August 19th, 2008
San Francisco Office Update: 717 Market filling up following building rehab
Filed Under Development Updates, Financial District, Tenant Activity, Union Square, Yerba BuenaAs reported by J.K. Dineen and Blanca Torres of the San Francisco Business Times this week, Ellis Partners is having success with their project at 717 Market Street. According to the article, about half the property is now leased, with activity pending on even more. The marketing efforts are being led by a group of talented agents that primarily represent landlords here in San Francisco. Their work shows in the type of tenants they have been able to attract, and the ownership group that took a chance on the building must be pleased.
In my opinion, this is wonderful news for the neighborhood as a whole, not just the investors. This is an important corner in San Francisco, as it sits where Third Street comes up from Mission Bay and meets Kearny Street at Market Street. Third Street is one of the busiest streets we have, and it is usually the fastest way to get yourself from South of Market into Chinatown and North Beach. A lot of tenants feel that 717 Market is too far South along Market, but the truth is it is a very convenient location for local amenities and transportation. One block South is the Westfield Shopping Center, one block North is where Post meets Market meets Montgomery, a very busy intersection. Bart is mere steps away, and the local hotels are convenient to Yerba Buena and the convention center.
Economically, I do not have the rental numbers for these leases, but I am certain the rates are lower than what the traditional financial district has to offer today. What it shows me is that tenants seeking space exist and are active despite the recession fears, but they are being more careful with expenses, and looking for good rates in good buildings. [More...]
August 8th, 2008
San Francisco Development Update: City seeks partner for 1st & Folsom
Filed Under Development Updates, Financial District, South of Market, Zoning & City Hall IssuesThe San Francisco Redevelopment Agency will be seeking help in taking what is now barren land and construction storage at 1st & Folsom, and turning it into a “retail mecca” under a residential tower.
As reported by J.K. Dineen of the San Francisco Business Times in this weeks edition, the plan calls for a 550 foot tower, townhouses, retail, and some infrastructure updates such as wider sidewalks. This block is part of a group of parcels that has given the City an incredible opportunity to restructure and redesign a good portion of the city-center.
If you have a chance to walk this area, you will notice that the development that has sprouted along Mission Street has not quite reached this far South. This parcel is situated behind the Novogradac building at 246 First Street, and Just East of the building now owned and occupied by the Emerald Fund at 532 Folsom Street. It is also only a few blocks South of the Foundry Square developments, the future Transbay development, the future 350 Mission development, and the almost completed 555 Mission development. Placing a large number of future residential units this close to future office projects keeps with the planning departments strategy of minimizing commute distances. [More...]
August 5th, 2008
San Francisco Office Update: Pfizer takes 100,000 square feet in Mission Bay
Filed Under Development Updates, Mission Bay, South of Market, Zoning & City Hall IssuesMission Bay, long reported to be struggling to achieve the biotech tenant base it had been seeking, had a big day as Pfizer has decided to move a major portion of their employee base into the San Francisco Submarket, and take 100,000 square feet with options on more.
This is exciting news for all involved in the deal, and comes as fantastic news as well to people like me that had no involvement at all. The success of Mission Bay is key to the coming together of Southern San Francisco and I look forward to the day when the entirety of the neighborhood is built, as I anticipate it will be a new hub of retail, office, and residential to rival any in the City.
The plan in place for continued growth reminds me a bit of what San Diego has done with the neighborhood surrounding Petco Park, home of the Padres. They have created a seemless transition from hotel property to convention center to restaurants to living spaces. If the developers can stick with the vision and complete the 4th Street retail corridor heading into Mission Bay, and make great use of Seawall Lot 337, they will be giving our great City a gift that will lend justification to try a similar effort at Hunters Point.
A well written article by Ron Leuty of the San Francisco Business Times is contained below, and an excellent take on the residential neighborhood can be found at www.socketsite.com. [More...]
August 4th, 2008
San Francisco Office Update: Slide leads tenant shuffle South of Market
Filed Under South of Market, Tenant ActivityThe growth, both fiscally and physically, of technology companies continues here in San Francisco as one of the top producers of facebook applications is changing addresses and taking four times the space it currently occupies.
