By Jon Peterson
Pasadena-based Alexandria Real Estate Equities has acquired the 88 Bluxome Street site in San Francisco for $140 million, according to sources that are familiar with the transaction. The deal closed earlier this week.
In November of 2016, The Registry reported the sale and the amount, which was stated in the public real estate investment trust’s supplemental report for its third quarter 2016 earnings.
The seller of the asset is the San Francisco-based Bay Club Company. This company was represented in the transaction by the San Francisco office of Newmark Cornish & Carey through its NGKF Capital Markets group. The listing agents were Michael Taquino, Kyle Kovac and Daniel Cressman. They all hold the position of executive managing director with the company. Newmark declined to comment when contacted for this story.
The site is currently the home of the San Francisco Tennis Club. Alexandria had stated in its third quarter 2016 earnings report that the seller may lease the property back for a term of one year or more depending on certain factors. There has been no change to this since the property has been sold.
Alexandria did not respond to inquiries about seeking comment for this story. The public REIT will be working with San Francisco-based TMG Partners as its development partner on the project going forward.
The plans by the new owners are to obtain entitlements on the site to develop one million square feet of new office space. The plans were to develop this space in two buildings, as stated by Alexandria in its 2016 third quarter earnings call.
In September of 2015, the developers had initially proposed razing the existing three-story tennis club to construct a mixed-use project with 368,550 square feet of office and 5,500 square feet of retail space. The project site was also planned to include a 25,000-square-foot fitness club and four outdoor tennis courts. It was estimated at the time that the project would carry an estimated construction cost of $117 million, according to the preliminary project application filed with the city in 2015.
In March of 2016, the developers submitted a revised Preliminary Project Assessment (PPA) for a mixed-use project. In a prepared statement the two companies outlined a vision for the project but did not provide details on the size or scale of the development, which would more than double from the proposal submitted in late 2015.
The project falls under the city of San Francisco’s Central SoMa Plan. The city published in August of 2016 a revised plan and implementation strategy document that sets the vision of the Central SoMa Plan to create a sustainable neighborhood in the city by the year 2040. A number of developers, including Tishman Speyer, Kilroy Realty and Boston Properties, have lined up potential projects in the area and were effectively forced to place them on hold until the plan was finalized and approved. The final plan adoption, according to the city of San Francisco documents, could occur by May of 2017, although that timing is at the discretion of the Board of Supervisors.