Exclusive: Last Transbay tower site sells for $160 million

(This article Originally appeared on June 22, 2016)
by Roland Li, San francisco business times

Parcel F, San Francisco's last public development site in the Transbay district zoned for a tower, has sold for $160 million.

The sale of the site at 546 Howard St. closed on Wednesday to a partnership of developers Urban Pacific Development LLC and Hines, along with Goldman Sachs Group Inc. (NYSE: GS)'s Broad Street Principal Investments LLC. A spokesman for the Transbay Joint Powers Authority, which controlled the site, confirmed the closing. The identity of the buyers was first reported by the Business Times in March.

The exact development plan and design of the tower, which could rise up to 750 feet, hasn't been finalized. Preliminary plans call for 200 to 300 hotel rooms, 200 residential units, and 250,000 to 425,000 square feet of office space. The tower is required to have 15 percent affordable units. The project also isn't entitled and would require city planning reviews. The project also requires office development allocation approval under the Prop. M ordinance, which limits the amount of office space that the city approves each year.

The sale is a key deal for the last highrise of the city's Transbay district, and proceeds are also expected to fund the adjacent Transbay Transit Center, which is grappling with cost overruns and funding gaps. The Transbay Transit Center is expected to be completed by the end of 2017. The Parcel F tower will join neighboring spires including Salesforce Tower181 FremontPark Tower and Oceanwide Center at First and Mission, encompassing one of the biggest development booms in the city's history.

Michael Kriozere of Urban Pacific Development LLC, who also developed the two One Rincon Hill towers, said the developers have selected two high-profile architects for the Parcel F tower: Pritzker Prize-winner Cesar Pelli, the same architect of the Transbay Transit Center, and HKS Architects, which designed the Jasper tower in Rincon Hill.

Kriozere hopes to secure approvals and break ground within a year, and the tower could be completed by 2019 or 2020. The buyers also have the option to acquire an adjacent site at 540 Howard St. for $15 million, which was included as a premium in the $160 million deal. A separate public site about two blocks away, known as Block 4, could also be built by the development team have over 45 percent affordable housing to satisfy Parcel F's 15 percent requirement.

The deal came together after developer Crescent Heights withdrew its bid after financial concerns. The Transbay Joint Powers Authority also cancelled a planned live auction last September.