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The hard-fought litigation involved disputes in San Francisco County Superior Court, U.S. Bankruptcy Court and before a Bankruptcy Appellate Panel. The settlement ends all of the cases and leaves TMG and Northwood with seven parcels facing Mission and First streets that now have four mixed-used buildings and an empty lot.
TMG has not decided when it will start the new project at the northwest corner of First and Mission streets and has spoken to no general contractors, said Matt Field, a managing director with the company.
The $122 million purchase price is generally considered a discount, said Michael Grisso, senior project manager in the city’s Office of Community Investment and Infrastructure, the successor to the San Francisco Redevelopment Agency.
The sale is the latest in a series of land transactions around the Transit Center that are setting new benchmarks. Chicago-based Golub & Co. LLC is to pay $1,135 a land foot, or $30 million, for a block at Folsom and Beale streets later this year. Avant Housing and Palo Alto apartment landlord Essex Property Trust Inc. are to pay $1,604 a land foot, or $43.3 million, next year for a block at Folsom and First streets. Development is expected to top out at 300 feet on the Golub site and at 400 feet on the other, Grisso said.
Policy for the Office of Community Investment and Infrastructure requires that it not sell land until a development is starting.
Golub is expected to start development in October on 409 market-rate apartments with a local partner, South San Francisco-based Project Management Advisors Inc. Avant plans 456 market-rate apartments but won’t start until mid-2014, said Eric Tao, an Avant principal.
The project’s total development cost is expected to be approximately $250 million. “We decided to bring Essex in because we needed a long-term capital source that wanted to be a majority owner. Our role in building projects is more of a developer,” Tao said.
Grisso said that his office intends to issue requests for proposals for two additional blocks in the Transbay Redevelopment Project Area next year and in 2016, both involving offices.
According to new data from CBRE Inc., leasing activity in San Francisco through the second quarter was down 45 percent this year to 3.1 million square feet. In the second quarter, net absorption—the change in occupied space—increased less than 200,000 square feet. Rent growth has slowed, rising 6.5 percent year-to-date compared with 14.6 percent for the first half of 2012.
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