Posted: Apr 11, 2008, 6:06 PM
Join Date: Jun 2006
Location: San Francisco & Tucson
Reinvention under way at Third and Folsom
Friday, April 11, 2008
Reinvention under way at Third and Folsom
TMG, REEF bring life to forbidding monolith
San Francisco Business Times - by J.K. Dineen
For four decades, the AT&T complex at Third and Folsom streets has been an imposing concrete fortress designed to keep the public at bay and business operations as secure and secretive as possible.
Now TMG Partners and RREEF are getting ready to bring air and light -- and the public -- into the two-building property with a $200 million renovation and expansion the developers hope will transform the property into one of the most desirable office buildings south of Market.
The redevelopment, designed by Skidmore Owings and Merrill, will replace the opaque exterior with a nearly clear glass curtain-wall skin. Two floors are being added to the 12-story structure and the floorplates will be expanded as well, pushing the edge of the building toward Folsom Street. The glass, steel and granite lobby will have 30-foot ceilings with floor-to-ceiling glass and a floating staircase.
All told, the rehab will increase the building from 400,000 square feet to 505,000 square feet, with 440,000 square feet of office and 10,000 square feet of retail at 680 Folsom St. (formerly called 666 Folsom) and 55,000 square feet of offices at the abutting 50 Hawthorne St.
The ground floor will have a restaurant and TMG is in early talks with the Museum of Performance & Design -- formerly the San Francisco Performing Arts Library & Museum -- which is interested in moving from the Veterans Building in the Civic Center.
"It's incredibly monolithic and dated -- the streetscape is really uninviting," said TMG Partners Managing Director Matt Field. "It was designed to keep the public out. We're going to take the bunker mentality down."
The building's views and size will surprise most of the city's brokers and tenants. Fully occupied by the phone company since it was completed in 1964, few people have been in the building outside of phone company employees. The building has been vacant since 2005 when the telecommunications giant -- then SBC -- started moving employees to San Ramon and San Antonio, Texas. At the same time it unloaded 680 Folsom, AT&T also sold off two other properties, 370 Third St. and the landmark 140 New Montgomery St.
"It was never toured -- people don't come into the utility buildings," said Field.
At 35,000 square feet, the building has some of the biggest floorplates in the city -- similar in size to the Bank of America building -- and will cater to large users. Field compared it to the Landmark at One Market, a TMG project similar in size to 680 Folsom that was completely leased to seven tenants. Asking rates for the building will likely be about $60 a square foot a month, slightly less than Wilson Meany Sullivan is seeking for the final Foundry Square building nearby.
While the renovation will make 680 Folsom essentially a new building, TMG and RREEF decided it was environmentally and economically better to hold onto the existing structure's steel and floors, rather than raze it and begin anew. The developer is applying for LEED gold certification, the second highest level in the the U.S. Green Building Council's Leadership in Energy and Environmental Design program.
"We feel it's really important not to tear down, but to reinvent buildings," said Field.
TMG and RREEF are about to go out for a construction loan. The developers are putting in 35 percent equity, which should make it easier to get construction financing at a time when banks have tightened credit.
"It's a tough environment, but we'll get it done," he said.
Chris Roeder, a senior director at Jones Lang LaSalle, said the mid-2010 delivery date should time the market well, coming after Tishman Speyer's building at 555 Mission St. will likely be fully leased and other new construction won't be ready. Also, the fact that it's an existing building should allow TMG to have asking rates slightly cheaper than the new buildings it will compete with.
"It's coming in at the right time," he said.
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Last edited by BTinSF; Apr 12, 2008 at 1:41 AM.