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January 30, 2015

Development pours into Civic Center: Mid-Market spillover makes builders bullish on once-dead area

San Francisco Business Times

Cory Weinberg

The roof deck that stands 374 feet above the ground level at 100 Van Ness Ave. delivers an intimate view of the City Hall dome and an expansive look at the whole city. The 400-unit building, formerly the AAA office headquarters, started leasing in December and has rented out almost a third of the units.

Residents who look straight down on the Hayes Street side will get one of the most interesting views of all: the two other Emerald Fund apartment buildings that are under construction.

100 Van Ness will be the first completed in Emerald Fund's three-building, 1,000-unit pipeline on the block between Van Ness and Polk Street. Those projects will build on Mid-Market's momentum to create the first signs of new residential development next-door to the Civic Center district.

"This project marks the shift for this neighborhood," said Oz Erickson, chairman of the Emerald Fund. "Once we finish the whole thing, it becomes a 24-7 neighborhood. It becomes a residential neighborhood. You talk to any old timers around here, and they'll tell you this area used to shut down at 5:30."

The rest of Emerald Fund's Civic Center pipeline includes the 162-unit 101 Polk St. building that started construction last spring and the 450-unit 150 Van Ness. The developer also controls the four-building former California State Automobile Association as well as 101 Polk St. and 101 Hayes.

Plenty of new projects near Mid-Market can boast that they are surrounded by an area with "significant revitalization," as Emerald Fund does on a fact sheet about the building. But the developer's projects serve as the first hinge that swings open the door between Mid-Market, City Hall and Hayes Valley. Stretches of city blocks that have for decades seemed disconnected wi ll soon become active.

Developers have been circling for sites at the intersection of Van Ness, Mission, Otis and 12th streets.

Down the street from Emerald Fund's projects, Build Inc. is planning a landmark residential tower to replace a donut shop on Market and Van Ness.

At 1699 Market St. near Gough, developers are planning a nine-story building with 160 residential units at the current location of Flax Art & Design.

Emerald Fund (and equity partner National Electrical Benefit Fund) can't claim total credit for the rise in developer interest, of course. The area's rebirth is due to a decade-long zoning process, a successful payroll tax break for technology companies and a booming job market in San Francisco.

"I see it as a nice transition to the Civic Center area," said Kearstin Dischinger, a city planner who helped lead the Market-Octavia planning process. "What we imagined this to be is a punctuation at the end of the downtown corridor of Market Street street."

100 Van Ness will have the trappings of a new apartment building: a fitness center, wine storage, conference rooms, a game room, fire pits, a bocce court and a grass lawn. The view, of course, is the best amenity that has hooked mostly young professionals in their 30s to sign leases so far, Erickson said.

Ceilings are 10 feet tall, but the rentals aren't super luxurious and the prices start at $3,100 for a one bedroom. Units are drawing workers from technology companies - from Zendesk to Zoosk - that have taken root on Market Street.

Citywide, tech jobs grew about 17 percent last year compared with an overall employment increase of 4.6 percent.

"We were building for the professional class, for the techies," Erickson said. Twelve percent of the units in the building will be rented for below market rate, the city's minimum by law. It was originally proposed to have 15 percent affordable units, but downsized in order to meet equity partners' demands.

The building will have a ground-floor restaurant, but doesn't have a tenant yet, Erickson said. The Hayes Valley shopping district is a block away, as are new bars and beer halls on Market Street.

"It was a totally dead area. Before, you had an empty office building, the AAA building, that was sitting there. It was almost a wasteland," said David Wientjes, a real estate broker for Kidder Mathews who worked the 101 Hayes deal to sell to Emerald Fund. "They wanted to control that whole block."

It's tough to keep track of the rest of the changes happening in the small radius around 100 Van Ness. Nineteen tech companies moved into the Central Market corridor since 2011, and developers' risky bets on residential buildings like Nema have paid off handsomely.

"This will very soon be one of the No. 1 locations in San Francisco because of the adjacency to all the cultural facilities and the adjacency of transportation and the government," Erickson said. "We are the catalyst project."

For the full story, go to San Francisco Business Times.

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