Fox Plaza to replace retail with condosSan Francisco Business Times
July 06, 2007
Two years after acquiring Fox Plaza for $140 million, Archstone-Smith is pushing forward with plans to raze the corner retail element and replace it with a 250-unit flatiron-style condo building.
The planned wedge-shaped terra-cotta and glass 120-foot structure, with retail, would replace the low-slung building that houses Starbucks and a stationery shop, according to Presidio Development Partners President Mark Conroe, who was retained by Archstone-Smith to obtain city approvals for the residential development and sell off the office part. The new building would cost about $150 million based on current construction costs.
The plans come as Archstone-Smith has completed the sale of the 220,000-square-foot office component of the complex for $42 million, or just under $200 a square foot. Palo Alto-based Broadreach Capital was the buyer. The long-anticipated sale was held up because Archstone-Smith was waiting for the city to finalize a condo map for the property, essentially breaking it up into the office space, plus three other separate pieces: 446 rental apartments, a 550-car garage, and the retail/development site.
Archstone-Smith, a national apartment REIT that agreed last month to be acquired by Tishman Speyer, will hold onto the rental apartments and the parking, according to Edward Suharski of Grubb & Ellis, who represented the seller along with Daniel Cressman.
The new development and the Broadreach bet on Fox Plaza comes at a time when investors are pouring capital into the Civic Center neighborhood at an unprecedented clip. Hill Cos. recently paid $13.3 million for 10 United Nations Plaza. Miami’s Crescent Heights plans to begin construction this year on a $350 million, 720-unit two-tower condo development. Australia-based Anka Property Group is out of the ground on its $140 million, 179-unit One Polk St. And Adco Group is pumping $35 million into repositioning the San Francisco Mart from a interior design exhibit space into office.
"It has taken out-of town investors and developers such as Anka, Crescent Heights and Archstone-Smith to see the possibilities," said Suharski. "Now we are starting to see local investors beginning to look for opportunities."
Momentum in the general Civic Center area should pick up even more when the California State Automobile Association sells its 750,000 square feet of space at 100-150 Van Ness. Suharski, who is also handling the sale of that property, said 80 prospective buyers have expressed interest. Rental rates in the CSAA properties, which have both Bay Bridge and Golden Gate Bridge views, are in the mid $40s. Offers are due at the end of July.
Over the past three years rents in Fox Plaza have jumped from the mid-$20s a square foot to the upper $30s. The San Francisco Symphony just signed a lease in the building and other anchor tenants are the city’s department of health and city attorney’s office. Fox Plaza is 83 percent leased.
Conroe emphasized that the rental apartments would remain rental and that views from the apartments would not be blocked by the condos. He said the residential building would be marketed as a gateway to the city’s performing arts district.
"It’s a very visible building," he said.
Jeffrey Heller, principal of project architect HellerManus, said the building materials and glass would "speak to the energy level of the Civic Center area."
"We’re going to have some fun with it," he said.
See this article in the San Francisco Business Times