JMA Ventures LLC | Week in Review: 4/14 – 4/18
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Week in Review: 4/14 – 4/18

After an extensive two-year renovation, Hotel G — a luxury boutique hotel brand out of Hong Kong — announced it will open on May 2. So far, room reservations have been filling up at the 153-room, 13-floor hotel near Union Square, said general manager Steve Rizzo. Average room rates range from about $190 to $280. Hotel G will have a gym — opening this summer— and a meeting room, as well as design features that include fog-colored walls, wood finishes as well as some fair trade pieces such as rugs and artwork. The aesthetics of the hotel, designed by New York-based Hun Aw Studio, have “clean lines,” Rizzo said. “It’s a mix of old and new, some is antique, some is modern — it’s a good blend.” Other design features include vintage schoolhouse chairs, banker’s lamps and mid-century writing desks. The hotel has partnered with San Francisco-based Creativity Explored, a nonprofit arts center for developmentally disabled adults, to curate, showcase and sell artwork, Rizzo said. The lobby will have oversized metallic reception desks underneath soaring ceilings, as well as a vintage courthouse bench and plush, colorful armchairs. Having replaced San Francisco’s long dormant Hotel Frank, the property at 386 Geary St. is owned by a Los Angeles-based investment group called Downtown Properties, which bought the hotel from AEW for $28.8 million in September 2012. Hotels G has major expansion plans. The Chinese hospitality management group added two new hotels to its portfolio this year — including the Hotel G San Francisco — and plans to open another four in China in the next couple of years. (SF Biz Times)

A Washington-based hospitality group entered the San Francisco hotel market recently when it acquired the Hotel California, a 101-year-old, 83-room hotel at the corner of Geary Boulevard and Jones Street. Pineapple Hospitality, a hotel management company headquartered in Bellevue, Wash., purchased the Hotel California, which was affiliated with Best Western, from Rick Butler of Geary Street Properties for $27 million. A large renovation and redesign of the seven-story hotel is planned for next year, said Della-Rae Carriere, Pineapple Hospitality’s asset manager. In the meantime, the hospitality group is incorporating some amenities that it offers at its other hotels — basic updates it calls “Pineappling” — such as free wireless Internet access, bike check-outs, dog-friendly rooms and a daily coffee and cupcake reception. The group bought the hotel as a way to enter the San Francisco hotel market, Carriere said. (SF Biz Times)
McDonald’s may have sold billions of hamburgers, but it’s no match for the power of SoMa real estate. The site of the burger joint at Third and Townsend streets in San Francisco is up for sale, and the price per square foot could set records for land without entitlements. Cushman & Wakefield is handling the sale of the 13,750-square-foot parcel at 701 Third St., a South of Market site zoned for about 100,000 square feet of mixed-use space. No permits have been issued for new construction on the site. The 3,200-square-foot restaurant on the property is leased through Jan. 2017, providing an income stream from the parcel while a buyer pursues approvals for redevelopment. With heavy demand in SoMa, even small parcels such as 701 Third St. can tap into rising prices and the possibility of competing buyers. Brokers say a nearby property at 500 Townsend St., also without permits, has received an offer at $170 per square foot; a similar price would value 701 Third St. at $17 