SF New Developments

By Brian K. Miller of GlobeSt.com  

Thursday, May 25, 2006 -  SAN FRANCISCO-Peebles Atlantic Development Co. has closed on its $20-million purchase of 250 Brannan, the 90,000-sf one-time Gallo Salami plant most recently utilized as dot-com office space. The Miami-based company plans to invest an additional $30 million converting the low-rise building into residential condominiums. R. Donohue Peebles told GlobeSt.com in that he expects the combined unit sales to top $100 million.  

The building is located within three blocks of the Giants baseball stadium in the trendy SOMA area of San Francisco. The property consists of the fully renovated 1907 brick and timber Gallo Building with an added 40,000 sf of new construction and 100-slip parking garage. The additions were completed in 2001 and its primary tenant was Double-Click Inc. In late 2003, Double-Click paid $24.5 million to terminate its 10-year lease in the building.

The seller, investment and development firm Zapulski & Rudd, acquired the building vacant in 2004 for $14 million. The building sits directly across the street from a luxury condo project called Brannan, where re-sales are reportedly topping $1,400 per sf. Peebles plan for 250 Brannan calls for dividing the building into 45 “ultra-luxury, Soho-style” lofts and multilevel townhouses ranging in size from 1,000- to 3,000 sf, which would provide a sellable area of between 75,000 sf and 85,000 sf.

Given the strong demand, Peebles says he won’t be doing any presales; he expects units to sell for “well above $1,000 per sf.” Amenities will include private access systems; wireless Internet; custom millwork; European-style kitchens with commercial grade gas ranges; a wine cellar; oversized whirlpool bathtubs; and private media rooms in the townhouse units. Other perks include full-time couture concierge services, 24-hour security, valet and doorman.

The renovation is expected to start this fall, with the first units being ready for occupancy 12 months later. Capital out of Chicago is providing equity for the deal and Fremont Investment & Loan is providing debt.  

The conversion will be the inaugural project of Peebles newest subsidiary, Peebles Urban, which will focus on infill projects where it can add its ultra-luxury stamp to the market. Peebles says he plans to open an office in San Francisco later this year. He plans to staff it with six people and build from there, “picking up project executives as we pick up projects.”  

Peebles has preserved other national landmarks including the Royal Palm Hotel, one of South Beach’s largest hotels, and the Residences at the Bath Club, which opened this month in Miami Beach. This fall, Peebles will begin a $40-million renovation and conversion of downtown Detroit’s historic 1920’s Lafayette Building into luxury condominiums. In the Bay Area, although not a conversion, the company is in the pre-development stage for an 87-acre development fronting the Pacific Ocean in Pacifica, CA.

The Bath Club is the reason Peebles will be waiting as long as possible to begin selling his units. Pre-sales were a lender requirement there, he says, and it cost him tens of millions of dollars. “Save for the two penthouse units we held back, we sold out, and there have already been 30 re-sales for an average profit exceeding $1 million,” he says. “We left $30 million on the table.”