Trammell Crow Residential has made its first foray into South San Francisco, spending $63 million to acquire two adjacent sites that have the city’s approval to be redeveloped into almost 500 apartments.
The properties at 100 Produce Avenue and 124 Airport Boulevard are occupied by six 1980s-era industrial buildings that its new owner will demolish and replace with two seven-story structures with 480 apartments. The project is the city’s second-largest residential development in the last decade, behind an 800-unit development about two miles west. That one was approved in 2019 but hadn’t broken ground as of the start of May.
Dallas-based Trammell Crow Residential, meantime, plans to start construction on its recently acquired sites in the second half of 2023, the company’s Stephanie Hill told The Real Deal. Construction will take 32 months, Hill said.
Trammell Crow is taking over the four-acre project from seller Glendale, California-based PS Business Parks and Hanover Company, a Houston-based upscale multifamily developer. Hanover was initially in a partnership with PS to entitle and construct the project, the firm’s Scott Youdall told The Real Deal on Friday. After the City of South San Francisco approved it in December, PS decided not to move forward with building it and instead elected to sell its underlying land, Youdall said. PS declined a request for comment, as did CBRE, which marketed the land for sale.
The deal shows the gravity that the Bay Area’s vibrant life science sector can have on multifamily developers such as Trammell Crow,. Its project in South San Francisco will benefit from the more than 200 life science companies next door, which makes the city of 65,000 or so residents among the most significant clusters for the industry in the world, Hill said.
The project also stands to benefit from strong market demand fueled by the Bay Area’s under-supplied housing market. In San Mateo County, which includes South San Francisco and 19 other cities and towns, about 10 new jobs have been created for every new multifamily unit since 2010, according to an offering memorandum. That makes it one of the most under-housed subregions in the Bay Area relative to job growth, the memo said. Average monthly rents for Class A apartments in South San Francisco have jumped 47 percent over the past decade, to almost $3,500 a square foot at the end of last quarter, the memo said.
Trammell Crow Residential is the multifamily development unit of Crow Holdings and is unrelated to Trammell Crow Commercial, a subsidiary of CBRE. Its U.S. project pipeline ranges nationwide; projects in the Bay Area besides its latest in South San Francisco are in San Francisco, Oakland and Danville, a town in the East Bay.
The company is reviewing the unit layouts in its South San Francisco project and plans to make minor changes to it, Hill said. Of its 480 units, one-eighth of them will be affordable to those making between 80 and 100 percent of the local median income, or between $104,400 and $116,200 a year. Future residents will be within a mile of a BART station and half a mile from Caltrain.