By Jon Peterson
Pasadena- based Alexandria Real Estate Equities has acquired a 1.23-acre development site located at 500 Townsend Street in downtown San Francisco. The purchase price of the parcel was around $50 million, according to sources familiar with the transaction.
“We are now in a quiet period for our company. We will not be releasing any detailed information on what we paid for the site and our projected total development cost until our first quarter 2014 results are reported in two weeks,” says Joel Marcus, founder and chief executive officer of Alexandria.
It will be a while before Alexandria will be starting the project. “I would think we would not be having a ground breaking on the development for 15 months. This will certainly allow us to do the design and architectural work on the project to have it all ready to go for that time period,” said Marcus. The total size of the project is projected to be around 300,000 square feet.
The parcel had been owned by a private family. It sold the property with the assistance of the San Francisco office of Cornish & Carey Commercial Newmark Knight Frank. One person that was involved with this was Mike Taquino, a managing director for the broker.
“This site is part of the West SoMa district plan that was approved by the City of San Francisco in 2013. This means that the environmental impact report on the project has already been done and should put the development site ahead of some other development projects in other parts of the city,” said Taquino.
Alexandria sees that there are many potential kinds of tenants that could be attracted to the site. “There are several types of tenants we think that might be interested in the site. These could be life sciences, technology companies and maybe digital health firms. We think there is tremendous tenant demand for this part of San Francisco and our project could be leased to a single or multiple tenants,” said Marcus.
The public REIT sees this site as a logical extension of its operation in the Mission Bay district. “Our experience with our one million square foot Mission Bay portfolio, makes the 500 Townsend site a logical extension of the growth of our company. The Mission Bay assets are now 99.8 percent occupied and there is no room to grow this portfolio,” said Marcus.
Alexandria is a major owner of urban science and technology campuses in select markets around the country. The San Francisco Bay Area is one of its targeted markets. Through the end of last year, it held a portfolio in the regional of 2.8 million square feet with 26 properties. These assets had a combined occupancy of 97.7 percent. They were located in Mission Bay, South San Francisco and the Peninsula.