SAN FRANCISCO | Projects: Under Construction, Approved, and Proposed

[EzmoEd]

Excellent aerial video of nighttime San Francisco. Includes all of downtown and many highrises under construction. http://vimeo.com/119029890

[peanut gallery]

Market Street Place has it's first tenant signed to a letter of intent. From Bisnow:

Laura [SRS Real Estate Partners SVP Laura Tinetti] tells us her team sealed a deal for an LOI with a 50k SF full-line apparel user that should close in the next few months at the 5th and Market project.
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The 250k SF project just broke ground and is slated to wrap up in Q3 2016.
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Floors one and two of the project will be flagship stores in the apparel category and may have multi-level components. (Think a flagship retailer on one side, and on the other, a lower-level specialty store.) Expect dining and entertainment options on the fifth floor.

[fflint]

Originally Posted by AndrewK

I haven't been by this one in some time, how did they do on the Oak side of varying the look on different portions of the block to give it a more organic feel as they had originally intended?

That's Oak Street heading up the hill.

[Jerry of San Fran]

Originally Posted by EzmoEd

Excellent aerial video of nighttime San Francisco. Includes all of downtown and many highrises under construction. http://vimeo.com/119029890

EzmoEd - The best video of SF at night I have ever seen! Dramatic views of highrise construction. Thanks for sharing the link.

[Ant131531]

Originally Posted by EzmoEd

Excellent aerial video of nighttime San Francisco. Includes all of downtown and many highrises under construction. http://vimeo.com/119029890

Looks like a movie. Awesome. Those would make great stock video that they can sell commercially...I can easily see that being at the beginning of a movie featuring SF.

[1977]

Originally Posted by Ant131531

Looks like a movie. Awesome. Those would make great stock video that they can sell commercially...I can easily see that being at the beginning of a movie featuring SF.

Exactly my thoughts. The vibe reminded of the movie "Drive".

[fflint]

That video is awesome! It's so new it shows the new Golden Gate Bridge median.

[pseudolus]

Originally Posted by fflint

That's Oak Street heading up the hill.

So not very well then?

[timbad]

Originally Posted by fflint

That's Oak Street heading up the hill.

right... I didnt walk up that way, and some of it is still in scaffolding, but I seem to remember that even the drawings didnt make it look like they were still trying for the organic effect. or at least not succeeding, as pseudolus also mentioned. we'll see, I'll wander over in another month or so if someone else doesnt beat me to it.

[fflint]

I lived at Oak and Octavia in 1993 and 1994. You're not going to get me to talk trash about the new infill.

Sorry, haters.

[northbay]

LOVE the video!

[shakman]

DAAAAAAAAAAAAAAMN. After watching that video, I want to move to SanFran.

[a very long weekend]

the oak street side isn't particularly compelling, but it's difficult to say exactly because it a good portion is still largely covered in scaffolding, with sidewalk and steps unfinished. it definitely doesn't have the varied look it did in initial renderings. the laguna side, though still under scaffolding is really unimpressive, looks like mission bay. the laneway is what it is and will definitely look better once covered off by the last offramp parcel just adjacent (will be subsidized affordable housing, btw). the exterior work should be done any day now, so it'd be worth returning next weekend.

[simms3_redux]

Originally Posted by fflint

Do we know for certain Oakland development costs are about 90% of San Francisco development costs?

Even if so, I think there are still upsides that affect the bottom line--land acquisition is cheaper in Oakland, and local NIMBYs aren't as powerful. And set aside rents, what about condos? All those units in Jack London Square and Uptown somehow got built--and both areas are thriving compared to prior decades.

Originally Posted by dboakland

That's just silly. Land costs in Oakland are 2/3 the cost of San Francisco and rents are climbing twice as fast. In California it takes at least a year to get any project entitled and Oakland has been considered risky. As fflint points out there are about 400 hundred units under construction but over 3,000 in the permit process. So like I said, be patient...and for the clowns with the old sideshow video's SF has had all the driveby shoots lately.

Just wanted to go back to this.

According to Bisnow's article from today,

Oakland and has lots of pre-construction activity there, where it costs 10% less than S.F. Kilroy Realty SVP Mike Grisso hopes the scarcity of land in S.F. translates to development in Oakland (we just told you the East Bay was on fire), but rents aren't there yet (30% to 40% lower than S.F.).

