There’s a new plan to stop Millennium Tower sinking — and settle lawsuits

All sides in the Millennium Tower debacle appear to be nearing an agreement on a $100 million-plus fix to stop the 58-story high-rise from sinking further — but at least part of the building’s tilt will probably remain.

“We’re very encouraged by the recent progress that has been made,” said P.J. Johnston, spokesman for Millennium Partners, the luxury condominium’s developer. “We look forward to working with the homeowners and the city to get this all completed as soon as possible.”

Doug Elmets, spokesman for the homeowners association, cautioned that nothing has been submitted to the city yet for review, but that residents are “encouraged by the ongoing progress.”

The latest plan calls for drilling piles into bedrock from the sidewalk on the building’s southwest corner. The proposal would be less extensive and intrusive than the plan floated in April, which called for drilling as many as 300 micro-piles to bedrock through the building’s concrete foundation.

The idea was to stabilize one side of the 58-story structure, then let the other side continue to sink until the building straightened itself. That plan, however, probably would have cost upward of $350 million — as much as it cost to build the tower in the first place.

The new plan by Ronald Hamburger, the structural engineer for the developer, is expected to be considerably less expensive and faster, and without as significant a disruption to the residents.

“Hopefully, it will take out some of the tilt and stop the building from moving entirely,” said one source familiar with the plan, but who wasn’t authorized to speak for the record.

The tower has sunk 18 inches and tilted 14 inches to the west since it opened in April 2009.

The building sits on a 10-foot-thick mat foundation, held in place by 950 reinforced concrete piles sunk 60 to 90 feet deep into clay and mud. They do not, however, reach bedrock.

The repair job is expected to take several months to complete. The timeline for getting started, however, will probably hinge on how fast the parties can get approval of an environmental impact report and the necessary building permits.

Read more on The San Francisco Chronicle

Google is gearing up to buy prime San Jose land for a new tech campus. What now?

As the city of San Jose gets ready to release long-anticipated documents related to the sale of 20 acres of land near downtown, the question on the minds of both boosters of the Google expansion and skeptics is “what now?”

The city of San Jose is on the verge of releasing details of a controversial 17-month negotiation to sell 20 acres of publicly owned land to tech giant Google for a massive new campus near downtown.

Those details, set to be released Friday, are a key milestone, but only the first step of making the Bay Area’s largest city one of the next expansion points for Alphabete Inc.-owned Google, a plan that has been met by community members with both excitement, deep disdain, and as of this week, a lawsuit over transparency.

Now, as the release date of the long-anticipated land sale documents near, the question on the minds of both boosters of the Google expansion and skeptics is “what now?”

First, the end goal: Google has said it wants to build a mixed-use campus that could span as large as 8 million square feet and would include housing, retail, and office space next to transit. Somewhere between 15,000 and 20,000 workers could show up each day at the campus if built out fully.

 

 

Read more on Silicon Valley Business Journal

 

 

 

Contra Costa County setting itself up to be next Bay Area hub if only the jobs will follow

Several large-scale projects in Contra Costa County could transform the suburban county into a thriving employment center with live-work-play dynamics.

The region’s biggest challenge will be actually getting to that point. Many investors and developers think the county is well on its way.

“What is wonderful about Contra Costa County is that it is unmatched quality of life if you can afford to live here in terms of work, play, live opportunity,” East Bay Leadership Council President and CEO Kristin Connelly said during Bisnow’s recent Future of Contra Costa event. “I’m a huge champion of the East Bay. We are poised to be the center of the mega-region in Northern California because of our assets.”

While more development is occurring in Contra Costa County, many cities are struggling to be attractive to employers, and many residents are still commuting elsewhere for their jobs. The East Bay Leadership Council found that 78% of Contra Costa workers commute to Western Alameda County, San Francisco or San Jose, Connelly said.

Cities like Walnut Creek and Concord are having to build more housing to meet the needs of current and new residents.

“When you’re seeing the South Bay having a 10:1 job-to-housing ratio, we’re the ones in the East Bay and the suburbs having to pick up the slack because of that,” City of Walnut Creek Mayor Justin Wedel said.