million and real estate brokers contacted by the Business Times expect it will go for more than that. That compares to what developer Hines paid the Transbay Joint Powers Authority for the land at 415 Mission St. where it plans to build the 1.4 million square foot Salesforce Tower. In March 2012, Hines agreed to pay $140 per buildable square foot for the land, which included entitlements. The site is suitable for mixed-use residential or office development and close to buses, light rail and Caltrain, including routes to the East Bay, Siegel said. The flexible zoning would also be suitable for a hotel, giving a buyer flexibility to tap the hottest market sectors in the neighborhood, he said. Although the parcel is only about 100 feet by 135 feet, making floorplates a bit small for some office tenants, Siegel said there has been interest from boutique office developers. The broker received five offers even before the property was put on the market early this month, and Siegel expects around 200 potential buyers to sign confidentiality agreements to review details of the property before it’s all over. In the depths of the downturn land values crashed and “development sites couldn’t even be given away,” Cressman said. Now, demand is so intense that it has narrowed the usual gap between prices for unentitled land and sites that already have building permits as investors look for a foothold in the booming market, he said. “That’s a prime corner, and the market is so strong for development right now,” said Colin Yasukochi, director of research for CBRE. Given the reports of a record $170 per square foot offer without entitlements for 500 Townsend, he said, a sales price topping $17 million is within reach for 701 Third St., but it would depend on what kind of project and return the investors have in mind. (SF Biz Times)
The site of the long closed-down Home restaurant at the corner of Market and Church streets could become a seven-story, 64-unit apartment building from Brian Spiers Development. The developer submitted preliminary plans to the San Francisco Planning Department for the development at 2100 Market designed by Arquitectonica, a firm that designed Spiers’ Linea condo project that is almost sold out. Other people have tried. A previous and controversial proposal for Chipotle, the burrito chain, to occupy the space was rejected. Home closed its doors three years ago. Spiers negotiated a ground lease with the owner, who decided that housing might be an easier route than trying to find another restaurant tenant. The zoning and heights for the project are allowed under San Francisco’s Market Octavia Plan, which encourages housing development in the area. The building will include 4,700 square feet of retail, one bike parking spot for each unit and a rooftop terrace. Units will range from 500 to 1,000 square feet consisting mostly of two-bedrooms with a few studios and one-bedrooms sprinkled in. Arquitectonica’s exterior design with floor-to-ceiling windows are a play on bay windows that are common in the various Victorian houses in the surrounding neighborhoods. The project is at the early stages. The planning department will give Spiers feedback for him submit the official application. Approval times vary in San Francisco, Spiers said, but construction could start within a couple of years if things go well. The developer has been busy these days mostly selling condos at Linea, where sales have gone faster than Spiers projected. Despite the hot condo market, Spiers wants 2100 Market to be apartments. “This project is going to be apartments because I’m going to keep the building,” he said. (SF Biz Times)

