'The Oyster Point area is one of the best kept secrets of the region. It's so beautiful and has so much potential.' -- Pradeep Gupta, Mayor of South San Francisco
It was a gem of a property: a 42-acre waterfront development site already entitled for up to 2.25 million square feet of Class A office and/or life science space. Yet it sat unsold since 2011, the sheer scope of the project intimidating to many developers.
Finally, last August, Chinese developer Greenland USA took the plunge and bought the Landing at Oyster Point site from Shorenstein Properties LLC and SKS Partners for $171 million.
Its $1 billion project marks the first foray into the Northern California real estate market for Greenland, one of China's largest developers. The transaction also marked the largest land sale in South San Francisco history and one of the largest land sales in the history of the Bay Area. The site's prominence and its waterfront location meant that not only did the buyer and seller have to agree to the sale, but also the City of South San Francisco and the San Mateo County Harbor District had to as well.
"This was a very complicated transaction given the multiple ownerships, the city of South San Francisco, ground leases and the multiple tenants of the existing buildings and the marina. All these factors made for a very challenging transaction," said Skip Whitney, Kidder Mathews partner, who represented the joint venture that bought the site with his team.
Along with Greenland, the joint venture partners include Ping An Trust, Agile Group and Poly Sino Capital Ltd.
"Worked in a collaborative manner and kept their eyes on the prize of how to work through all of the complexity," Whitney added.
Rob Hielscher, managing director of Jones Lang LaSalle, who represented Shorenstein and SKS, said that the size of the project limited the pool of interested parties. He explained that the site included six land and two water parcels, which were governed by a total of four ground leases.
Shorenstein and SKS spent three years getting approvals for the site, essentially doubling the density there.
"Shorenstein and SKS had added tremendous value to the site," he said.
Greenland's plans to develop the site could also be significant for the life science industry, said Dino Perazzo, executive vice president at CBRE.
South San Francisco is undergoing an inventory crisis and Perazzo doesn't anticipate demand lessening soon.
"The first phase right now is entitled for life science, and it's well located for that but the problem with that is timing," he said. "Delivery to market is really critical and the Greenland people are aware of that. They are certainly interested and motivated to lease that first phase to market as quickly as they can."
Liana Yang, partner with SOW Capital who helped fund the deal, agreed that a site of this scale comes with added complexity because it has so many different elements to it.
"It's one of those rare sites that come to market," she said. "We will work closely with the city to enhance the biotech base in South San Francisco."
Biotech, Yang points out, is not as well developed in China or Asia.
"This project is a huge opportunity in terms of cooperating between the U.S. and China," she said.
Alex Greenwood, director of economic and community development for the city of South San Francisco, also agrees the deal is major.
"We see this as an opportunity to transform our waterfront," he said. "It's going to completely reinvent our skyline and even the identity and character of our biotech cluster. It breaks the logjam on a project that has not moved forward in many years. We couldn't be more thrilled to have it going forward now."
As the project is built out, it's expected to be a big boost to the local economy.
Kidder Mathews' Whitney said Greenland saw the value of the site's strategic location with proximity to Caltrain, the ferry and Highway 101. Above all, the site is nestled in the heart of the U.S. life science capital.
Greenland USA has since applied to revise later phases of the project to include residential and retail uses.
The developer is poised to start construction next year on the first 500,000 square feet of office and R&D space on the site.
"The city has been very eager for something to happen at that site," Hielscher said. "A well-capitalized group like Greenland gives everyone a lot of confidence it will get built."
South San Francisco Mayor Pradeep Gupta told the Business Times in January that the project is important for the city.
"The Oyster Point area is one of the best kept secrets of the region," said Mayor Pradeep Gupta. "It's so beautiful and has so much potential."
Superlative -- The Landing at Oyster Point Land Sale
Address: 360 & 375-389 Oyster Point Blvd., and 401, 425, 671 Marina Blvd., South San Francisco
Description: The largest fully-entitled waterfront development site in the Bay Area
Size: A 42-acre waterfront development site entitled for up to 2.25 million square feet of Class A office or life science space
Buyer: Greenland USA in a joint venture with Ping An Trust, Agile Group and Poly Sino Real Estate
Sellers: Shorenstein Properties LLC and SKS Partners
Seller's brokers: Michel Seifer, Rob Hielscher, Will Connors, Erik Hanson, Erik Doyle of JLL
Buyer's brokers: Skip Whitney, Timothy Mason, Alexander Mason of Kidder Mathews
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