Cities are working to create better balances that can be attractive for employers seeking a live-work-play dynamic.

 

 

Read more on Bisnow Oakland

 

 

New SF hotels, WeWork-backed waterfront school among ideas for historic piers

Developer Simon Snellgrove has an idea: A new 65-room boutique hotel just south of the Ferry Building.

The problem: Hotels are illegal on Port of San Francisco land unless voters authorize them.

Snellgrove’s concept is one of 52 responses received by the port to revitalize 13 historic waterfront piers that dot the city’s scenic Embarcadero.

For the past three years, the port has sought public uses to bring new life for the piers, some of which were built over a century ago. The projects have big financial hurdles, requiring millions of dollars in renovations to withstand future earthquakes and sea level rise. But previous projects like the renovated Ferry Building and AT&T Park are a testament to the public’s love — and the lucrative business — of waterfront development.

The port received a diverse mix of ideas, including basketball and tennis courts, art galleries, an Italian Innovation Hub, and an International House of Prayer of Children. Boston Properties, the city’s biggest office owner and majority owner of Salesforce Tower, said it was open to operating nonprofit, maker and research space.

 

 

Read more on SFGate

 

 

 

 

How the stock market’s wild ride could affect CRE investment

Stock market volatility may spur investors to allocate more funds to direct ownership of real estate.

The stock market’s recent rollercoaster, with October’s sharp correction followed by a post-midterm election surge, can put the investment community on edge, including commercial real estate investors.

“People who invest in real estate don’t invest in a vacuum,” says Mark Dotzour, a real estate economist who spent 18 years as chief economist of the Real Estate Center at Texas A&M University before opening a private consultancy three years ago.

It’s impossible to completely separate one’s emotional reactions from financial behavior, says Mike Ervolini, CEO of Cabot Investment Technology, which sells behavioral finance software to professional equity fund managers. Ervolini previously served as a portfolio manager and CIO with AEW Capital Management.

Real estate investors pay close attention to what’s happening in the stock and bond markets and while they may be able to overlook recent volatility, they’ll need to keep an eye on longer-term trends to determine if commercial real estate investment is still the best bet for their financial portfolios, according to Dotzour. For now, it seems the answer is yes.

 

 

Read more on National Real Estate Investor

 

 

Downtown San Jose developer drops hotel, apartments from massive Museum Place project

The developer behind Museum Place, a 1.4 million-square-foot downtown San Jose mixed-use development and Tech Museum expansion, is simplifying the project, shedding the previously planned hotel and residential units in the project.

Plans submitted this week to the city of San Jose show that investor and developer Gary Dillabough, who took over the project from Insight Realty earlier this year, is looking to reconfigure the previously approved tower by increasing the office space from 250,000 square feet to 850,000 square feet on the 2.3-acre site at 180 Park Ave., where Parkside Hall currently sits.

“The reality of the situation is that when you are trying to build a hotel, residential space and office, you can’t do all three in a world-class fashion, and our belief is that we want to build a world-class office tower,” Dillabough told the Business Journal in an interview Thursday morning.

That means the previously planned 184-room Kimpton Hotel and the 306 residential units that San Jose-based Insight Realty had gotten approved by the city last year would be no more. The project is now estimated to rise to about 19 stories — down from the currently approved 24 stories — and would still include parking and between 15,000 square feet and 20,000 square feet of retail space on the ground level.

Dillabough, who has become a major property owner in Downtown San Jose over the last year-and-a-half after setting off on a buying spree in the area, says he is still interested in hotel and residential projects in the city, just not at Museum Place.

“We still think the city needs housing and hotel uses, but we think they would be better in standalone buildings,” he said.

Read more on Silicon Business Journal

Major S.F. tech company eyes one of Oakland’s largest vacant office buildings

San Francisco-based fintech Square Inc. has eyed Oakland for a big lease, according to the San Francisco Chronicle.

The payments processing company reportedly looked at Uptown Station, a 356,000-square-foot refurbished, mixed-use building that is one of the largest blocks of office space available in Oakland.

