October 24, 2008

535 Mission Street: From Office To Residential To Office To Suspended

535 Mission Street: Rendering (Image Source: Simon & Associates)

"With the markets in turmoil and rents falling, Beacon Capital Partners has suspended construction on its 27-story office tower at 535 Mission St., the only speculative downtown highrise slated to be built over the next few years.

The $100 million HOK-designed tower was put on hold earlier this month in response to worsening market conditions. A spokesman for the Department of Building Inspection said the building permits had not been withdrawn yet. The excavation on the project was complete and contractor Swinerton had completed the pile driving."

Construction work suspended at new downtown office tower [Business Times]
Approved For Residential, But Building Commercial (535 Mission) [SocketSite]
535 Mission Update: Parking Lot Closed And About To Break Ground? [SocketSite]

First Published: October 24, 2008 7:30 AM

Comments from "Plugged In" Readers

Booooooo!!!!

Posted by: SFhighrise at October 24, 2008 7:40 AM

Let's hope they at least build SOMETHING there.

it's super sucky when projects get cancelled part way through. It leaves an eyesore and a public hazard.

they should be at least required to turn it into something safe.

Like concrete over it and make it a plaza or something.

how much could it possibly cost to do that?

Posted by: ex SF-er at October 24, 2008 7:52 AM

I hate Depressions! Please don't tell me we are going to be stuck with the current boring skyline for the next 10 years. I guess this can be added to the growing list of projects that are no longer:

Transbay Tower, 1RH tower 2, The Californian, Crescent Heights (1401 Market), the new Fox Plaza tower, etc. etc.

I think Socketsite should make a list of projects now on hold or cancelled.

[Editor's Note: Agreed (and on the way).]

Posted by: Morgan at October 24, 2008 7:56 AM

I agree with ex-SF. I wish they would find the funds to build tle levels below grade and open the parking garage, and build the ground floor and open some retail or a restaurant.

Posted by: flaneur at October 24, 2008 8:10 AM

Get used to it people, most of the pipeline is gone for now because virtually everything relies on financing which is increasingly tough to come by these days. That and new permit activity is waaay down.

Posted by: Jake at October 24, 2008 8:17 AM

How do you figure Transbay is no longer? You can guess at that and something might change in the future to make it come to pass, but there has been nothing to suggest it. Quite the opposite actually. The rest however, absolutely. And add 45 Lansing and 350 Bush to the list.

Posted by: PG at October 24, 2008 8:43 AM

Especially 'sucky' because this is/was a rather cool design...but it probably get built eventually. They'll hold the permits for as long as they can and if the economy looks like it is starting to improve they will go ahead.

Posted by: CameronRex at October 24, 2008 9:00 AM

Transbay on hold or cancelled? Please just stop making up this riduculous BS. Shame on you.

From SFGate a few days ago:

SAN FRANCISCO
Tower developer cuts land payment
John King

Thursday, September 25, 2008

The developer selected to build what could become San Francisco's tallest tower has agreed to pay $235 million for the land where the high-rise would be located.

That's well below the $350 million offered by Hines, the development firm, when it was among three firms competing last year for the site at First and Mission streets now owned by the Transbay Joint Powers Authority. But the deal has changed in another way: Most money will be paid shortly after the tower is approved.

The proposed terms are for Hines to pay $160 million within 90 days of the tower being approved by the Transbay board, with additional payments of $15 million each of the next five years. Hines would add $50 million more to build a park atop the mass transit terminal that the authority hopes to start building next to the tower site in 2010.

Hines' original offer delayed payments until an approved tower had 50 percent of its space preleased - a stipulation that in a slow economy could translate into years of delay because construction would be unlikely until that space was leased.

Posted by: anon at October 24, 2008 9:04 AM

How do I figure Transbay Tower is now on hold? Do you really think that ANY financial institution is going to want to "invest" on the most expensive psf office and residential space tower in California right now? Transbay Tower would have been great, but I would bet money we will not see it rise in the next 3-4 years.

Look at the similar Chicago Spire. While over 35% of the units are already in contract, construction has now stopped on the tallest tower in North America. The developer is not talking, and all equipment has been removed from the site. Speaking of Chicago, the Waterview tower (90 stories) shut down at floor 20 about 6 months ago, even with a major hotel tenant and 30% of the units in contract. The 95 story Trump Tower has finished, but "buyers" have walked away from their deposits. This is a world wide problem.