As reported this week by J.K. Dineen of the San Francisco Business Times in the article below, Slide will be taking the top three floors at 301 Brannan, which is a wonderful building on the corner of Second Street two blocks North of the stadium and two blocks South of the 80 Freeway. Strong online success combined with venture capital financing continues to drive quite a few tech companies in San Francisco which appears to be one of the major reasons our economy is not being hit as hard as other cities regionally.
The reverberations of this lease will be felt quickly as existing tenants currently taking space within 301 Brannan will obviously be seeking alternative space ahead of Slide taking occupancy. Most notably Xoom, currently leasing 11,791 square feet on the 5th floor. Xoom has already been on the market touring of course but expect news on where they land very soon, as any opportunity for staying in the building has been eliminated. [More...]
July 31st, 2008
San Francisco Office Update: Elastra takes 16,733 square feet at 75 Broadway
Filed Under Financial District, North Beach/ Waterfront, Tenant ActivityAccording to Costar, a web service that tracks tenant activity across the country, Elastra has inked a deal to take new space in San Francisco. The lease is for 40 months and 16,733 square feet. Elastra will be leaving 201 Spear Street and moving over to 75 Broadway, also known as the Golden Gate Commons.
In my opinion this is an interesting move for a San Francisco tech tenant in the sense that they are getting physically further away from the ballpark, which is ground zero today for internet based companies. Elastra is in the world of cloud computing, which is becoming increasingly popular as companies require more flexibility with their information, faster and less expensive scaling, and security fears diminish. I have no inside knowledge of this transaction, and I wonder if the move North was motivated by price, or possibly a need to start connecting with the types of companies that are traditionally located in the Financial District. 75 Broadway is a wonderful building, a great place to do business, and is located in a neighborhood I think very highly of. Perhaps the move is simply motivated by executives who want a pleasant place to go everyday? [More...]
July 17th, 2008
San Francisco Development Update: 350 Mission Street Proposed, Seeks LEED Gold
Filed Under Development Updates, Financial District, South of Market, Zoning & City Hall IssuesA significant corner in the South Financial District here in San Francisco is headed for the planning department, and the ownership group is hoping to break new ground for green development.
According to J.K. Dineen of the San Francisco Business Times, 350 Mission Street plans on seeking LEED Gold certification, and will use Styrofoam and plastic bottles in place of some of the concrete to achieve this goal. This new technology is intended to lighten and strengthen the foundation and super-structure, and it will add to the overall greening of Mission Street, which is quickly becoming the new center of downtown San Francisco with nearby developments underway.
The most impressive part of the plan in my opinion is the effort being made to open the lobby to the outside world by raising the ceilings, creating movable glass walls on the street level, and adding mezzanine level dining. This section of Mission Street is quickly becoming a bustling center of activity for lunch time employees, and 350 Mission will add to the enjoyment of the area. Other recent and future development nearby include the Transbay Terminal, 555 Mission, 535 Mission, and the Millenium Tower. These projects will bring tenants, which will mean very busy retail opportunities and a chance for the entire atmosphere to be recreated through proper planning. [More...]
June 24th, 2008
San Francisco Office Update: Sequoia Capital Headed for 555 Mission
Filed Under Development Updates, Financial District, South of Market, Tenant ActivityTishman Speyer has landed another big name for their soon-to-be completed building located at 555 Mission Street in San Francisco. Sequoia Capital, the well respected venture capital firm currently located on Sand Hill Road, has apparently committed to the property and plans to take the top floor. As we have covered over the past three months on this blog, that makes three major tenants (Sequoia, Gibson Dunn, DLA Piper) to choose the future LEED Certified building, and all three have mentioned sustainability as one of the top reasons for the choice.
In my opinion Sequoia is a perfect tenant for this building, as it is important they retain a high-class appeal to their offices to continue to attract big investment dollars, but it is important also to be able to relate to the technology companies they fund, most of which are located South of Market.
Major changes are underway for this small corner of the City. The financial district has to grow, and it will grow, and the path of this growth continues to be towards Yerba Buena and the Moscone Center. 535 Mission will be built, the fourth building at Foundry Square will be built, 680 Folsom will be redeveloped, and 370 Third is already in the process of signing tenants (so we hear).
