Strada Investment Group wants to build homes instead of offices at a demolished tennis club site in San Francisco — if the city rezones it, and if Alexandria Real Estate Equities will sell it.
The locally based developer asked the city Planning Commission to relax zoning for housing around 88 Bluxome Street in South of Market, the San Francisco Chronicle reported.
Jesse Blout, a principal at Strada, sought legislation proposed this summer by Mayor London Breed that would relax zoning in Central SoMa, which requires two-thirds commercial uses at office development sites. The legislation would allow developers to switch to housing.
Strada is now building a 16-story housing highrise at 555 Bryant Street, two blocks from 88 Bluxome, but gave no details about a potential residential project there.
“Today, I think we’re the only crane up in Central SoMa,” Blout told planning commissioners. “We have distressed office buildings all around us.
“We recently bought one that cost $260 a foot, and a new office building today costs about $1,200 a foot,” he said. “That gives you a sense of the scale of the challenge, of when we are actually going to have new office construction. Some people think maybe a decade.”
The Planning Commission took note, voting to unanimously remove the zoning restriction, but modified the new law to cap the height of future housing projects there to 600 feet.
The legislation that would nix the requirement under the city’s Central SoMa Plan that six sites accommodate new office towers now heads to the Board of Supervisors for potential approval.
The office market in San Francisco has largely collapsed, with more than 37 percent of its offices empty. At the same time, the city has a state mandate to build 82,000 homes by 2031.
In 2017, Alexandria bought the block-long Bay Club San Francisco Tennis at 88 Bluxome for $140 million. When the club closed two years later, Alexandria bulldozed the city’s largest tennis facility.
The Pasadena-based real estate investment trust ultimately planned to build 775,000 square feet of life science offices and research labs, but the project stalled during litigation and a life sciences market slump.
It is unclear how far along the talks are between Strada and Alexandria — and whether Strada would ever buy the site, according to the Chronicle.
Alexandria, which built such mega bioscience campuses as Gateway Commons in South San Francisco and the Alexandria Center for Science and Technology in San Francisco’s Mission Bay, is shedding real estate, it said in an earnings call last month.
The nation’s largest life science developer has sold several of its properties outside of the Bay Area to residential builders as it adjusts to the declining office and lab market. It plans to part with more properties in the coming months.
Alexandria CFO Marc Binda told investors the company has $1.2 billion in pending sales that are “subject to non-refundable deposits or executed letters of intent or PSA (purchase and sale) agreements.”
“Given that these assets no longer fit our strategy, we’ve elected to sell … and allow the buyer to invest the capital to reposition those assets,” Binda said.
— Dana Bartholomew
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