A tale of two succession plans

Companies can often represent a mirror of their leaders. Understand the top executive, and you’ll have a better chance to understand the why and how of the organization beneath.

So, changes at the top create some intrigue, as is the case for Related California, a subsidiary of the dominant Related Companies and one of the state’s most prolific developers. This week, The Real Deal‘s Lauren Elkies-Schram broke the story that Bill Witte, Related California’s chairman and CEO, planned to step down.

For more than 35 years, Witte, 74, led the once-upstart Related California and its development of tens of thousands of new housing units — a portfolio worth several billion dollars — across the state. To continue his work, Witte has tapped two successors: company president Gino Canori and in-house affordable housing executive Ann Silverberg. Canori is based in San Francisco and will become president and CEO of Related California’s market rate and mixed-income development group. Silverberg will take over as president and CEO of all affordable housing work.

Sometimes succession plans don’t work out, as evidenced this week by the news that Victor MacFarlane has returned as CEO of the development firm he founded, MacFarlane Partners. MacFarlane, now 74, had stepped down in 2022 from the San Francisco-based company, which the San Francisco Business Times called “one of the first and largest Black-owned real estate development firms in the country.” MacFarlane thought he had a succession plan in place, handing the keys and his legacy over to protégé Landon Taylor.

According to the Business Times, Taylor struggled to “pursue business opportunities without MacFarlane’s involvement.” Taylor is now starting up his own company, LegacyFirst, which will reportedly work with MacFarlane Partners to complete Freedom West, a $2.3 billion megaproject in San Francisco’s Fillmore neighborhood envisioned to have more than 2,000 new housing units, a hotel, and commercial space. Momentum on the project has slowed in recent years, and MacFarlane told TRD the focus is on entitling the property for the development.

Regarding succession plans for MacFarlane Partners, MacFarlane, 74, told TRD he has none, and that he now hopes to wrap up the firm before he turns 80.

What hasn’t slowed in San Francisco is the artificial intelligence agency’s grip on commercial real estate. Earlier this week, the San Francisco Chronicle reported that Nvidia, the multi-trillion-dollar chip manufacturer, leased 45,000 square feet at the Mission Rock project, where they’ll be neighbors with Visa, Coinbase and the Golden State Warriors. Nvidia has largely taken up space in Silicon Valley but now stake out a presence in OpenAI’s Mission Bay neighborhood.

Up around the Embarcadero, OpenAI rival Anthropic, creator of the large-language-model Claude, is reportedly finalizing a long-term lease at 300 Howard Street. According to the San Francisco Chronicle, the lease terms could be as long as 13 years, and “would involve the company taking over the entire 420,000-square-foot building.” The building was previously leased to FitBit.

Such a lengthy lease would fly in the face of the city’s recent trends. Yes, high-end office leases are flying off the charts, but many leases are for three-to-five years — terms which provide necessary flexibility for young companies to grow fast, but add a layer of long-term uncertainty to the local office market.