A long-stalled residential tower slated to go into a lot at Van Ness and Market, which we thought was completely dead, may get revived by a new developer who is now taking a fresh look at the project's feasibility.
When we heard in April 2023 that the 40-story tower approved to be built at the intersection of Oak Street, Van Ness Avenue, and Market Street had gone into foreclosure — that is, the developer was basically surrendering the land it had purchased for the project to its lender — we figured this project was dead for real.
But now, as the Chronicle reports, the lender, Washington Capital Management Inc., has partnered with local developer Emerald Fund Inc., and they've approached San Francisco's Planning Department about reducing the affordable housing "in lieu" fee that was part of the original financials for the project.
Developers have the option when building in San Francisco to build a certain amount of below-market-rate (BMR), affordable units onsite, or pay a fee to the city that represents the cost to build those units elsewhere.
In order to speed up housing production in SF, which has been dismally slow since the city has committed to a state-mandated requirement to produce over 80,000 new units in the next decade, the Board of Supervisors voted last summer to temporarily relax affordable housing mandates for developers, and temporarily slash multiple other fees as well.
Planning Department Chief of Staff Dan Sider tells the Chronicle that they've been anticipating that developers would be seeking various reductions and discounts after previously agreeing to these fees and mandates, as they increasingly find their projects infeasible due to sky-high construction costs.
Emerald Fund — which is one group that has been actively seeking development opportunities in SF the last few years, after their success a decade ago redeveloping 100 Van Ness from its former office use to residential — is reportedly seeking a 16.4% reduction in the "in lieu" fee for One Oak, amounting to $35 million. Pending approval of that discount, a spokeperson tells the Chronicle that the group will assess the feasibility of the project — i.e., whether it "pencils" with any profit for them in the current market — and then decide whether they'll move forward.
As previously envisioned, One Oak was going to include 460 rental units — up from an earlier plan for 309 condo units. The change to rentals was a last effort by previously developer Build Inc. to make the project pencil, and they received approval for the change in 2022. The new version of the tower would have 516 units.
One Oak was one of four large buildings that were in planning stages, pre-pandemic, in what the city was calling the "Hub" area at Van Ness and Market — in which each of the four corners was up-zoned for very tall residential buildings. The only one of those projects to break ground, the Hayes Point development on the opposite side of Van Ness from One Oak, halted construction last summer. Australian developer Lendlease is now reportedly looking to sell off the partially begun project to another developer, per the Chronicle.
Previously: One Oak Property Has Reportedly Gone Into Foreclosure, 40-Story Tower Likely Won’t Get Built
