By Meghan Hall
Throughout the current market cycle, a large influx of both businesses and new residences has led to a plethora of new mixed-use residential and commercial developments throughout San Francisco; developers and public real estate companies are eager to partake in the city’s residential and commercial real estate markets in order to maximize their investments. However, until recently, not as much attention has been given to the market for production, distribution and repair (PDR) space within the City of San Francisco, but a new proposed project located at 1401-1433, 1449 Illinois Avenue in the Eastern Neighborhoods might help change that.
Workshop1, a development, architecture and brokerage firm based in Oakland, submitted a preliminary planning application in January 2017 for the Illinois Avenue site with the hope of capitalizing on the City’s efforts to maintain and create additional PDR space in San Francisco.
“The whole point of the project is that we believe there is a real opportunity to target advanced and emerging industrial uses in San Francisco,” explained Will Mollard, Workshop1’s owner and real estate broker. “We had done a lot of housing projects previously, and as that matured and costs have increased, we have been focusing on some other markets; the industrial uses have been a real focus for both planners and politicians in San Francisco.”
Preliminary plans for the site would demolish the existing industrial buildings and construct a three-story, 40-foot-tall, mixed-use building with 228,869 square feet of designated PDR space and 2,500 square feet of retail space. The City has asked Workshop1 to provide additional details regarding parking and plans for the exterior architecture. Because the plans are still preliminary, Mollard said some specific details regarding both of those points remain in development, but they are working on them.
Over the past several years, city officials have been striving through a variety of means to maintain existing PDR space within San Francisco and stem the transition of the Eastern Neighborhoods from a primarily industrial district to a mixed-use office and residential neighborhood. In 2014, Mayor Ed Lee and several members of the Board of Supervisors proposed legislation to amend the Planning Code to allow office and retail space to be combined with PDR in mixed-use development projects.
At that time, the City’s Planning Department began numerous investigations into activities of some landlords who were taking advantage of the commercial real estate market’s high rental prices and leasing industrial-zoned spaces to office tenants. One report claims that there were more than 100 cases of tech and professional firms using buildings designed for manufacturing and warehousing as office space.
While the city officials from the Planning Department declined to comment on the current state of PDR in San Francisco or the status of the development on Illinois Street, Mollard emphasized that the PDR market is finally growing in San Francisco thanks in part to increased research and development in the industrial and automobile sector.
“As it turns out, it has always been about jobs and employment,” said Mollard. “With companies doing advanced manufacturing, R&D, the PDR market is maturing in ways that we had not imagined it would.”
According to Madsen, the redevelopment of 1401-1443, 1499 Illinois Street could not come at a better time; several other projects such as Pier 70, which just broke ground in May 2018, and the Potrero Power Plant development, are at various stages of redevelopment, signaling the re-emergence of the Eastern Neighborhood as a desirable location to be.
“The site is well located to all parts of San Francisco, the Dogpatch as a place to live and play, and you can naturally see a variety of focuses putting a premium on being located in this part of San Francisco,” said Mollard. “That said, it’s been an underutilized area. I think the location and the market is catching up to it.”
Located along the waterfront, the project site is located just a block from the Third and 23rd Street Muni Stop and is a short walk from the 22nd Street Caltrain station, and Interstate 280 is also only several blocks away. Pier 70 and the Potrero Power Plant are just north of the site. Smaller businesses operating out of PDR spaces such as Center Hardware, a campervan rental and several auto part shops sit just to the south.
The redevelopment of 1401-1433, 1449 Illinois Street is still in its preliminary stages; Mollard expects that Workshop1 will spend the next year vetting the proposed plans with the city, since the group has yet to submit an environmental application or a building permit application, although the hope is to break ground by mid-2020. Mollard also stated that Workshop1 will begin a transportation study with the city in the hopes of potentially adding public improvements to the Eastern Neighborhood’s green connector streets to the plans.
As to who could potentially lease the new space, Mollard said no tenant has been confirmed yet, although he said the site has generated a lot of interest. Workshop1 hopes to have a lease in place before breaking ground on the development.