The rush to be on the leading edge of San Francisco’s next wave of condo projects has started, as digging has begun on two long-awaited developments.
On Aug. 3, Oyster Development Corp. and Tricon Capital Group closed a $41 million construction loan to build 98 units at 1800 Van Ness, a $60 million project that has been named Marlow. The construction loan is being provided by National Real Estate Advisors, which invests money for the National Electrical Benefit Fund and other investors.
Not wasting any time, Oyster Development and its contractor Build Group started work on Aug. 6.
“We have had it on our calender for Aug. 6 for a while, and we hit our timing,” said Dean Givas, president of Oyster Development.
Meanwhile at 1998 Market St., developer Brian Spiers and Canyon Johnson Urban Funds have started demolition to clear the way for a 115-unit project designed by Arquitectonica. That project will cost $35.5 million in hard construction costs. Spiers bought the site in 2006 for about $10 million.
Wells Fargo is providing the construction loan on 1998 Market St. John Manning and Alex Witt of Jones Lang LaSalle arranged the loan on the 1800 Van Ness project, which is being designed by Kwan Henmi.
Mark McAllister, managing director with National Real Estate Advisors, said San Francisco in general, and the 1800 Van Ness project in particular, possess a combination of traits still rare in the United States even four years after the real estate bust.
“Like every lender in the country, we still look at condo as a four-letter word,” said McAllister. “San Francisco is one of two markets in the country I would do a condo deal in. New York is the other.”
McAllister was drawn by the track record of the Oyster Development team, which in 2007 completed the Arterra in Mission Bay and the Hayes in Hayes Valley. He said he also likes the location straddling Nob Hill, Pacific Heights and the Van Ness corridor.
National Real Estate Advisors is also currently working with the Emerald Fund on converting a former office building at 100 Van Ness into rental apartments. During the last cycle, the company provided the construction loan for the 74-unit condo conversion at 104 New Montgomery St. and the 80-unit Fillmore Heritage Center.
“We know the market and we love San Francisco because it is hard to build, and there is such a lack of supply,” he said. “(1800 Van Ness) is in a good stable neighborhood. We love the site.”
By the end of the year San Francisco will likely have just 300 new condos on the market. “We wish the condos could be available today,” said Givas. “We think the market is ripe for a project like this.”
The project is slated to wrap up in February 2014. Pre-sales will start in spring of 2013. Polaris Group is doing sales and marketing for both projects.
Earlier this spring the Polaris Group brought two projects to market: the 36-unit 299 Valencia St. in the Mission district and the 32-unit Millwheel in the Dogpatch. It took 45 days to sell out the Millwheel project and 60 days to sell out 299 Valencia. The average price per square foot was $900 on Valencia and $600 at Millwheel.
“Based on our experience on 299 Valencia and Millwheel the market demand for condos is very strong,” said Foley.