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Posted Aug 8, 2008, 11:02 PM
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BANNED
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Join Date: Jun 2006
Location: San Francisco & Tucson
Posts: 24,088
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Quote:
Originally Posted by Reminiscence
From Socketsite.com: In The Pipeline For First And Folsom: 550-feet And 600 Units
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Here's the full article. I would have posted it earlier except I have been having a disorienting week and didn't even realize it was Friday, i.e BizTimes day:
Quote:
Friday, August 8, 2008
Another big tower slated for San Francisco's Transbay
City invites developers to reach for sky at 'Block 8'
San Francisco Business Times - by J.K. Dineen
The San Francisco Redevelopment Agency is seeking a developer to tackle a prime 600-unit residential project at First and Folsom streets, the first step in a planned 2,600-unit highrise Transbay District the city is counting on to help pay for a new Transbay rail and bus terminal.
On Sept. 8, the agency will issue a request for proposals for Block 8, one of a dozen state-owned lots freed up when the elevated Embarcadero Freeway was knocked down after the 1989 Loma Prieta earthquake. While nine of the 12 parcels are set to be eventually redeveloped with housing -- two will be parks and one a 700,000-square-foot office tower -- Block 8 is the boldest. It calls for a 550-foot tower reaching above two mid-rise affordable apartment buildings and a row of townhouses that will open onto Folsom Street, a thoroughfare that will eventually be reconfigured as a retail mecca with wide sidewalks, greenery and outdoor seating.
Besides the Transbay Terminal and Tower site itself, where Hines is negotiating to build a 1.7 million-square-foot tower, Block 8 is the most valuable parcel the development agency plans to sell to developers as part of the Transbay District, according to Michael Grisso, project manager for the Redevelopment Agency.
"It will have the tallest tower and it's right on Folsom Street, which will be the retail heart of the neighborhood," said Grisso. "It will have views of the water. We think it's the best (location)."
Grisso said about 75 developers have requested information on the project. He declined to speculate on the site's value.
"We think it's worth a lot," said Grisso. "We all know the residential markets are struggling, but San Francisco is pretty resilient -- especially this neighborhood."
A shaky marketplace
Given the credit crunch and slowdown in absorption in highrise condo projects from coast to coast, the agency's request for proposals is coming at an awkward time, though Grisso hopes the market will turn by the end of 2009, about the time the eventual developer is expected to get entitlements for the site.
The high water mark for the sale of downtown sites for entitled condo projects came nearly two years ago when Jackson Pacific sold 45 Lansing St. for $30 million, or about $125,000 per anticipated unit. Developers said that the current market downturn had reduced the value of prime entitled downtown sites to between $100,000 and $110,000 per unit. One developer set the value of Block 8 at $35 million, payable when the land is entitled.
"It's a tough deal for a whole bunch of reasons," said Tony Crossley, a broker with Colliers International who has brokered a number of land deals in the area. "Construction costs are very high, condo prices and the rate of absorption are off and then you roll in the increased affordability (probably around 25 percent) and you really have to do some hard math."
He added: "These are very big projects in a market that is uncertain at best -- your cast of characters is going to be a pretty short list."
Broker and developer Chris Foley, a principal of Polaris Group, said the project would be "impossible to finance today," but he said the timing of the agency could work out.
"There may be a lot of projects going up, but there are holes in the pipeline over the next four, five, or six years, and that could be a compelling story for Block 8," said Foley. "But it will most likely be somebody with outside money or foreign investors."
Sources said the project would be a natural for Forest City or Related Cos., both of which specialize in complex public-private partnerships. One developer reportedly making a run at the project is Avant Housing, a joint venture between TMG Partners and AIG Capital backed by CalPERS.
"TMG and Avant would be a great buyer because they believe in the longterm San Francisco market," said Foley. "They have a vision and they have the money."
Land use consultant Nina Gruen of Gruen + Gruen said the growing demand for downtown housing from "baby boomers and Generation Y" make the site viable. "The market is not in great shape, but we think it will be by the time they get through selecting the developer and going through the entitlement process," she said.
A quarter of units affordable
Under a 2007 agreement between the city and the state Department of Transportation, 35 percent of the total housing built on the Transbay District redevelopment sites must be affordable. However, not every individual project has to meet that threshold. Several of the parcels on the plan have been targeted for 100 percent affordability, creating breathing room for other developments, like Block 8, to do 25 percent. In addition to a lead for-profit developer, the Redevelopment Agency is seeking a nonprofit housing builder to handle the two affordable housing structures, which will include 70 apartments and be available to families making up to 50 percent of Bay Area median income. Eighty units will be moderate-income units -- 120 percent of area median income -- sprinkled throughout the 436-unit tower and the 11 townhouses.
In addition to providing affordable housing, the Block 8 developer will be required to move the Folsom Street freeway off-ramp to the parcel's northern edge. The agency estimates the cost at $2.3 million.
Caltrans stores materials and machinery for Bay Bridge construction work on the site. Grisso said Caltrans needs the parcel through 2009, by which time Block 8 entitlements should be completed.
jkdineen@bizjournals.com / (415) 288-4971
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Source: http://www.bizjournals.com/sanfranci...ml?t=printable
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