Oyster Development, Tricon Get $144M in Financing for San Francisco Condo, Retail Development
- Nov 19, 2014
A joint venture between Oyster Development Corp. and Tricon Capital will receive $143.5 million in financing for Rockwell, a new condo development located at 1634-1690 Pine St. in San Francisco.
JLL’s Capital Markets arranged the financing through National Real Estate Advisors.
“The tight multi-family market along with the market-wide lack of new supply made this the right time for financing this project,” Pavan Malhotra, JLL’s vice president of real estate investment banking, told Commercial Property Executive. “The San Francisco multi-family market has seen vacancies drop and rents rise between 5 percent and 10 percent since 2010. When combined with current mortgage rates, this trend has resulted in an increased desire to buy versus rent. Additionally, condominium demand will benefit from the recent IPO activity.”
Rockwell will consist of two 13-story towers, totaling 260 units. The development will also include one level of below-grade parking for 201 cars and a 4,000-square-foot ground floor retail component.
A recent report by Marcus & Millichap noted that San Francisco boasts one of the strongest retail markets in the country because of robust job growth in high-paying employment sectors and limited construction of retail space. That has led to multi-family construction to reach its highest level in decades.
Still, according to JLL, between 1999 and 2009, San Francisco averaged a supply of 1,000 new condominium units per year. Since 2010, the annual supply has been less than 400 units. New condo construction starts did top 1,000 units in 2013 largely due to two projects totaling more than 900 units located in the eastern part of town. Of the new supply, only 83 units would be competitive with this new development.
“The property has an irreplaceable location, adjacent to Whole Foods and one block from Pacific Heights and Nob Hill. The property scores a 98 in walkability, considered a ‘walker’s paradise,’” Malhotra added. “The neighborhood commands some of the highest gross and per-square-foot residential prices in San Francisco and experiences little new construction. Additionally, the large size of the site is very rare and would typically require a complicated assemblage. This project consists of six parcels, which were assembled from four property owners.”
The neighborhood is centrally located with exceptional transit and contains every amenity a city dweller would need within walking distance—restaurants, nightlife/entertainment, shopping/grocery, fitness, retail and financial services.
“As the limited number of sites within prominent neighborhoods of San Francisco become developed, we are now seeing demand and new development in upcoming/less established neighborhoods such as Potrero and Dog Patch,” Malhotra concluded. “Fundamentals remain strong and even with the increased level of development, the city’s for sale housing stock is expected to remain undersupplied for the foreseeable future.”
The developer has successfully built more than 500 luxury residential condominiums within San Francisco including selling out the nearby 98 unit Marlow project in 2014.