Following a $3.5 million renovation of Le Méridien San Francisco’s lobby, meeting spaces and restaurant, Park Grill and Bar333, the hotel will embark on a further renovation of all its 360 guest rooms. The estimated $9 million renovation — or $25,000 per key — led by Ellen Johnson at Boston-based hospitality design firm Parker-Torres Design, Inc. is expected to begin in October and be finished by March 2015. The room renovations will reflect a more mid-century modern aesthetic in line with the renovation last year of the hotel’s common spaces and restaurant, said Le Méridien San Francisco general manager Pradeep Bobba. As a part of the renovation, the hotel lobby was transformed into the brand’s signature Le Méridien Hub, a gathering space that is designed to change from coffee house in the morning to an atmosphere like a living room throughout the day, Bobba said. The hotel also revitalized its meeting spaces, and redesigned the hotel restaurant, Park Grill and Bar333, which was designed to be a craft-cocktail bar with new cocktail menus tied to the season every month. Le Meridien, at 333 Battery Street, was built in 1988 and designed by architect John C. Portman, Jr. (SF Biz Times)

San Francisco Board of Supervisors President David Chiu plans to introduce what will surely be controversial legislation aimed at regulating short-term apartment rentals, a practice that has become widespread as a result of online services such as Airbnb and VRBO. The websites, which sometimes offer room rates lower than local hotels, have become so common that landlords have allegedly evicted tenants seeking extra cash by catering to travelers. The bill took nearly two years for Chiu to develop, far longer than he predicted. The delays reflect the thorny issues facing landlords, tenants and venture-backed companies including San Francisco-based Airbnb, which in six years has grown to have listings in 34,000 cities and 192 countries and is one of the city’s 10 biggest tech employers. Despite Airbnb’s popularity — billionaire Warren Buffett even urged attendees of Berkshire Hathaway’s annual shareholder confab in Omaha to check it out— San Francisco’s administrative code generally prohibits short-term rentals in residential apartment buildings with four or more units. The San Francisco planning code also prohibits using residences for commercial purposes without special permits. Chiu’s bill would make a significant change by legalizing short-term rentals on a limited basis, subject to rules, but it would expand regulations to cover apartment buildings with as few as two units. Single-family residences would not be affected. Ed Singer, a lawyer who specializes in representing landlords, said he would oppose the proposed rules for a couple of reasons. While he has not seen the language yet, based on what he has heard, Singer worried that tenants could unilaterally decide to start booking their spare rooms if leases do not specifically prevent short-term rentals. He also wants rent-controlled apartments excluded from short-term renting, and he dislikes a provision that would require landlords to give tenants 30 days to “cure” a first-time subletting violation of a lease. Such provisions are prone to gaming by tenants, he said. (SF Biz Times)

In a world where smartphones can help you instantly snag a cab ride, a nice hotel room and even an errand service, consumers have become accustomed to not planning ahead. But in a foodie city like San Francisco, open reservations at top restaurants are scarce, and spontaneous fine dining hasn’t really been an option — until now. An app launching next week called Table8 will give diners a shot at grabbing a table on prime nights at peak times, on short notice. Starting Tuesday Table8 users can access restaurants, including Central Kitchen, La Folie, Boulevard and Hard Water — spots that typically require reservations weeks, even months in advance — by logging and booking a last-minute reservation. Co-founder Santosh Jayaram promises three things to potential patrons. “First, if it’s on the list, it’s a fine establishment,” Jayaram said. “You don’t have to muck around looking for reviews.” If it’s on the list, it also means that it’s sold out through all the regular reservation channels, and it’s during peak dinner times — such as 7:30 on a Friday evening. The company works with restaurants directly to block off tables in advance — sometimes months or a few weeks out. When the service begins, diners can browse potential last-minute reservations at approximately 15 San Francisco spots. When they book at table, diners can pay $20 for a two-top table and $25 for a four-top table — a fee that will likely change in the future, depending on the restaurant and size of the reservation. Half the fee goes to Table8, while the other half goes to the restaurant. “Restaurants don’t have to do anything extra,” Jayaram said, “We’re raising their level of hospitality to those who didn’t have the luxury to plan ahead.” It’s beneficial for the restaurants, too, he explained, because half the proceeds from the Table8 reservation fee go to the restaurant. Plus, the service helps reduce the no-show rate in dining rooms, he added. Jayaram, who served as the vice president of operations in Twitter’s early stages, and co-founder Pete Goettner, a venture capitalist, came up with the idea for Table8 after they worked on an app for Virgin that serves as a virtual concierge. When the pair talked to hotel concierges in major cities like New York and San Francisco, they learned snagging a last-minute table for hotel guests at top restaurants was the concierges’ biggest challenge. Table8 closed a round of $4 million in funding last week and Jayaram said he plans to grow the presence of the 13-person company, expanding the number of participating restaurants in the Bay Area, and moving into other cities such as New York, Boston, Chicago and Las Vegas. (SF Biz Times)

