By Robert Sammons, Senior Director, Northern California Research
The San Francisco Planning Commission approved the first major project in the rezoned Central SoMa district. The honor goes to 598 Brannan Street whose first phase consists of just over 700,000 square feet (sf) of office space along with some PDR (production, distribution and repair) space too. That office block will, of course, pull from Prop M allocation taking the grand total in the large cap queue down to just under 2.2 million square feet (msf). For those not as aware of the quirks of the San Francisco entitlement process, Proposition M essentially controls the amount of office development allowed. For projects 50,000 sf and larger, there is 875,000 sf added each October though that does roll over if not used. There was a build-up for a number of years during the recession and early in the recovery though that figure is now on the decline. Meanwhile, there is 8.0 msf included in the pending phase with the San Francisco Planning Commission.
Obviously not everything can be approved. It is worth noting that no pre-leasing has been announced yet for 598 Brannan Street, while another project that is yet to be approved in Central SoMa, 88 Bluxome Street, has preleased most of its space to Pinterest. Meanwhile, the last parcel in the Transbay District, 550 Howard Street, has also not been approved yet even though this mixed-use building has preleased all of its office space to Salesforce. And if all of that wasn’t enough to make your head spin, there are lawsuits still pending within Central SoMa which will certainly delay final approvals and ground breaking. Oh yes and finally, there are two projects in the queue that don’t really have to step in front of the Planning Commission to move forward thanks to the fact that both sit on Port land – Pier 70 (1.8 msf) and Mission Rock (1.3 msf). Those two projects would wipe out the entirety of entitlements available under Prop M. Never a dull moment in San Francisco development.
This all comes at the same time as the release of the UCLA Anderson Forecast which states that the California economy may be slowing. That has more to do with the long-run of this expansion and the fact that most markets are at or near full employment across the major markets in California, particularly the Bay Area. With the cost of living high, it’s more difficult to convince others from around the U.S. to move here. At the same time, with difficulties surrounding H-1B visas, immigration by those from outside the U.S. has become an issue too.
There was much more news this week including how to get wealthy in Silicon Valley and not be in the tech world (hint – real estate), and yet more development in the pipeline in San Jose. Also, Cushman & Wakefield’s own Ben Conwell talks all things ecommerce on Bloomberg Technology Television – it’s definitely well worth a look!
In “Off Topic” there is news on ratings of Bay Area restaurants released along with a slew of eating establishments about to launch around the new home of the Warriors in Mission Bay. And now that summer is here (such as it is in San Francisco proper) there are a list of rooftop bars to visit.
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Robert Sammons is Cushman & Wakefield’s Senior Director, Northern California Research. Based in San Francisco, Robert’s principal roles include working closely with the C&W research teams across the Northwest – including Northern California, Portland and Denver. Robert is author of numerous documents that delve into a wide variety of real estate and economic trends. He has been a quoted source for all manner of real estate and related economic information in many widely known media outlets across the country. Robert has 29 years of real estate experience as both an appraiser and researcher. He earned a BBA in Real Estate from The University of Georgia and an MS in Real Estate from Georgia State University. Robert is a member of the Urban Land Institute.