By Jon Peterson
San Francisco-based Build and Denver-based UDR have come together to build a 136-unit apartment development in San Francisco located at 1532 Harrison Street. The total development cost of the project is $84 million.
UDR stated in its second quarter 2017 earnings report that its preferred equity investment in the project is $24.6 million. The return rate on this investment is 11 percent. UDR declined to make an additional comment beyond what it stated in its earnings report.
UDR is not getting ownership stake in the property. It will be earning a return on its preferred equity investment. The construction loan on the project is being provided by Bank of the Ozarks. The project on Harrison Street will be the first development that Build and UDR have done together.
“The rental demand for San Francisco apartments remains very strong. Our project should attract very good interest from technology workers as our site is about six blocks from where Twitter is located,” says Lou Vasquez, a managing director for Build. The majority of the units in the project will be market rate units. Around 14 percent of the project will be designed for affordable renters.
The project will have several shared amenities. This will include 3,000 square feet of ground floor retail with an on-site café, 85 below ground parking spaces and 136 bike parking spaces. The companies are working with Macy Architecture and BAR Architects on the development.
The moving dirt for the project has just started. “We are anticipating that it will take 18 to 20 months to complete the entire project. The leasing efforts will begin six months prior to the finish of the development,” said Vasquez. The site for 1532 Harrison was previously used as a surface parking lot. Build has owned the site for three years, and the company had to take the site through the full entitlement process.
UDR has another new development project in the San Francisco Bay Area in the works. The public real estate investment trust stated in its second quarter earnings report that it owns some land in Dublin being considered for a future development project. The company owns this land 100 percent at a cost basis of $10.1 million. The company is in the process of obtaining entitlements and design approvals. There was no indication on how much land is involved with this project or when the development would be started.