Lendlease broke ground last week on its long-planned 47-story office and condo tower 30 Van Ness Street, even as applications to build new housing in San Francisco fall dramatically and entitlements gather dust due to rising interest rates and a softening housing market.
The Australian-based development company’s ability to finance and build its own project is a big reason it was able to begin construction on the $1 billion-plus project that has been five years in the making, Lendlease’s West Coast Development Manager Arden Hearing said.
“We don’t have a lender right now breathing down our neck,” he explained.
That breathing room allows Lendlease to take a long-term view past the market downturn and instead focus on what conditions might be when the 333 condos start selling in late 2024. The 820,000-square-foot building is expected to be complete in 2025.
Although “the herd” may be “freezing up” due to current market conditions, Hearing said, the company believes building in a downturn will give it a leg up when those conditions improve and there is very little new inventory.
“When we deliver new condos to the market in 2025, we know we have exactly zero direct competition,” he said. “So whatever’s happening in the economy, if you have that and you believe that San Francisco’s not dead, that’s a pretty rare position to be in.”
The building’s 290,000 square feet of office, retail and art space will benefit from the three-year construction timeline, with almost no new supply expected in those categories either, Hearing added.
The office space will open onto Market Street and be contained in a nine-floor “podium” below the slimmer residential tower, with terraces for commercial tenants on each floor. The 10th floor on the roof of the podium will host residential amenities, including an outdoor lounge, solarium and spa. Six units at the top of the 540-foot tower will have private terraces.
Lendlease bought the 0.9-acre former site of a Walgreens from the city for $70 million in 2017 and agreed to build 25 percent affordable housing in the project. That gave it the edge over Related, which offered $80 million but would only go as high as 15 to 20 percent affordable units.
While the tower originally was going to be made up of about 600 smaller rentals “very early on,” Hearing said, it has been envisioned as more spacious condos for most of its development. The company is still convinced that it was the right move even as the rental market comes back and Build Inc.’s One Oak development across the street recently received approval to switch from condos to rentals for its planned 40-story tower, he said.
Related finished a 550-unit apartment tower a block away at Mission and Van Ness in 2020
and has been calling the location “Van Mission,” while the official redevelopment area designation from the city, which allows these high-rises to be built, is called the Hub. According to Google Maps, 30 Van Ness is in Civic Center, but Hearing prefers “the edge of Hayes Valley,” a neighborhood of restaurants and boutiques and mostly older housing stock that is a few blocks to the west.
While admitting the location is “on the cusp of several key neighborhoods,” including SoMa and the Mission, Hearing said the neighborhood name won’t matter to buyers as much as the new-build construction and nearby amenities. If you live at 30 Van Ness and can walk to dinner at perennial Hayes Valley favorite Absinthe, “you don’t care if you live in whatever you want to call it,” he said.