By Jon Peterson
The Lendlease regional office in San Francisco is estimated to close on the acquisition of the 30 Van Ness Avenue site in San Francisco for $70 million on May 1st, according to sources aware of the transaction and as noted in public documents.
The asset had been owned by the City & County of San Francisco, which sold the property with the assistance of the San Francisco office of Newmark Cornish & Carey. Taking the lead on the sale was Kyle Kovac, executive managing director. Other people involved were Michael Taquino and Daniel Cressman, both executive managing directors. Kovac declined to comment for this story.
The sale of the property produced a cap rate of around five percent, according to sources. This return is based on the property’s current net operating income being produced.
Lendlease is very excited about its new project. “This is an incredible opportunity to bring our global resources, creative energy and holistic approach to revitalize this site in a way that reflects San Francisco’s values of innovation, sustainability and housing at all levels. By partnering with the City and community, our focus is to help the City achieve its goals and create a catalyst that connects adjacent neighborhoods within the proposed hub community plan,” said Alexa Arena, executive general manager for development on the West Coast for the Americas Development for Lendlease.
30 Van Ness mostly consists of office based leased to the City & County of San Francisco. The site totals 180,363 square feet of office space with some ground floor retail. The asset is now 100 percent occupied. The plan is that the City & County of San Francisco will lease back the majority of the office space through 2019. Walgreens occupies the ground floor of the building with a lease than runs through the end of August 2018 and this tenant pays approximately $465,000 in annual rent.
This strong income will give Lendlease some time as its goes through the entitlement process to get the project approved for residential development. Following that, the site could become in the future a development of 600 residential units. The cost for this development could be somewhere in the range of $600 million. The development is planned to have 25 percent of the project be affordable units based on the requirements of Prop C that exists in San Francisco.
Lendlease has a regional office in San Francisco located at 71 Stevenson Street. The company is looking at being more active in the overall San Francisco market going forward. This would involve the development of apartments, condos and office buildings, according to sources familiar with the company’s operations.
Lendlease has been operating in Northern California since 1985. In this region, the company has $1.4 billion of projects under its management. Some of its building projects include Lumina and One Rincon Hill.
Lendlease this year has added new personnel to its NorCal operations. In January, the company hired Tiffany Bohee, as a general manager for development for San Francisco for the Americas development business. In her new role, she is responsible for growing Lendlease’s development capabilities by pursuing and identifying sustainable regeneration projects.
Since 2011 Bohee had served as Executive Director for the City of San Francisco’s Office of Community Investment & Infrastructure, which was the successor agency to the San Francisco Redevelopment Agency.