Work is nearing completion for the 12-story South Tower, which is fully available and has 303,612 square feet of office space, 12,000 square feet of retail space, a 200-seat conference center and a 100-person childcare facility. Work on the 21-story, 358,000-square-foot North Tower stopped after its foundation was poured in November. The project also includes a two-phase 2,000-slip parking structure, the first phase of which is complete, and 50 surface parking spots.

"We have constructed a very unique product in terms of quality and market position but it's a difficult time," Myers Development chief Jack Myers tells GlobeSt.com. "A lot of tenants have taken a seat and we'd like to not get too far ahead of ourselves when comes to the market place. At the same time, we think that the worst of all that's been going on is behind us and have an abiding belief and respect for the Peninsula market. While these are disappointing times when it comes to leasing the market, the fundamentals over time are pretty solid, and despite this malaise, stemming from questions about the economy, that has given us pause, we remain optimistic that we have built the right product type for the right market group, and that there are a group of tenants out there that would work very nicely in this building."

The development site fronts Highway 101 between Downtown San Francisco and San Francisco International Airport. Skidmore, Owings & Merrill LLP designed the towers. Hathaway Dinwiddie Construction Co. is the general contractor. Phil Tippet, James Lees and Tim Grant of CB Richard Ellis have the office leasing assignment. Kazuko Morgan and Courtney Griffen of Cushman & Wakefield control the retail listing. A Call to Stockbridge on Monday morning had not been returned as of Monday afternoon.

The initial plan had been to complete the second tower by the end of 2009. Now the plan is to start work again by that time—and sooner if an anchor tenant comes along--and complete it no later than early 2011. Myers says the first building is shell complete and that the steel, glass and elevators for the second tower already have been purchased such that it could be ready for tenants in as little as 13 months. In addition, Myers says one silver lining to the situation is that there is "reason to believe" costs for the project can be significantly contained--"and perhaps even somewhat reduced"--by the lack of demand in the construction industry and the willingness of principal subs an others to sharpen their pencils and make prices even more attractive to make sure jobs get going.

"We could start TIs tomorrow [in the South Tower] if we had a tenant in hand," office leasing agent Tim Grant tells GlobeSt.com. "The reason the South Tower went first is because its larger floor plates [29,000 square feet versus 17,000 square feet] are more ideally suited for a larger tenant; the plan has been to land a large tenant for the first building and then multi-tenant the second, but in this economy it has been hard to find large users willing to commit."

Indeed, Grant says tenants who had been looking to upgrade or expand have been taking every opportunity to delay their decision-making process. Instead of relocating or inking a long-term renewal, they are extending their leases for six months or a year while they wait for the economy to turn around. "And every landlord out there is willing to cooperate because they are in the same boat," he says.

Things will change, Grant says, and when they do they likely will change quickly, but no one's sure whether that change will occur sometime in 2009 or be delayed until 2010. "Once people see a couple of bigger, more public players pull the trigger it might open a bit of a flood gate of companies that had been sitting on the sidelines," he says. "It may be three-, six-, nine-months away, but we have seen it happen here before.

For someone who wants 100,000 square feet of new, high quality space on the Peninsula in a single building with signage rights and great exposure to Highway 101, there are few competitors to Centennial Towers, which is one of the big reasons Grant says Myers went ahead with the project. It's also one of the reasons there is interest in the building despite the economy.

"When we started construction it was a pretty safe bet we would find an anchor tenant and while we are behind our initial expectations we are well on our way," Grant says. "There are four groups we are talking to, two we are trading paper (negotiating) with and two that have taken multiple tours."

Sony is said to be one of the four interested parties; Grant declined comment. While there's no official asking lease rate for space in the building, one can reportedly expect to begin negotiations at approximately $50 per square foot per year, triple net, including a $50 per square foot allowance for TIs. Myers willingness to work with prospective anchor tenants has kept interest higher than it otherwise would be, Grant says. Myers has reportedly offered to redesign ingress and egress to the first floor retail and lobby area to make it more appropriate for prospective full-building users, Grant says.

"We're looking for a tenant that values the quality and visibility and what that can do for their identity," he says. "Every major corporation has an executive that comes to San Francisco every year for something; on their way there they will drive right by this building."