The Bay Area’s apartment boom isn’t just luring new residents, but new developers as well. Lennar Multifamily Communities, a division of Lennar Corp., came into the game in late 2012 and is now pushing forward three deals, totaling close to 500 units. The firm just broke ground recently on a 196-unit apartment building at 601 Main St. in downtown Redwood City, is under construction on a 149-unit project in Mountain View, and is in contract to buy a site at 2600 Shattuck Ave. for 155 units in Berkeley. “The market is extremely competitive right now — the low hanging fruit was picked about a year ago,” said Peter Schellinger, vice president of development for Lennar Multifamily in San Francisco. “We focus on transit-rich and supply-constrained markets with strong demand fundamentals.” Lennar Multifamily’s parent Lennar Corp. is one of the nation’s largest homebuilders with $6.31 billion in annual revenue. Lennar Urban, a Bay Area-based division of Lennar Corp., is the master developer for the massive Shipyard mixed-use project in San Francisco’s Hunters Point. The multifamily division is a new endeavor for the company, which pumped about $31.5 million into the division during the 2013 fiscal year, according to its most recent annual report. In the last three years, the multifamily division amassed a national pipeline of $3 billion worth of apartments projects, most of which involve joint venture and equity partners. “Our multifamily segment anticipates that the construction of its development pipeline will be completed over the next four years,” the 2013 annual report states. “We plan to sell our apartments once rents and occupancies have stabilized. Our multifamily segment is still in start-up mode.” Meanwhile, the Bay Area office has been aggressively pursuing deals here. The Redwood City project, known as Marshall & Main, falls within the city’s Downtown Precise Plan, which encourages dense development of housing. Schellinger said the $100 million project, designed by Christiani Johnson Architects and built by ZCON Builders of Oakland, took only about six months to secure approvals, which made it easier and faster to get under construction. The developer expects to begin leasing units in late 2015. This year, about 420 units will be delivered in downtown Redwood City and about 700 units will start construction. In Berkeley, Lennar Multifamily expects to close later this year on a deal to buy a project known as Parker Place at 2600 Shattuck Ave., on the site of Honda dealership that sits midway between the Ashby and Downtown Berkeley BART Stations. The project, originally conceived by CityCentric, a development firm that disbanded, was approved by the city, but then got tied up in lawsuits. The lawsuits have since been resolved.Lennar made an offer to buy the site from the owners, a group of investors, and are working on updating the entitlements. The project will contain 20 percent affordable units, an open space component, a bike repair shop and a cafe on the corner. The firm is also working on snapping up other development sites in the Bay Area, joining a crowded pool of developers. Developers are also on the hunt for land they can entitle for apartments or condos, which have come back into favor with lenders. Despite the competition for sites, sellers are looking for buyers that can secure financing to build projects — not just write the biggest check, Vitzthum said. Like many developers, Lennar Multifamily sees the demand for new units is still climbing. “Although there’s certain pockets where everyone has concern about overbuilding, on a regional level we don’t see that affecting the markets we’re in,” Schellinger said. “Overall the Bay Area market is still very strong.” (SF Biz Times)

The Oakland A’s are in negotiations for a 10-year lease extension at the Coliseum that will include stadium improvements by the team. The talks follow years of attempts by A’s owner Lew Wolff to relocate the team to the South Bay. Over the past five years, the A’s have targeted San Jose as a new home, but the team has been unable to secure permission from Major League Baseball. The result has been a series of short-term lease extensions at the Oakland Coliseum. The A’s are now looking at a lease to remain at the Coliseum through 2024, which would include their making $10 million to $12 million in stadium improvements, Wolff told the Chronicle. The improvements would include a new scoreboard and a ribbon scoreboard between decks. (SF Chronicle)

A 16-story proposed hotel in downtown Berkeley could transform the city’s skyline as one of the tallest buildings in the area, if approved. The architects and developers unveiled new details about the hotel this week as the team pushes ahead with community meetings to convince reticent neighbors that a mixed-use highrise tower belongs in downtown Berkeley. The hotel, proposed by Jim Didion and Center Street Partners LLC, would replace the one-story Bank of America building and parking lot at 2129 Shattuck Ave. It would occupy approximately 288,000-square-feet and shoot up 180 feet — making it one of only three allowed highrise buildings in the area, following the passage in 2012 of Berkeley’s Downtown Area Plan. Designed by JRDV Architects, the building — which is estimated now to cost almost $100 million — is set to include 12 stories with 297 hotel rooms and three floors with 82,500 square feet of Class A office space. Bank of America, which owns the site but plans to sell it to Didion upon approval, would take up 7,000 square feet on the ground floor, and a restaurant or bar would go into another 7,000 square-foot space on the ground floor. The designers are seeking LEED Gold certification with features like a storm water retention tank, operable lighting and drought-tolerant plants. In addition to the eighty underground parking spaces that are planned, developers are in talks with the city to carve out 120 spaces for hotel use in the city-owned garage on Center Street. The developers are supportive of providing employees with a free transit pass, said Daniel Dolan, a designer with JRDV. (SF Biz Times)

