxpayers $37M. Phase 1 of the Transbay is very late and well over budget. There is tremendous money coming in to the coffers of SF from parcel sales, property tax, sales tax, hotel tax, business tax etc. and it is hard to understand how Transbay can be so much over budget. To be fair, the cost of materials has gone up but not enough to explain the project’s cost and why SF is struggling with money for this project in the the middle of the biggest economic boom the City has experienced. We would love to hear thoughts from City leaders and readers here about this issue.
Oakland Office Rents are now as high as $50 per square foot per year which explains why the 228,000 sq. ft office building at 2150 Webster is selling for an undisclosed sum for now.
The area around the End up and Clara street in SF has never been appealing but the 100 unit condo building approved for the site at 988 Harrison directly across the End up may “end up”changing this. You will notice that several homeowners on Clara street are remodeling their homes…
63 condos over 8,000 square feet of commercial space will be built at the corner of California and Polk (1567 California) almost directly across the Lumiere Theater.
247 condos+ a 200 room hotel over commercial will be built by the Warfield Theater on Market and Taylor.
35 Dolores is the site of a condominium which faces construction defects litigation following water intrusion (35 units). This type of litigation is very common with new properties. It has been our experience on other properties that often sub-contractors do not align windows or pour concrete properly on decks resulting in water intrusion. It would make business sense to have this phase of construction closely supervised by a team of SWAT project managers because it is the source of so much litigation but we haven’t seen that anywhere. Some think it is a good investment to purchase units in a building that is in litigation if you find a lender willing to lend because you get a steep discount.
2000 Franklin in Oakland is selling for $400. It is a 33,000 square foot class B building. We will follow up with the exact price after the deal closes. 3300 Webster sold for $45o per square foot and Uber’s HQ sold for $325.
875 Howard Streets lower floors will be office space soon about 30,000 sq. feet will be available. 899 Howard is just the opposite: the top 2 floors of the Burlington Coat factory will be office space.
Zynga is selling its 670,000 sq. ft. headquarters at Townsend and 8th. Zynga could potentially triple its money since it paid $228 million or $340 per square foot.
Gagosian Gallery is opening across from Moma May 18 on the Ground floor level of Crown Point Press and John Berggruen will be co-located in part of the space Roe Bar has vacated in the same building. Full disclosure, our Brokerage dealt with Larry’s rep and John when we were selling 667 Howard. The Gagosssian move is very significant for SF. SF is considered a B market for Art well behind NY and LA: It is a fact that most well known artists live and work in NY where Gagossian started his first gallery. It is also a fact it is hard to find good art in SF despite great SF Art Buyer demographics. It is very likely that this is all going to change because of Gagosssian’s opening. Larry Gagosian has built the best and largest gallery in the world. He has 16 locations around the world and represents the best artists and collectors in the world. It is fair to say that not one major work of Art trades without him being somehow involved in the transaction. Larry Gagossian is also a self-made man. Legend has it that he used to sell posters on the parking lot of UCLA in the 70’s before he moved to NY and started working with another mythic figure who revolutionized Art dealing: Leo Castello. Larry Gagossian is widely regarded as Castelli’s spiritual heir. If SF if mindful not to destroy the area around the new SFMOMA where Gagossian and Berggruen are located it will become the new Art district in SF very much like Union Square was 30 years ago. To that end, SF would be well served to work on traffic congestion and pollution problems that plague the area. There are too many cars going to the Bay Bridge or into SF during commute hours and especially event. It is urgent for SF to implement congestion pricing and act like the world class city that it could be.
image: Gagosian gallery
Transbay finally sold Parcel F at 546 Howard Street for $160 million. It is the last available parcel and is located on the lot right next to the old DV8/Temple night club. Plans change all the times but the latest is a mixed project which is the latest trend: hotel+condos+office+retail. After all, the site is zoned for 750 feet.
Market and Sanchez will be 14 condos over commercial.
SF’s 3 most pressing issues in our opinion are homelessness, cost of public employee pensions and traffic congestion. Regarding traffic congestion we firmly believe congestion pricing will solve the issue and its direct side effect Chinese grade pollution. There are some efforts by SFMTA to address the problem. It is not enough but it is a start: redirecting Freeway traffic away from 2nd street to prevent congestion.
Royal Automotive at 1525 Howard plans an upward and inside expansion to consolidate its operations.
The 140,000 sq. ft. Warehouse at 1201 Bryant aka the McGuire building sold for $47M $320 per square foot.