Let's face it, this whole cyle of huge growth is now over. As an architect, I am more than a little worried.

Posted by: Morgan at October 24, 2008 9:08 AM

""With the markets in turmoil and rents falling..."

Are the rents falling? We just read Beacon Economics forecast of rising rents. I guess depends on the depth of the recession severity of the job losses etc.

[Editor's Note: Commercial rents falling, residential rents rising (for now).]

Posted by: chuckie at October 24, 2008 9:13 AM

I suspect they are refering to rents for commercial space. Those are falling.

Posted by: diemos at October 24, 2008 9:21 AM

What will this mean to people who bought in areas which were supposed to be on the upswing?

The redevelopment of Folsom Street for the relatively barren Rincon Hill, for example. The supposed lift to mid market for people who are absolutely surrounded by homeless people right now? Or the never actually articulated improvements near Esprit park, that supposedly made it "up and coming" (for no reason whatsoever), and for which people were supposed to pay some huge premium in a relatively low income area?

All these people paid premiums that essentially built these future enhancements right into the current prices, without any assurance that any of the supposed improvements would ever occur. What happens to those premiums, already pocketed by the developers, when construction stops everywhere and people realize that those neighborhoods will be no better in 5 years than they are now?

Posted by: tipster at October 24, 2008 9:23 AM

"What will this mean to people who bought in areas which were supposed to be on the upswing?"

There's a significant constituency that likes the area just the way it is. I'm sure they're breathing a sigh of relief that the area is not going to be totally converted to condos. A city needs space for other activities too.

Posted by: diemos at October 24, 2008 9:33 AM

Tipster. If you don't like it, don't buy it. And I think you're going to earn the name Captain Obvious pretty quickly here if you keep it up. I'm fairly certain no one is looking for quick gains in RE these days. What do you think?

Oh, and I challenge you again to find a way to bring something to the discussion besides your standard negativity. It's extremely tiresome and predictable and really does nothing to further the discussions on this site. This is not the place for rhetorical questions. Even though I used one above. Oops. Damn!

Posted by: Boo at October 24, 2008 9:45 AM

"Transbay Tower would have been great, but I would bet money we will not see it rise in the next 3-4 years. "

If the economy was still booming, you still wouldn't have seen the Transit Tower in the next 3-4 years, except maybe as the skeleton of the first half rising out of the ground. The project can't get approved at the Planning Commission until end of '09 or beginning of '10 at the earliest. Add another year for completion of construction drawings, and you're looking at beginning construction on the Transit Tower in 2011 at the earliest. What will the financial markets look like in 2011? Probably not what they do now.

"What will this mean to people who bought in areas which were supposed to be on the upswing?"

It means that people should not be so naive as to think that economies always go up and that rising housing prices are not something you can set your watch by. Tough nouggies, as they say in elementary school, which is about the level of critical thinking that most real estate decisions and real estate advice have been based on for the past five years.

Posted by: intheknow at October 24, 2008 9:49 AM

Intheknow, you write of the Transbay Tower: "The project can't get approved at the Planning Commission until end of '09 or beginning of '10 at the earliest." Does the Ttansbay Tower require its own EIR given that the EIR for the Transbay Terminal already studies the "establishment of a Redevelopment Area Plan with related development projects, including transit-oriented development in the vicinity of the new multi-modal Transbay Terminal."?

Posted by: flaneur at October 24, 2008 10:17 AM

So like I said, you are guessing. Fine. Write it that way. Not: "a project that is no longer" which is demonstrably false. And not seeing it rising for 3-4 years is to be expected, as intheknow correctly pointed out. Again, nothing close to the statement you originally made.

Posted by: PG at October 24, 2008 10:29 AM

PG, we have just seen a rare cycle of construction that will be hard to duplicate for at least 10-15 years. I guess my question for YOU is, do you really feel Transbay Tower WILL be built as currently designed? Do you trust even in the next 10 years there will be a market for what was at one time promoted as the tallest and most expensive condominiums on the West Coast? I could see a 40 or 50 story tower next to the Terminal, but super tall towers are VERY expensive to build, and there is NO SHORTAGE of expensive commercial or residential condominium space in San Francisco now, or for at least the next 8 years. Why would Transbay go forward when less expensive buildings like 535 are cancelled? What companies in San Francsico are waiting in line to lease commercial space that would be the most expensive psf. outside of Manhattan?

