San Francisco Housing Boom Moves to Van Ness

2000 Units already in pipeline

San Francisco Business Times
By J.K. Dineen

A residential revolution is revving up along San Francisco ‘s automobile row.

As part of Highway 101, Van Ness Avenue has always been more about cars than people. Despite several isolated housing projects in the 1980s and 1990s, its automobile showrooms and snarled traffic have been the antithesis of the ideal of a quaint, walkable San Francisco neighborhood.

But with developer-friendly zoning, decent public transit, and land prices that are cheaper than other downtown areas, the avenue has become a hot spot with builders jockeying for housing sites, according to architects, builders and brokers.

“If you look up and down Van Ness, somebody is working on a residential development on virtually every corner,” said Paul Zeger of Pacific Marketing.

A half-dozen housing projects are under construction or recently finished, including 130-unit Symphony Towers at 724 Van Ness Ave., a 54-unit 818 Van Ness Ave., a 50-unit project at 77 Van Ness, and a 29-condo building at Greenwich and Van Ness. A half a block off of Van Ness, at 1 Polk St., Anka Development is nearing completion on the 179-unit Argenta. Elsewhere, AF Evans is planning 282 units on a large lot at Pine and Van Ness, and Bayrock Residential has entitlements to develop 107 units and a Trader Joe’s at the old Galaxy Theater on the corner of Van Ness and Sutter.

Taken together, more than 2,000 housing units are in the pipeline along Van Ness, with another 1,000 likely to be built at the four corners of Van Ness and Market streets.

Planning pays off

From a city planning perspective, the burst of residential activity has been a long time coming. In 1989, the city passed the Van Ness corridor plan, which changed the zoning from commercial to “commercial/residential.” The plan also raised height limits to 80 feet in some parts of the avenue and 130 feet elsewhere. Gabriel Metcalf, executive director of the urban think tank San Francisco Planning and Urban Research, said the 20-year-old Van Ness plan serves as the model for city’s “better neighborhood” planning process.

“What we are seeing now is, through several real estate cycles, that plan continuing to be built out,” said Metcalf. “Van Ness proved the value of neighborhood planning in the sense that we are not fighting about each individual project because we did the work up front.”

Van Ness may also be benefitting from planning gridlock elsewhere. With the Eastern Neighborhood planning process still contentious and bogged down after eight years, and Market Octavia plan still stuck in committee debate, Van Ness is one of the few centrally located parts of town where dirt can be moved, according to Chris Foley, a principal with the Polaris Group, which does condo sales and works with developers to secure sites and entitlements.

“I think when SoMa and the Eastern neighborhoods got shut down there was less of a battle to do entitlements on Van Ness, so people migrated there,” said Foley.

Another factor is price. As international developers like Tishman Speyer and Millennium Partners have scrambled to out-deluxe the last luxury tower, local entrepreneurial builders have been priced out of Mission Bay , SoMa and Rincon Hill. Smaller builders are looking for “a transaction, not for a luxury building that will cost $1,000 a square foot,” according to Handel Architect’s Glenn Rescalvo, who designed the Millennium Tower and the Four Seasons. “There is that whole $700-a-square-foot market that people want to tap into. I think that is where Van Ness is starting to head.”

Rescalvo is working on one development on Van Ness and has a client pursuing several other sites.

“There is obviously a shift from these big buildings downtown, which take a lot of time and a lot more money,” said Rescalvo. “The Van Ness Corridor from Market Street all the way to the bay is really starting to pick up some energy.”

Van Ness Avenue could also benefit from the proposed “Bus Rapid Transit,” which would dedicate a lane of traffic to buses and also green the street with wider landscaped median strips.

Staking a claim

As builders and brokers made millions by staking an early claim in SoMa and Mission Bay , the same is happening on Van Ness. One city brokerage, the Paragon Real Estate Group, is placing a big bet on the avenue. A fund put together by principals at Paragon, which has 130 brokers, shelled out $5 million for 1400 Van Ness, a historic former auto showroom which used to house the Good Guys electronics store. Paragon will use most of the building for its brokerage and develop a cafe on the street, according to Robert Dadurka, a principal of the Paragon Real Estate Group.

“We really wanted to be in the center of a lot of development action, and we really feel the city’s next wave of development will be along Van Ness,” said Dadurka.

The bullishness is also being driven by the hospital California Pacific Medical Center‘s plans to build at 1101 Van Ness. CPMC has also bought 1100 Van Ness for medical offices. Paragon Van Ness specialist Jay Pon expects that full-city-block development to attract doctors’ offices, drive rents up and create new housing demands along with a new community.

“Twenty years from now, all the single or two-unit buildings will be gone,” predicts Pon. “Van Ness will be more of a New York , cosmopolitan place to live, with groceries, transportation and health care all in one central location.”

Architect Warner Schmalz of Forum Design has also carved out a niche on the avenue. Schmalz has four projects along Van Ness, including 1400 Van Ness, 77 Van Ness, and 818 Van Ness . He says 1400 Van Ness “will be exquisitely converted like the Avenue’s Maybecks that house the Jaguar showroom and the AMC Theatre” at 1000 Van Ness. The design will feature a two-story glass and stone staircase rising in the lobby.

“It’s a great part of the city and is really becoming a meld of high-intensity commercial and high-intensity residential,” said Schmalz. “There are a lot of good bones along that street from the post-earthquake period and a lot of dreadful architecture as well. I think you’re going to see a lot of new, appropriate building.”

Measuring sales

The question of how well housing will sell on Van Ness remains to be seen, especially given the weak housing market. Symphony Towers , the largest Van Ness development now being sold, has 67 units in contract or closed, according to Zeger of Pacific Marketing, which is doing sales and marketing for the project. Zeger said sales are better than expected, and the studios starting below $400,000 and one bedrooms below $500,000 are attracting a lot of first-time homebuyers. The 67 units sold include the 16 below-market-rate units and reflect about seven market-rate sales a month since opening day, fairly slow sales, according to Socketsite, the real estate web site that closely tracks sales in all city condo projects.

But Zeger says half sold is not bad for a project that opened Feb. 8 and he is not worried.

“The services are there, the transportation is there, and even though you get some great views, it’s still not priced like highrises downtown,” said Zeger. “There is a big audience that doesn’t want to pay the luxury prices downtown that is underserved.”

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