University of the Pacific Bets Big South of Market
Submitted November 22, 2011, 8:03 PM
Jon Peterson & Sharon Simonson
The University of the Pacific plans to invest $151 million in a campus for its dental school at 155 Fifth St. in the South of Market section of downtown San Francisco.
The school paid $47 million in cash to acquire the seven-story 395,000 square-foot office building. The institution expects to invest $8 million to demolish the structure down to its shell, then to put out another $96 million to renovate.
“We think that this will give the university a more high-profile location and a larger operation for the dentistry program,” says Richard Rojo, associate vice president of marketing and university communications.
The seller is a joint venture of San Francisco-based real estate companies TMG Partners and Continental Development Corp. Continental, which is owned by Richard Lundquist, originally developed the Fifth Street building and owns the neighboring InterContinental San Francisco hotel at 888 Howard St.
“We look forward to the upcoming synergistic relationship with a great university and the added vitality its young professionals will bring to the neighborhood. The impressive improvements planned for the building will continue the rejuvenation of the Fifth Street corridor and will provide hundreds of new construction jobs,” Lundquist said in a prepared statement.
The San Francisco office of SmithGroup Inc. is the lead architect. San Francisco-based Plant Construction Co. is the general contractor. Nova Partners Inc., in Palo Alto is project manager.
Michael Covarrubias, TMG chairman and chief executive officer, said his company was brought into the project in September 2010 by Continental to help reposition the property after its main tenant, Wells Fargo & Co., left. “From then until now we considered both leasing the property and selling it. In the end, we felt that it made the most sense to sell it to a user,” he said.
The university, which says it is the oldest such school in California, has its main campus in Stockton where it has seven schools and colleges. Pacific also has the McGeorge School of Law in Sacramento.
The university plans to finance the project with a fundraising campaign, revenue from the commercial leases and the sale of two properties currently used by the dental school in San Francisco’s Pacific Heights neighborhood.
UOP was represented by Daniel Cressman, an executive vice president with Grubb & Ellis in its San Francisco office. Cressman will also help lease the two floors of offices, which together have about 100,000 square feet. “At this point it’s hard to project what the asking rents will be, given how far away it is before the space will be on the market. Average full-service asking rents now are at $40 a square foot and rising,” Cressman said.
Cressman, who has been a broker in San Francisco for more than 30 years, was one of more than a dozen featured speakers at the 34th Annual Real Estate and Economics Symposium held Nov. 21 in San Francisco. The event is sponsored by the Fisher Center For Real Estate and Urban Economics.
The rumble of activity across SoMa, which includes a broad swath of technology companies, has raised questions about a replay of the dot-com bubble and bust, Cressman said. “I say no.”
“This is totally different. The stage is set. The Bay Area and San Francisco will experience the most resounding commercial real estate recovery in their history,” he said.
Next up to share the love will be the Civic Center-Van Ness corridor, he said. Last will be north of Market Street.
