The first public iteration of a proposed agreement between a private company and the Port of San Francisco to outline prospective terms for development of a waterfront site near AT&T Park is expected to be public in the next several weeks.
Seawall Lot Associates LLC, a joint venture that includes the San Francisco Giants, has been engaged in exclusive negotiations with the port since September 2010. The two are hammering out a term sheet that will express the public-private vision for the remake of a more than 20-acre parking lot and six-acre pier. The development is to be known as Mission Rock.
The site is a keystone between the rapidly developing Mission Bay neighborhood and the South of Market district. It is separated from the stadium by McCovey Cove and is envisioned as an extension of the baseball field as well as an integral community within Mission Bay. The developers propose to build up to 3.5 million square feet of housing, offices and other uses. That includes a five-acre park along the water’s edge across from the stadium and a residential tower as high as 450 feet.
Officials for the project team told a gathering at the San Francisco Chamber of Commerce on June 12 that they have been meeting in negotiations twice a week with Port staff to refine the details of the terms. Once they have the non-binding—but comfort-inducing—agreement settled, the developers should proceed to the environmental review, said Jack Bair, senior vice president and general counsel for the San Francisco Giants. The term-sheet is nonbinding in part so that the two sides can return to the document after the environmental impact report is accepted and modify the agreement if necessary.
The baseball club and The Cordish Cos., a Baltimore-based real estate developer and entertainment-district operator, form the joint venture that wants to develop the site.
The goal is to finish the term sheet by the end of this year, then to complete the EIR with an eye on breaking ground at the beginning of 2015. The selection process for the master developer began in February 2008.
The 11 building, $1.6 billion community would be developed in stages over a decade or less. Financing for the project has not yet been settled, and team executives speaking before the chamber said it was too early to test capital-market interest. “We do have two well capitalized partners who both understand the costs. Cordish has done a number of large-scale projects,” said Jon Knorpp, who is affiliated with Mission Rock. The joint venture could develop the parcels itself or sell to third parties.
The developers did not disclose the total anticipated cost, but Bair and plans submitted to the port in March make clear that developing the site is both a technical and financial challenge. Vertical development will require pilings as deep as 270 feet, and because the location’s use has never necessitated basic urban infrastructure, it means sewer, water and drainage systems must be built from scratch as well as electrical and data utilities. Pier 48 also needs extensive upgrade.
Financing would be segregated between horizontal and vertical development with financing sources for the horizontal development requiring greater returns because of the perceived greater risk. To help mitigate risk, the project also contemplates a four-phase, “just-in-time development approach” for the infrastructure to support the buildings’ development, including construction of the parks.
“While there has been significant recovery in San Francisco real estate markets since the national crash and subsequent ‘Great Recession,’ current market conditions generally do not yet support speculative new vertical high-rise construction,” the March documents say. “Currently, little to no institutional capital is pursuing new large scale speculative land developments in the region….”
The March report also makes clear that some public financing mechanisms would be needed to provide lower-cost debt to support the public improvements.
The developers also are working with under the constraints of a 75-year ground lease for the Seawall lot and a 66-year lease of the pier with the port. The stadium is also subject to a 66-year ground lease.
Bair said the partners had been disappointed by Salesforce.com Inc.’s decision not to go forward with its two million square-foot headquarters campus at Mission Bay. But he was not deterred, citing the unexpectedly rapid build-out of the district in the last decade. “We think it is a temporary setback. Silicon Valley is now from San Francisco to the South Bay. This development is ideally positioned to capture that. We think this is a very attractive place for high-tech industry to locate satellite offices or headquarters themselves,” Bair told the chamber gathering.
Mission Bay as a whole is relatively suburban, with larger street blocks and institutional-size and -grade buildings. The developer plans to introduce a more fine-grained street grid to the site to help reduce the sense of scale. To a pedestrian, the feel would be reminiscent of the Financial District or SoMa.
The Giants also are striving for a “model community, incorporating green technologies and sustainable practices to reduce energy consumption, vehicle emissions and the community’s overall carbon footprint,” according to the March report. Their architect, Perkins + Will, recently announced that its new managing director in San Francisco is Peter Busby, a highly respected architect from Canada with impeccable green credentials.
In total, the plan incorporates up to 125,000 square feet of retail, up to 1,000 apartments and townhomes, up to 1.7 million square feet of offices and a more than one-acre central park that would unite the six proposed buildings around it. In all, the plan contemplates three to five residential buildings and five to seven office buildings in various combinations.
“We want a destination in Mission Bay that is more pedestrian scale,” Bair said.
The north edge is devoted to three distinct open spaces that act as a bridge between the large-scale public gathering space of the stadium and the tighter internal street grid of the proposed development.
One scheme to enliven streets is to build a 2,000-space parking garage at the site’s southwestern corner. That means game-goers would be forced to traverse the streets as they go to and from the stadium. The parking garage also replaces the spaces being lost to the development itself. Another 600 parking spaces would be available to residents, office workers and visitors.