By Meghan Hall
Concerns of density and rent fluctuations aren’t stopping developers from pursuing new projects in the downtown core of San Francisco. At the end of October, real estate private equity firm Strada Investment Group submitted a preliminary planning application to the City detailing its intent to construct a 160-foot residential tower on seven lots in the South of Market neighborhood. According to planning documents, the development is expected to cost around $200 million.
Located at 555-585 Bryant St., Documents detail that the 16-story development will include 503 residential units, of which 53 will be studios, 170 will be urban one-bedrooms, 73 will be one-bedrooms and 205 will be two-bedrooms. All units will be for-rent, and 100 will be designated as affordable.
The development will also include 8,925 square feet of production distribution and repair (PDR) space, replacing some of the PDR space that will be demolished to make way for the new project. 100 parking spaces are also allocated in the plans. Solomon Cordwell Buenz is the architect of record for the project.
There have been several proposals pitched for the redevelopment of the property over the past several years. In 2014, plans were submitted to develop 190,000 square feet of office over 10,000 square feet of retail or 112 residential units over 47,000 square feet of office and 20,000 square feet of retail. Several years later, in 2017, those preliminary plans were scrapped as new ones, which would include a 300-key hotel with 1,600 square feet of retail, were proposed.
Strada Investment Group has been active throughout the Bay Area, even over the past six months, and in September announced a joint venture with California State Teachers’ Retirement System (CalSTRS) to pursue additional multifamily development in key sectors, including the San Francisco Bay Area. CalSTRS has approved $300 million of equity capital to target “build to core” assets.
At the end of the third quarter, multifamily vacancy in San Francisco sat at 10.2 percent, an increase of 4.9 percent quarter to quarter, according to data from Transwestern. Rent per square foot also recorded a decrease of 9.2 percent, and the average rate per square foot dipped to $3.76 per square foot, down from $4.414 in the second quarter of 2020. Transwestern also estimates that studio rents have decreased 31 percent—the largest decrease recorded in any major metro market. One-bedroom inventory and two-bedroom inventory saw rents drop 24 percent and 21 percent, respectively. Transwestern also states that while rents have dipped, rent collection still remains strong as landlords have offered more concessions to keep tenants in place.
On a more positive note, San Francisco County has brought back 33,000 jobs, roughly a third of the 90,000 jobs lost between May and August. While recovery is slow, the market favors tenants in the short-term, long-term outlooks for property owners and landlords remains strong.
As of this writing, the application team had not yet returned The Registry’s request for comment.