Posted by: Morgan at October 24, 2008 10:52 AM

The Transbay Tower would make a great "Wells Fargo" tower...

Posted by: flaneur at October 24, 2008 11:04 AM

Haters:
Please keep in mind the transbay terminal tower is likely going to be the only time EVER that a tower will be allowed to be 1k ' tall.

Posted by: Bob at October 24, 2008 11:08 AM

flaneur -
The EIR for the Redevelopment Plan and Terminal (they were both covered in the same EIR)did not include anything about a 1,000' tower, as something of that magnitude was not even envisioned at the time (late 90s). The EIR analyzed a 550' building on the site, as that is what the heighest heights are currently in city and which also surround that site.

The Transit Tower will be included specifically in the EIR for the Transit Center District Plan, which the City is currently working on, due for adoption at the end of '09.

Until the EIR is certified, plan adopted and zoning changed, the Tower cannot get approved.

Posted by: intheknow at October 24, 2008 11:25 AM

Bob, being doubtful of Transbay Tower ever being built does not mean that you hate the design, tower or height. I am pro super tall towers in that part of the city, but don't think it will be happening in the next decade or so. I was hoping for the SOM design, or for the Rogers plan, but would be happy to see the Pelli tower built.

Why am I doubtful?

"It's the Economy Stupid!"

Posted by: anon2 at October 24, 2008 11:51 AM

All that is fine, rational and valid. Not that it matters to the point at hand, but I still give it a 50-50 shot. Mostly because it's critical to the new terminal going forward, so the city might be willing to do things they wouldn't for other developers. The real threat is Hines backing out. But they haven't backed out yet so, again, my point is that you cannot call Transbay "no more" right now, today. You can say things like "I don't think it will happen," or "it might be in jeopardy." And everything you posted at 10:52 would be excellent support of that opinion. 10 years out? No one can predict that far ahead. Especially not in times like this where everything is very much in flux.

Posted by: PG at October 24, 2008 11:52 AM

This is too bad.

Of all the projects that have been scrapped or postponed, I still can't get over the loss Piano's possible contribution to the Transbay development.

Posted by: Timosha at October 24, 2008 12:27 PM

Temporary Transbay Terminal is set to start construction November 1st .... they keep adding banners and signs to those two parking lots on Main Street to fill me with glee every day .... change is a 'coming. I'm not worried about the Transit Center ... development further up Rincon Hill is a bit worrisome (how long can I stand to look at that big hole in the ground on Fremont at Harrison? ughh ... at least I can totally avoid it until I walk over to Local Kitchen and Wine Merchant).

Posted by: jamie at October 24, 2008 1:16 PM

"Tipster. If you don't like it, don't buy it. And I think you're going to earn the name Captain Obvious pretty quickly here if you keep it up. I'm fairly certain no one is looking for quick gains in RE these days. What do you think?

Oh, and I challenge you again to find a way to bring something to the discussion besides your standard negativity. It's extremely tiresome and predictable and really does nothing to further the discussions on this site."

Boo - I couldn't agree more. She's particularly venemous towards SOMA and seems hell bent upon convincing all parties that will listen that they must never even consider buy anything there. And the drone continues ...

Posted by: Conspiracy checker at October 24, 2008 1:50 PM

The standard negativity leavens the pollyanna chorus of boosters.

Posted by: irreverent at October 24, 2008 3:22 PM

The most insulting part of all of this is that I had to put up with that piledriver for two weeks (I work at First and Mission), all for nada! :-

Posted by: Chris. at October 24, 2008 4:16 PM

Yes, tipster is the worst.

Like on the thread linked below, for the home on Broderick for 3.6M. Everyone was positively gushing over it and tipster was the only one bitching about the price.

Which they then lowered by $530K when it didn't sell, thereby proving tipster right.

http://www.socketsite.com/archives/2008/10/vibe_tall_windows_and_a_balconette_2736_broderick.html

Posted by: tipster at October 24, 2008 5:41 PM

Wow what a link. Positively gushing? 4 people said they liked it, and none of them said anything about price either way.

Posted by: sparky-the-bear at October 24, 2008 6:11 PM

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