Soon after raising a $330 million equity fund, Swift Real Estate Partners is diving into deal making with the 1 million-square-foot California Center, a Class A office complex in Pleasanton, that the firm has under contract. Christopher Peatross, founder and head of Swift, would not comment on the price, but market sources pegged it at $160 million or about $160 per square foot. The seller is RREEF, the real estate investment arm of Deutsche Asset Management. Swift Real Estate Partners, founded in 2010, has done several deals in the Bay Area in its short history and plans to buy up to $1 billion worth of real estate on the West Coast using its recent $330 million fund. California Center, which will be close to 90 percent vacant when the deal closes in about a month, is emblematic of Swift’s strategy of buying struggling assets to add value to them. In the case of California Center, Swift will renovate the six-building complex and focus on leasing up the vacancy. Brokerage firm JLL will handle the leasing and represented Swift in the sale. Swift is also no stranger to large office complexes after buying the 1.1 million-square-foot former Bank of America campus in Concord for $88 million or $74 per square foot. Swift renamed the campus Swift Plaza and sold two buildings totaling close to 600,000 square feet to Divco West in 2012 for an estimated $94 million, or about $157 per square foot. (SF Biz Times)

Palo Alto’s City Council on Monday will discuss a concept plan that will guide development in the area’s sleepier “second downtown” – California Avenue. The plan encourages more mixed-use development in the area and a startup-focused “technology corridor.” It would preserve some residential areas outside California Avenue and try to make the area more bicycle friendly, according the Palo Alto Weekly’s Gennady Sheyner. It also proposes splitting the 27-acre site that currently holds Fry’s Electronics into two zones, carving out 15.2 acres for future mixed-use development. The city, which is struggling to meet housing demands set by regional planning organizations, sees the Fry’s site as an area that could include new housing. Fry’s lease on the site is due to expire this year, but the company can opt to renew it for another five years. The proposal comes as the city renovates the California Avenue corridor, an effort that includes shrinking it from four lanes to two to foster a more retail- and pedestrian-friendly environment. Developers see California Avenue, with its busy Caltrain stop and relatively easy freeway access, as an area ripe for development. Several developments have received approval in the area, spurring anxiety from residents about worsening traffic and parking. (Palo Alto Weekly)

