BTinSF
09-28-2007, 06:48 PM
S.F. cruise terminal finds new berth
San Francisco Business Times - by J.K. Dineen
riday, September 28, 2007
A blue-ribbon panel on the future of San Francisco's cruise ship industry has identified Pier 27 as the best place for a new terminal, a recommendation that could give a major boost to Shorenstein Properties' proposed mixed-use development on Piers 27-31.
The panel, led by former Port Commissioner Frankie Lee and Chamber of Commerce President Steve Falk, said that Pier 27, which is in relatively good shape, represents the cheapest and best place to accommodate the increasing number of luxury cruise vessels that have been stopping in San Francisco over the past few years.
The debate comes as Shorenstein Properties and partner Farallon Capital Management are negotiating with the port to transform Piers 27-31 into a recreation, office and cruise ship facility. The panel didn't specifically address the Shorenstein project, details of which have not been made public. But it was clear that funding the terminal would likely require a public-private partnership of the sort that Shorenstein is proposing.
In addition, a cruise ship terminal could give the project a better chance of passing muster with the State Lands Commission. That agency, which must approve any waterfront development, tends to favor maritime and recreation uses over offices.
While the details of the Shorenstein project are still being worked out, the revised plan would likely include more than 300,000 square feet of office space and a large recreation facility. In October 2006, Shorenstein proposed 440,000 square feet of office space as the economic engine that could pay for the $446 million project, which included a $145 seismic upgrade of the rotting piers. Under a revised plan, the amount of office space is likely to be significantly reduced to accommodate the cruise ship terminal.
The West Coast cruise ship trade has been stopping with increasing frequency in San Francisco as both Alaska and Mexico have exploded as cruising hot spots. The cruise ship industry currently pumps $31 million into the city's economy and between 1998 and 2006 the number of cruise passengers visiting the city annually rose from 34,000 to 250,000.
While San Francisco represents a popular stopover, the city's antiquated cruise terminal at Pier 35 is too small and in poor shape. The Port of San Francisco estimated that Pier 35 will be completely obsolete in five to seven years. Pier 35 could be repaired for $45 million, but even then it would remain too short, with a shed that is too small and an apron that is too narrow, according to the panel.
"Pier 35 is like a time bomb -- it's going to blow up if we don't do anything, and bye-bye cruise ship industry," said Lee.
The panel looked at three options for Pier 27. The cheapest, bare-bones development would cost $26.6 million, but would not meet cruise ship industry standards. The other two options would cost $57.9 million for a moderate renovation or $106.6 million for the most expensive alternative, which would include a berth at Pier 29. At a Port Commission meeting Sept. 25, Falk said San Francisco should choose the middle alternative. The city "needs a stronger seat at the table" or will "sit back and let the ship pass us by," he said.
"The industry is growing and we need to grow with it," said Falk.
Shorenstein Executive Vice President Tom Hart said the panel report shows that a new cruise ship terminal at Pier 27 "is clearly the direction the port has to head in.
"Every great American city has a library, a symphony, a baseball team, and every great port city should have a first-class home cruise ship facility," said Hart. "I think a facility at Pier 27 is the place for it, and we would like to be part of the equation."
The city has had several false starts in its efforts to develop a new cruise terminal. The most recent deal was at Piers 30-32, where Bovis Lend Lease had agreed to develop a terminal as part of a larger office and condo project. That agreement ran aground when the developer's estimated costs for seismically retrofitting the dilapidated piers doubled to $80 million. The aborted terminal at Piers 30-32, however, did generate some money for a cruise ship terminal. As part of that agreement, Bovis Lend Lease was allowed to develop the Watermark condos on Port-owned land in exchange for pumping a portion of profits into a fund for the cruise ship terminal. That money, $17.8 million, could be transferred to Piers 27-31.
Larger cruise ships are expected to hit the West Coast in 2008, including the Genesis line currently under construction. The Genesis ships are 1,035 feet long and hold more than 5,400 passengers. Longshoreman Willie Adams, secretary-treasurer of the International Longshore and Warehouse Union, said funding a stronger cruise ship facility has been "the No. 1 issue" that always comes up as he looks at infrastructure needs.
