San Francisco Redevelopment Plans Land Offering
Submitted April 26, 2010, 9:36 PM
The San Francisco Redevelopment Agency plans to return to market later this year or early next to offer for sale one of four residential tracts around the proposed Transbay Transit Center in downtown San Francisco. It will be the agency’s second run at trying to sell property to raise cash to help defray the cost of the new transport hub.
Michael Grisso, a senior project manager with the agency, said managers hoped to capture benefits from the rising interest in residential properties and the recovering residential market.
The agency is evaluating four sites on Folsom Street for its offering, blocks 6, 7, 8 and 9, Grisso said. Block 8 is the one-acre site that the agency put up for sale in October 2008 then pulled from the market in June 2009 after getting only two offers. The offered prices were never disclosed. The property is expected to accommodate about 600 housing units including a 550-foot residential tower.
The agency is leaning toward a smaller site than block 8 for its return to market, Amy Neches, a manager of project area planning and development for the San Francisco redevelopment agency, said in late March. The entitlement process would be through the RDA and would be “relatively easy,” she said.
“It’s a pricing and design-review process,” she said.
The agency plans to sell the remaining parcels slowly over the next several years, Grisso said.
The RDA may find that its market timing pays off. The supply of for-sale condominiums in San Francisco is dwindling, said Alan Mark of The Mark Company, a San Francisco-based housing consultant and market prognosticator. He told the NAIOP San Francisco chapter March 31 that by the end of this year he expected there would be no new construction of units positioned to sell for less than $750,000 and that by next spring, there would be no new construction for units intended to sell for $1 million or less. The market’s “high-water mark,” he said, was in 2006 when 3,650 units were under construction in the city.
At the same time, development in San Francisco can be halting and incredibly slow, Mark said. For instance, The Infinity, a 650-unit condo development at Spear and Folsom streets facing the Embarcadero and the San Francisco Bay, is selling the last of its units only now. Developer Tishman Speyer bought the entitled site in 2004.
“I don’t expect any big high-rise projects until 2014 or later,” Mark told the NAIOP gathering.
There are 1,299 units under construction in San Francisco now, including 274 that are on-hold, according to The Mark Company’s most recent market update released April 26. The report covers San Francisco condominium sales and development activity in multiple neighborhoods including Mission Bay, South of Market, Nob Hill, the Financial District and Rincon Hill. Another 941 units are currently offered for sale, the report said.
The land around the Transbay terminal site that is zoned for residential could lead to the construction of 2,700 residential units. Plans for the residential portion call for a mix of apartments, condos and townhomes. The City of San Francisco has required that no less than 35 percent of the residential units be affordable housing.
The Redevelopment Agency hopes that the land sales will generate proceeds totaling $250 million between the end of this year and 2015. The revenue would then be used to cover a portion of the $1.2 billion estimated cost to construct the first phase of the terminal.