Although several years away still, I am looking forward to the time when the developers will look to the neighborhood that sits between the ballpark and showplace square, along Townsend and Brannan Streets. Until it is formally decided that the City will go vertical with its zoning, it seems the next logical place to buy and build.
Enjoy the well written and well researched article below featured in the San Francisco Business Times. As is customary for this blog, I have tried to take recent tenant news and give it some context in the bigger picture of the San Francisco commercial real estate market. [More...]
June 24th, 2008
San Francisco Building Update: $370M One Sansome Sale Closing in August
Filed Under Financial DistrictIn what is becoming a rarity of sorts lately, a downtown San Francisco high rise is set to change hands in the very near future. One Sansome, located where Sansome St., Market St., and Sutter St. come together across Market St. from the Market Center, is tied up by a Korean investment firm. The property, as detailed in the GlobeSt.com story attached below, is part of a portfolio of San Francisco properties, three of which are either publicly or privately being marketed for sale today.
There has been a dearth of skyscrapers sold recently, and it will be interesting to discover after closing what rents are being anticipated at One Sansome to justify the predicted purchase price. As we have discussed previously, rents in the financial district appear to be flattening or headed South, while Landlords that bought into the real estate market at its height last year are expecting and needing rents to increase.
The article below also addresses some greater economic indicators affecting values, most notably the weak dollar in comparison to foreign monies. I anticipate that more San Francisco properties will be sold to oversees investors over the next two years as our downturn, and the weak U.S. dollar are of benefit to those with cash reserves looking for undervalued assets here in the United States. [More...]
June 13th, 2008
San Francisco Building Update: 500 Terry Francois Blvd. Trades for $149M
Filed Under Development Updates, Mission Bay, South of MarketThe ownership shuffle continues in Mission Bay as 500 Terry Francois changes hands after the completion of construction. This transaction gives an insight into the different business models development and real estate investment groups use to create a return on the dollar.
Some firms specialize in land banking and will wait for area growth patterns to shift their way before selling. Some firms specialize in early stage development consisting of getting the proper entitlements and architectural work done before selling. Some firms specialize in completing construction while marketing a property for “pre-lease” and then selling at the completion of construction. Some firms specialize in buying a built asset and taking responsibility for the lease-up of the property. Some firms only buy assets with existing tenants with a long-term hold in mind.
This property is clearly set for continued value growth over a long period, but may struggle in the very near future in my opinion. Threats of a nationwide recession, ongoing difficulties in the biotech field, and a potential softening of the San Francisco office market all lead me to believe that potential tenants may sit on the sidelines for short while to see what direction rents are headed.
In the bigger picture however, eventually 4th Street will be a shopping district starting South of King St, the current parking lot for the Giants will be developed into a likely mixed-use concept, and the rest of Mission Bay will be completed. All of these factors make 500 Terry Francois an excellent lease and hold opportunity at this time.
The following is an article pulled from Globest.com, an industry website that puts out informative, daily information for people in my industry.
May 30th, 2008
San Francisco Development Update: Prime Transbay Project On The Block
Filed Under Development Updates, Financial District, South of Market, Zoning & City Hall IssuesIn a major change to a very interesting story, David Choo has listed his Transbay properties for sale due to the recent credit crunch. As we have followed closely, the South Financial District is due for some major zoning changes that will allow for increased building heights in the area immediately surrounding the proposed Transbay Terminal. The idea is to increase the vertical presence, but to do so in a thoughtful way that allows for tapered elevations.
In my opinion things are just beginning to get interesting. There will be many more properties changing hands over the next 5-10 years now that it appears the rezoning will be moving forward. Property values in downtown settings are based upon buildable square footages, which makes it difficult to determine value if you do not have a known height limit. This is still the case for the First and Mission area, making the future sales price of Mr. Choo’s properties difficult to predict.
The following article by JK Dineen from the San Francisco Business Times dives into further detail and explains the history behind the accumulation of this wonderful block of downtown real estate. [More...]