"We feel this is at the top of our priority list," said Adams.
jkdineen@bizjournals.com / (415) 288-4971
Source: http://www.bizjournals.com/sanfrancisco/stories/2007/10/01/story1.html
San Francisco Business Times - by J.K. Dineen
riday, September 28, 2007
A blue-ribbon panel on the future of San Francisco's cruise ship industry has identified Pier 27 as the best place for a new terminal, a recommendation that could give a major boost to Shorenstein Properties' proposed mixed-use development on Piers 27-31.
The panel, led by former Port Commissioner Frankie Lee and Chamber of Commerce President Steve Falk, said that Pier 27, which is in relatively good shape, represents the cheapest and best place to accommodate the increasing number of luxury cruise vessels that have been stopping in San Francisco over the past few years.
The debate comes as Shorenstein Properties and partner Farallon Capital Management are negotiating with the port to transform Piers 27-31 into a recreation, office and cruise ship facility. The panel didn't specifically address the Shorenstein project, details of which have not been made public. But it was clear that funding the terminal would likely require a public-private partnership of the sort that Shorenstein is proposing.
In addition, a cruise ship terminal could give the project a better chance of passing muster with the State Lands Commission. That agency, which must approve any waterfront development, tends to favor maritime and recreation uses over offices.
While the details of the Shorenstein project are still being worked out, the revised plan would likely include more than 300,000 square feet of office space and a large recreation facility. In October 2006, Shorenstein proposed 440,000 square feet of office space as the economic engine that could pay for the $446 million project, which included a $145 seismic upgrade of the rotting piers. Under a revised plan, the amount of office space is likely to be significantly reduced to accommodate the cruise ship terminal.
The West Coast cruise ship trade has been stopping with increasing frequency in San Francisco as both Alaska and Mexico have exploded as cruising hot spots. The cruise ship industry currently pumps $31 million into the city's economy and between 1998 and 2006 the number of cruise passengers visiting the city annually rose from 34,000 to 250,000.
While San Francisco represents a popular stopover, the city's antiquated cruise terminal at Pier 35 is too small and in poor shape. The Port of San Francisco estimated that Pier 35 will be completely obsolete in five to seven years. Pier 35 could be repaired for $45 million, but even then it would remain too short, with a shed that is too small and an apron that is too narrow, according to the panel.
"Pier 35 is like a time bomb -- it's going to blow up if we don't do anything, and bye-bye cruise ship industry," said Lee.
The panel looked at three options for Pier 27. The cheapest, bare-bones development would cost $26.6 million, but would not meet cruise ship industry standards. The other two options would cost $57.9 million for a moderate renovation or $106.6 million for the most expensive alternative, which would include a berth at Pier 29. At a Port Commission meeting Sept. 25, Falk said San Francisco should choose the middle alternative. The city "needs a stronger seat at the table" or will "sit back and let the ship pass us by," he said.
"The industry is growing and we need to grow with it," said Falk.
Shorenstein Executive Vice President Tom Hart said the panel report shows that a new cruise ship terminal at Pier 27 "is clearly the direction the port has to head in.
"Every great American city has a library, a symphony, a baseball team, and every great port city should have a first-class home cruise ship facility," said Hart. "I think a facility at Pier 27 is the place for it, and we would like to be part of the equation."
The city has had several false starts in its efforts to develop a new cruise terminal. The most recent deal was at Piers 30-32, where Bovis Lend Lease had agreed to develop a terminal as part of a larger office and condo project. That agreement ran aground when the developer's estimated costs for seismically retrofitting the dilapidated piers doubled to $80 million. The aborted terminal at Piers 30-32, however, did generate some money for a cruise ship terminal. As part of that agreement, Bovis Lend Lease was allowed to develop the Watermark condos on Port-owned land in exchange for pumping a portion of profits into a fund for the cruise ship terminal. That money, $17.8 million, could be transferred to Piers 27-31.
Larger cruise ships are expected to hit the West Coast in 2008, including the Genesis line currently under construction. The Genesis ships are 1,035 feet long and hold more than 5,400 passengers. Longshoreman Willie Adams, secretary-treasurer of the International Longshore and Warehouse Union, said funding a stronger cruise ship facility has been "the No. 1 issue" that always comes up as he looks at infrastructure needs.
"We feel this is at the top of our priority list," said Adams.
jkdineen@bizjournals.com / (415) 288-4971
Source: http://www.bizjournals.com/sanfrancisco/stories/2007/10/01/story1.html
