SAN FRANCISCO | 30 Van Ness Avenue (Hayes Point) | 540 FT | 47 FLOORS | ON HOLD

[unpermitted_variance]

Yeah, very bad time to be a skyscraper/development enthusiast in the Bay right now. I am confident that things will rebound, as that's the nature of large economies, but I'm not expecting much to happen for the next few years. Development happens on long timelines, that's the nature of the game.

[gillynova]

Originally Posted by unpermitted_variance

Yeah, very bad time to be a skyscraper/development enthusiast in the Bay right now. I am confident that things will rebound, as that's the nature of large economies, but I'm not expecting much to happen for the next few years. Development happens on long timelines, that's the nature of the game.

Yeah, I definitely felt this too. I think the only skyscraper/development that's rising is near Levi's Stadium and Treasure Island. I haven't really seen much of Oakland and San Jose only has 1 building that topped out (Garden Gate Tower)

[Jerry of San Fran]

NOT A GOOD SIGN The cover over the MUNI entrance at Van Ness/Market and the sidewalk was removed a couple of days ago. Apparently, the permit for the wood protective covering was removed as the permit has not been renewed. The developer had hoped to get financial backing for the construction this year, but it appears that did not happen. Looks like a second giant hole in the ground with a foundation but no building in San Francisco. Sad. I was excited and looking forward to this one being built.

[theskysthelimit]

The developer Lendlease, is pulling out of the US. This project is up for sale. IMO, another 5+ years for someone to take over the project.

In a strategic shift announced this week, Australia-based developer Lendlease said it will pull out of international construction and development within the next 18 months to focus on its domestic market.

http://www.globest.com/2024/05/30/le...20240809115757

[Zapatan]

Kinda sad they see the US as such a bad investment. I'm guessing issues in the area like crime and homelessness (Van Ness isn't the nicest part of SF) factored in. Did they not know this beforehand?

[fimiak]

It's the interest rates. It affects these buildings in a huge way. It's probably 30-50% more expensive to build this vs 5 years ago, not even counting the increase in labor and materials.

[Zapatan]

Originally Posted by fimiak

It's the interest rates. It affects these buildings in a huge way. It's probably 30-50% more expensive to build this vs 5 years ago, not even counting the increase in labor and materials.

Where are you getting 30-50%? That's insane if true. I was going to say they could just wait until next month when rates (may) go down. Perhaps it isn't enough.

[fimiak]

Originally Posted by Zapatan

Where are you getting 30-50%? That's insane if true. I was going to say they could just wait until next month when rates (may) go down. Perhaps it isn't enough.

Well I am not a professional by any means, but an amortized loan at 3% over 15 years results in about 25% interest paid. An amortized loan at 6.5% over 15 years results in interest paid of 57%. So the total cost is about 25.6% more.

If the loan is 30 years, then total interest costs are 49.9% more paid.

[iamfishhead]

Originally Posted by gillynova

Yeah, I definitely felt this too. I think the only skyscraper/development that's rising is near Levi's Stadium and Treasure Island. I haven't really seen much of Oakland and San Jose only has 1 building that topped out (Garden Gate Tower)

I mean, aside from all the other factors we know (interest rates, low downtown occupancy, lowered residential rents, demand for housing, etc) I do think two other things might be at play: (1) a ton of projects and especially a number of residential high rises and skyscrapers were planned and submitted before the state density bonus laws passed, so that might have some projects going back to the drawing board, to see what they can get with the bonus and (2) in the areas near downtown that have mixed use or downtown zoning types, it is permitted to construct either commercial, residential or a mixture of types. The fact that offices aren't in demand may have also have led companies planning to build to rethink what they're going to build.

[unpermitted_variance]

Per the SF Chronicle, there may be potential hope for this project. Lendlease is striking a deal with the city to eliminate the 25% on-site affordable housing requirement (they also have already paid $13 million in affordable housing impact fees, and $40 million in total impact fees). Converting 83 of the units from affordable to market-rate will certainly help with the economic viability of the project. However:

Johnston, of Lendlease, said that the project is not actively being listed for sale, but did not provide a timeline for restarting. She did say that the SUD proposal is “not a panacea.”

