SF New Developments

by J.K. Dineen

Two years after acquiring Fox Plaza for $140 million, Archstone-Smith is pushing forward with plans to raze the corner retail element and replace it with a 250-unit flatiron-style condo building.

The planned wedge-shaped terra-cotta and glass 120-foot structure, with retail, would replace the low-slung building that houses Starbucks and a stationery shop, according to Presidio Development Partners President Mark Conroe, who was retained by Archstone-Smith to obtain city approvals for the residential development and sell off the office part. The new building would cost about $150 million based on current construction costs.

The plans come as Archstone-Smith has completed the sale of the 220,000-square-foot office component of the complex for $42 million, or just under $200 a square foot. Palo Alto-based Broadreach Capital was the buyer. The long-anticipated sale was held up because Archstone-Smith was waiting for the city to finalize a condo map for the property, essentially breaking it up into the office space, plus three other separate pieces: 446 rental apartments, a 550-car garage, and the retail/development site.

Archstone-Smith, a national apartment REIT that agreed last month to be acquired by Tishman Speyer, will hold onto the rental apartments and the parking, according to Edward Suharski of Grubb & Ellis, who represented the seller along with Daniel Cressman.

The new development and the Broadreach bet on Fox Plaza comes at a time when investors are pouring capital into the Civic Center neighborhood at an unprecedented clip. Hill Cos. recently paid $13.3 million for 10 United Nations Plaza. Miami’s Crescent Heights plans to begin construction this year on a $350 million, 720-unit two-tower condo development. Australia-based Anka Property Group is out of the ground on its $140 million, 179-unit One Polk St. And Adco Group is pumping $35 million into repositioning the San Francisco Mart from a interior design exhibit space into office.

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