And according to a San Francisco Business Times story from today, as well, Oakland multi rents are 2nd fastest growing in nation YoY (at 12.1% growth) while SF multi rents are 3rd fastest YoY (at 11.6%). Office rent growth in SF has absolutely taken off, fastest growing in nation and now highest on average, while Oakland's have remained a little more stagnant.


All in all, I think these guys are saying that yea it costs less, a little bit less, overall, to build in Oakland (land is only a piece of the cost - there's still labor/materials/fees, all of which are basically the same in Oakland as they are in SF), BUT, the rents are A LOT less and not necessarily growing like they are in SF.

BART not being 24 hour and the regional connectivity issue seems to be a more and more important topic at hand, as well. Hard to get people who can't afford SF into SF, but at the same time it's hard to pencil out building up Oakland or other areas more convenient to middle class/affordable housing.

Positive problems (I suppose) in SF to have versus Detroit's.

[1977]

Another nice video of SF:

http://vimeo.com/119318850

[simms3_redux]

^^^Simply amazing.

[dboakland]

Its all true that rents are significantly lower than SF (or the rest of Silicon Valley for that matter). However, the point made at the end of the Bisnow's article is key. Supply is constrained in SF far more than in Oakland. Not every tech business or other prospective tenant can pay $60-$70 sq/ft. rents. Oakland rents have to go up and probably at a faster rate than SF.

[peanut gallery]

That time-lapse video is utterly mesmerizing. "Epic" can be an overused term, but that's what it is.

[simms3_redux]

^^^Yes, but this is the theory and the hope. Lots of firms have that as their real estate investment thesis for the area right now. However, it's mostly still just theory and hope.

And if you haven't noticed, Oakland office rents have to come up A LOT for office development (Shorenstein was fully entitled for a tower, I believe, and they are switching to housing), at least for high rise/new construction nature to occur. Multi rents may be there, so just waiting for the sea of construction, I guess.

Here's where Oakland's a problem, from an investment perspective. Historically, its up cycles are short-lived and as soon as there is a correction and pricing comes down in SF, everyone wants to make a move in SF. When pricing comes down in SF and vacancy increases, Oakland sees pricing literally crash down and effective vacancy soar. It doesn't have the same appeal to either tenants or landlords, nor does it have the same quality of tenants or deep-pocketed landlords who are in it to ride cycles and own for longer periods of time. Its buildings are inferior. Its economic drivers take a back seat to SF's, and in fact are basically contingent on something failing in SF, not necessarily something positive happening in Oakland all by itself.

For this reason, many a firm has blacklisted Oakland. So even when something (an acquisition or development play) can pencil out, it rests on shaky fundamentals, and many avoid it for that reason. Probably most are wrong, and maybe there comes a point where Oakland becomes a longer term, safer bet, but for the time being it seems to be a cyclical bet and only so many can make it under the pressure it takes to get something done in the Bay Area (it's still a huge check to write to do a deal in Oakland - the same check can get you a new development in the Pearl District of Portland or a trophy building in Denver, etc).

I wish I had an excuse to track the market more and be more knowledgeable about it, however, I can only speak to what I "hear" in passing about it. Seems like an interesting, local case.

For the record, I didn't go to this development and construction summit referenced in the Bisnow link, however, those events are always worth it for real estate/construction geeks who like to hear tidbits from the experts who do know what's up. There's probably another one around the corner.

[simms3_redux]

^^^And just to add, just look at the difference between SJ and Oakland. SJ has huge economic drivers and very very high rents. Therefore it's seeing A LOT of interest in new development of every kind - office and multi, hotels, etc. Several towers have gone up in this cycle and several more are UC and on the way.

Oakland is naturally playing catchup and is still feeling like an overflow market to me rather than a market that can truly stand on its own. If this were not the case, then I have a gut feeling we'd have already seen a ton of stuff go up in Oakland. Little Berkeley is seeing more activity right now.

I hope to God that Oakland gets everything proposed on the table built - I love the city and really want to see it grow into something super vibrant and appealing, and COOL (maybe it will always be cool as the "cool" leaves SF for greener pastures). That would be nice.

I think having 24 hour weekend BART service would do Oakland wonders. It could be a game changer. Oakland is still limited in its offerings, so I feel like most who leave SF do contemplate their access to SF if they are staying in the area...or maybe they move altogether (to Portland, Denver, LA, etc). Oakland is inching there, but just having that late night access to SF could make it that much more appealing to millennials, which is the target of all of this development at the end of the day. I mean if Oakland is always going to be an "overflow" market, then it needs to be a "good" overflow market that provides imperative access to things it cannot provide itself.