"That's a pretty big number, we think," one of the listing brokers, Tim Maas of Colliers International, tells GlobeSt.com. Indeed, when Maas and partner Tony Crossley sold it to Blackstone in 2004, the sale price was $19.25 million, according to published reports.
The site, 535 Mission St., is a parking lot that was originally entitled for office by Hines. When Maas sold it in 2004 it was re-entitled for condos. "Now it has to go back through the entitlement process for office," he says. "At 18-to-1 (Floor Area Ratio), they can build 290,000 sf, but some TDRs (transferable development rights) would have to be purchased."
If Beacon does move forward with an office project, as is expected, its all-in development cost could top $550 per sf. Blackstone senior executive Jeremy Fletcher of Los Angeles did not return a phone call seeking comment.
If the company is looking for a high-single-digit cap rate on the investment, it would need to achieve average net rental rates of around $50 per sf per year, which is not yet achievable in the SOMA area. Currently, average class A rents there are in the low $40s fully serviced, according to local market reports.
The site is said to be one of the last developable parcels in the SOMA area. Maas says Beacon could probably have the necessary entitlements in place to break ground within a year, "but I'm not certain as to when they intend to build. They own the adjoining building and parking lot; there may be some marriage value there."
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