A riverfront entertainment district in West Sacramento stalled by the end of redevelopment looks as if it could be moving forward again, according to Mayor Christopher Cabaldon. Earlier this week, Cabaldon and city councilmembers heard a presentation from The Cordish Cos. on developing the Stone Lock District, 210 acres owned by the city at the north edge of the Southport neighborhood and bisected by the Barge Canal. According to the Cordish website, the Stone Lock District would have up to 890,000 square feet of retail, 2,500 residential units and 1.7 million square feet of office space. Website renderings show a music venue with downtown Sacramento to the north as a backdrop, pedestrians on concourses along the canal and multi-story mixed-use buildings overlooking the water. Though company officials didn’t propose anything concrete at the meeting, Cabaldon said, Cordish projects in other areas have featured venues for live music and other nighttime entertainment, along with some complementary retail and housing. The company recently opened an entertainment project called Ballpark Village with 100,000 square feet of commercial space on 10 acres north of the St. Louis Cardinals’ ballpark in downtown St. Louis. “It’s actually an opportunity to develop a whole entertainment district, something urban in scale but with a lot of suburban tones to them,” Cabaldon said, adding the idea is to create a project that’s not only a draw for Southport and West Sacramento, but regionally. Cordish and the city of West Sacramento first began discussing a potential project on the site in 2007, after the city’s redevelopment agency acquired and assembled the various parcels in previous years. Cabaldon said those plans froze when the end of redevelopment in 2011 led to questions over whether the land could still be developed, but last winter the state gave the go-ahead for development there to proceed. This week’s hearing was the prologue to a formal development application, but Cabaldon said he thinks that isn’t far behind. “They’re chomping at the bit,” he said. “You’re not looking at a 20-year project,” though he added market conditions will determine the project’s actual timing. Because the development would be near both the under-construction Pioneer Bluffs Bridge and the proposed bridge linking West Sacramento to Broadway in Sacramento, it has the possibility of “activating” and connecting several areas at the same time, Cabaldon said. “The bottom line is this has to be a place where residents in the surrounding neighborhoods say, ‘this is a plus,’” he said. “It can be a real unique, distinctive amenity.” (Sac Biz Journal)

Clearing the last hurdle from a zoning perspective means development of a new retail center in Roseville is that much closer. Though it’s still only got the likely-to-change name of Blue Oaks Retail Center, the proposed project for the 10-acre site at 1498 Blue Oaks Blvd could get underway by year’s end, with Walgreens as one identified tenant. Richard Sambucetti of Borges Architectural Group, which is the design architect for the project, said other than the drug store, there aren’t tenants he could share for the 90,000-square-foot project, but neighborhood commercial uses are most likely. The zoning change approved by the city of Roseville City Council on Wednesday allows 4.7 acres of the property to go from business professional to community commercial, following a similar rezoning that took place for the other 5.3 acres in 2006. The property was originally zoned for business professional uses two years previously. Sambucetti said the zoning change only helps along a project that’s already gone through city design review, after developer Burwell Management Group determined the previous zoning wasn’t practical. “We have our entitlements,” he said. “Now it becomes a question of the developer getting tenants and building it.” Full buildout for the center will probably take about two years, Sambucetti said. (Sac Biz Journal)

The next point of contention over Sacramento’s downtown redevelopment may not stem from the arena, but planned ancillary development. Seeing the proposed commercial, residential and hotel projects neighboring the arena as moving too fast without enough details, the Sacramento Central Labor Council has requested the city planning commission and council approve the arena, but to hold off on the entitlements for projects nearby. In its resolution, approved in March, the labor council points out there’s no project labor agreement stipulating union employment for the arena operations or the surrounding development, as there is for the arena construction project itself. There’s also been relatively little detail about the mixed-use buildings that would house expected retail, office, housing and hotel rooms around the arena, the resolution states. “Therefore be it resolved that the Kings should immediately agree to worker retention and contract assumption agreements covering the operations jobs at the arena; should immediately agree to card-check neutrality agreements covering the operations jobs at the mixed-use development; and should ensure that the mixed-use development is built under a project labor agreement;” the resolution concludes. A labor official indicated a letter outlining those same concerns would be presented Thursday night to the city of Sacramento planning commission, which has a hearing on the entitlements and zoning changes necessary for both the arena and ancillary development to proceed. (Sac Biz Journal)

The Tahoe Regional Planning Agency — in its role as the Tahoe Metropolitan Planning Organization — recently awarded over $550,000 in grants to various projects. The grants come by way of TRPA’s new On Our Way Community Grant Program, which promotes community-based planning projects aimed at sustainability and improved mobility options around Lake Tahoe, according to a news release. Five projects received funding, including:

  • $73,469 for Tahoe City mobility improvements
  • $53,000 for signage along the Highway 28 scenic corridor in Incline Village
  • $46,733 for the Mt. Rose Scenic Byway Corridor Management Plan near Incline Village

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