“There are large tech tenants looking at Uptown, but none have landed yet,” Edward Del Beccaro, a managing director of Transwestern, told the Chronicle.

Landlord CIM Group has been chasing tenants for the space since it bought the building in December 2017 for $180 million. The approximately $40 million renovation of Uptown Station by Truebeck Construction is expected to finish early next year.

CIM picked up the property at 1955 Broadway from Uber Technologies, which had planned to move up to 2,000 employees into the space, but decided to consolidate in San Francisco instead.

Square has been on a growth tear as of late. Over the summer, it added 104,100 square feet to its San Francisco headquarters at 1455 Market St. for a total of 469,000 square feet there. It is also growing outside the Bay Area and internationally.

In addition to Uptown Station, Oakland has a handful of similar historic rehabs, including projects from TMG Partners and Harvest Properties.

Read more on San Francisco Business Times

More move to modular construction to mitigate costs, but it’s not the solution for every project.

In an effort to shorten construction timelines to cut down on costs and find creative ways around the shortage of skilled labor, multifamily developers have embraced the possibilities of modular construction.

But as with any new technology, there are still a lot of pitfalls and issues to work out before it becomes a solution for everyone — and it is not a solution for every project.

The move to modular is being driven by a combination of desperation and fear of the future, Panoramic Interests owner Patrick Kennedy said last week at Bisnow’s Multifamily Annual Conference NorCal in San Francisco.

“Conventional methods seem untenable in many circumstances,” he said.

Ultimately, construction costs will just get higher and more developers across markets will look at modular to address costs and the labor shortage.

 

 

Read more on Bisnow SF

 

 

 

Are food halls a magic elixir for retail owners?

The concept of the food hall has taken deep root in U.S. retail properties, with scores up and running and hundreds in the pipeline.

Though a popular addition for struggling retail properties, celebrity chef Todd English said that without the right approach, food halls are not always the solution for owners. English spoke at the recent Second Annual International Council of Shopping Centers-Baruch College Real Estate Conference, as reported by Real Estate Weekly.

He warned that some food halls are merely “glorified food courts with better options.” He further called food halls a WeWork model, a kind of coworking space that “has to be about more than just food.”

Food halls are a draw because of their perceived authenticity, as local eateries, healthier options and craft breweries edge out standard food court fare (fast food, that is).

While not every food hall is going to feature chef-curated or otherwise expensive options, they have to be creative in some way, English said during the ICSC conference. “It’s not just another great turkey sandwich or croissant, or whatever the latest trend is, it’s something that brings people in.”

For retailers, a successful food hall is thus not a matter of simply setting up a food hall. With the increasing number of food halls, they too need to stand out to be competitive.

 

 

Read more on Bisnow

 

Is Silicon Valley going to change the way we build CRE?

From the end of World War II in the mid-1940s until just a few years ago, there was a surge in productivity throughout the United States economy, giving rise to what has often been called the “productivity miracle.”

Throughout this period, nearly every industry in the US — from retail to manufacturing to agriculture — became not only less expensive, but also much more mechanized and faster, leading to increased efficiency.

One industry, however, failed to come on board with this trend – construction. In fact, productivity in construction has not only not increased, but it is also actually lower today than it was in the late 1960’s.

In other words, the way that most commercial real estate buildings are built hasn’t changed much in the last 50 years or so. The process goes by the name “design – bid – build” – but it isn’t nearly as simple or straightforward as it sounds. First, the developer or owner needs to hire an architect, who drafts a rough design. In order to do this, he or she must bring in various outside consultants, such as structural engineers and landscape architects. Next, the owner puts the design out for bids from various general contractors and then hires one (usually the least expensive bid). From there, the general contractor subcontracts the work out, with the architect and the general contractor working together closely to make sure the project is completed as close as possible to budget and on schedule.

If the system sounds complicated, well, that’s because it is. Having so many cooks in the kitchen, so to speak, often leads to misunderstandings, placing blame on others, or worse. The combination of volatile prices for materials and an observed shortage of skilled labor has created an industry that is primed for disruption.

 

 

Read more on NAI Global