“Hayes Point, and other projects, will also need other factors including capital markets, interest rates, and commercial leasing to normalize before being fully viable,” Johnston said.

Will it come to life again? We can hope, but I wouldn't get too excited yet.

[Jerry of San Fran]

10/10/2024 - I noticed this notice on the fence at 30 Van Ness. Maybe someone can explain what it means. I get the sense that there is a change by the developer that could make the project more appealing financially. It would be fantastic if this building were to proceed. The foundation is ready.

30 Van Ness Avenue Notices, San Francisco

[AndrewK]

Originally Posted by Jerry of San Fran

10/10/2024 - I noticed this notice on the fence at 30 Van Ness. Maybe someone can explain what it means. I get the sense that there is a change by the developer that could make the project more appealing financially. It would be fantastic if this building were to proceed. The foundation is ready.

This is a notice of the Planning meeting at which the removal of on-site affordable housing will be approved (or not), as described in the article above.

[homebucket]

I'd be okay with them approving removal of the on-site affordable housing requirement if this project can become viable again and resume construction.

[BobbyMucho]

1000%. I have a feeling the approval will be a sure thing being there's a lot of political steam behind getting this project (and a few others in the surrounding area) moving again. It might take a year or so, but... I'm optimistic.

[PPQ]

Originally Posted by homebucket

I'd be okay with them approving removal of the on-site affordable housing requirement if this project can become viable again and resume construction.

Good thing you're not in charge.

[tall/awkward]

I feel PPQ's sentiment, but it seems like there are quite a few affordable projects going on right now, so I'd be okay with TEMPORARILY suspending affordable requirements just to get market rate projects going again.

[homebucket]

Originally Posted by tall/awkward

I feel PPQ's sentiment, but it seems like there are quite a few affordable projects going on right now, so I'd be okay with TEMPORARILY suspending affordable requirements just to get market rate projects going again.

that’s exactly it. you could go as far as to say that there are only affordable housing projects being constructed right now and there’s actually quite a few of them throughout sf as well as the rest of the bay area. but what isn’t being built at all is market rate housing. and we have a big hole in the ground here and a big project on hold. so why not? it’s not like it would halt construction of all the affordable housing projects current under construction as well as others in the pipeline. when you have a severe housing deficit as we do you need all viable units of varying types you can get built.

[theskysthelimit]

Lendlease has already, reportedly, paid out $13 million to the city's affordable housing fund, and spent $27 million to cover other impact fees to the city.

Claire Johnston, Lendlease’s chief executive officer for the Americas, tells the Chronicle that this $40 million "essentially represents a large overpayment," and should "be considered as our total affordable housing offering.”

Johnston, of Lendlease, said the project is not actively being listed for sale, but did not provide a timeline for restarting. She did say the special use district proposal is “not a panacea.”[/I]

As stated , the developer already paid the City upwards of $40 million in fees for BMR and other , IMO, shake down fees. Furthermore, this project is dependent on market conditions which will delay further this project for at least another five years.

[whitty]

Lendlease has multiple abandoned projects in California. This is them just trying to claw back money. Meh.

[theskysthelimit]

Originally Posted by whitty

Lendlease has multiple abandoned projects in California. This is them just trying to claw back money. Meh.

Correct, not only California but from New York to Chicago. As recently as May:

In an announcement May 27 through the Australian Stock Exchange, Sydney-based developer and contractor Lendlease said it would refocus operations and real estate investment in its native market and divest U.K. and U.S. projects and assets—an overall transaction it said would "recycle" $2.9 billion into the Australia market while exiting international construction.

I believe they will ultimately sell this property but wonder if they would be able to transfer over the agreement with the city cutting back on the BMR requirement.