By Meghan Hall
San Francisco’s South of Market neighborhood, named aptly for the city’s arterial Market Street that borders the north of the district, has quickly transformed over the years, and as a result real estate is snapped up quickly as developers look to capitalize on the diminishing redevelopment opportunities.
The City of San Francisco is currently reviewing plans submitted by San Francisco-based multifamily residential developer BUILD, Inc., which is seeking to build upon one of the remaining parcels of land in the neighborhood. The project site, located at 469 Stevenson Street in San Francisco’s bustling South of Market neighborhood, was originally owned by Nordstrom. BUILD Inc., which signed an agreement in 2016 with Nordstrom to purchase the site within three years, is planning to demolish an existing 28,790 square-foot surface parking lot on the site and replace it with a 31-story, 335-foot-tall mixed-use development.
“We have a housing crisis, the effect is purely positive in creating new housing,” said Lou Vasquez, founder and managing director at BUILD, Inc. “We’re taking what is a parking lot now and putting a few hundred rental homes in its place.”
The site is a stone’s throw away from the Montgomery Street Bart Station, Philz Coffee, Target and numerous other retailers, museums and parks.
“I think it’s a great location. It’s half a block off Market [Street]; it’s half a block from mass transit,” said Vasquez. “It’s extremely walkable, and there’s a lot of new business coming to the area.”
The city is currently considering two possible plans submitted by BUILD: the first, a base project, would include 325 dwelling units and would be approximately 352,098 square feet in a structure that would be 160 feet tall. The “bonus” project, which would take advantage of the State’s Density Bonus Program, would include 439 dwelling units covering 398,209 square feet of space. 6,902 square feet of ground floor retail is also included, along with 219 below-grade parking spaces, bringing the total footprint of the project to 495,138 square feet.
According to San Francisco City Planner Gina Simi, the city hopes the project will bring much-needed housing to an incredibly competitive market.
“I can’t speak for BUILD or as to why it’s important to them,” said Simi of the State’s Density Bonus Program, “but the program is intended to encourage the development of affordable housing.”
Although the California State Density Bonus law was adopted in 1978, the program was not utilized by the San Francisco Planning Commission until 2016, when it approved a housing project at 333 12th Street. In exchange for incorporating a certain percentage of on-site affordable housing into the project, developers are able to bypass certain height and density requirements, allowing more units to be built on the property. BUILD Inc. is currently aiming to designate between 17 and 19 percent of the units as affordable housing.
While Vasquez admits that so far the biggest difficulty has been how to precisely calculate the State Density Bonus, the extra work will pay off.
“There are a couple advantages to the State Density Program,” explained Vasquez. “The first is that you provide more housing. Two, we’re freed up in a design sense because planning code limitations can be disregarded in terms of setbacks and the like. You can just design a better building.”
When asked about specific plans for the design of the building, Vasquez stated that BUILD did not even have renderings yet, because the project was still in its most preliminary stages.
“It’s just too early. Nothing is crystallized yet,” he said.
Many of the other details such as cost and delivery also remain blurry at this point in time, and they will vary greatly depending on which direction the city and the developer chose to pursue.
“The cost of construction right now is high,” he said. “The question is in 18 months or two years what will the costs be?”
When the City was asked about the project’s timeline, Simi emphasized that the city was only in the early stages of review.
“The PPA Letter was just issued on May 17,” said Simi. “A PPA is a Preliminary Project Assessment, which is a preliminary process that evaluates moderate to large projects before development applications are filed.”
Before the project can be approved, BUILD Inc. must submit a formal application and undergo an extensive environmental review, which can take over a year.
“We are 18 months out before approvals, so it will be a long time before we figure that out,” speculated Vasquez on the timeline, although BUILD Inc. is aiming to start construction in the fourth quarter of 2019, with delivery anticipated between 2021 and 2022.