Third Street on Track
Hundreds of new housing units are springing up at Third and Carroll streets in San Francisco’s Bayview District, evidence that the T-Third light rail is finally pumping new investment to the long-isolated neighborhood.
Construction will wrap up in June on the first two buildings of Holliday Development’s 5800 Third St., a $75 million 140-unit condo development that includes a 15,000-square-foot Fresh & Easy grocery store. Down the block at 5600 Third St., Bridge Housing is finishing up the 124-unit Armstrong Place townhomes, below market rate for-sale units, as well as an affordable 116-unit senior apartment complex. Those projects should also finish in June. Together those projects represent a $101.2 million investment, according to Bridge Housing.
Meanwhile, Holliday has reached a deal with the nonprofit Delancey Street Foundation to open a Crossroads Cafe in another retail space at 5800 Third St., similar to the restaurant the group runs in the South Beach neighborhood. Delancey Street owns a 300,000-square-foot training facility and warehouse that sits between the Bridge Housing project at the Holliday complex.
“You’re looking at 1,000 people moving into this block in the next year. And a grocery store. And a Crossroads Cafe. This place will be radically different than it is today,” said Rick Holliday, president of Holliday Development.
The $667 million T-Third, which opened in April 2007, was supposed to jump start transit-oriented workforce housing along Third Street. A deep recession and housing crash stalled some of the construction projects that were in the works, while others never got off the ground due to a complicated and controversial planning process along the line.
The previous developer of 5800 Third St., Noteware Development, walked away from the project and eventually declared bankruptcy. The original contractor on the project, Thompson Pacific Corp., left behind more than $10 million in liens and has since had its contractor’s license suspended, according to the Contractors State License Board. Noteware’s equity partner, Goldman Sachs Urban Investment Group, brought in Holliday to fix the broken project.
The 5800 Third St. project is the first two buildings of a 340-unit, four-building redevelopment of a former Coca-Cola bottling plant site. Holliday said they are close to selling part of the property to the San Francisco Redevelopment Agency for $7.5 million. The agency is working with nonprofits to develop a senior center and 121 units of affordable senior housing.
Olson Lee, housing director for the San Francisco Redevelopment Agency, said they would probably close on the acquisition of the 5800 Third St. property in July
“Putting a senior center on a ground floor next to a grocery store and across from a light rail station was an opportunity we could not pass up,” said Lee.
Need for grocery
In addition, Fresh & Easy, owned by the British supermarket conglomerate Tesco, is in contract to buy their space at 5800 Third St. for $7.5 million. Originally they had planned to lease the space, but are now looking to take advantage of depressed real estate prices and buy up their U.S. locations.
“A grocery store was such a big need in the Bayview,” said Bridge Housing President Cynthia Parker. “It’s starting to get to the scale where it can support a midsized grocery store. You have got to believe this is an indication that there is a real transformation taking place.”
The for-sale part of the Bridge project, designed by David Baker + Partners, is about 50 percent sold. The townhomes range in price from $175,000 to $345,000 and are affordable to households earning 60 to 120 percent of area median income. It has been attracting quite a few single parents with children, Parker said.
“It was created with a nice unique courtyard setting with a playground. You could live in one of these homes, be cooking dinner in a beautiful big kitchen … and look out window and watch your kids play,” said Parker. “It’s ideally suited for families.”
The 5800 Third St. project is right across the street from the Carroll Street T-Third stop station. The two buildings have three secure landscaped courtyards with barbecue pits, a bike lounge and dog washing station. Pricing on the units is still being calculated but will be less than $400 a square foot. The range will be low $300,000 for one bedrooms to high $500,000s for the three-bedroom, three-bath 1,800-square-foot units. The units have underground parking spots and for the first two years after purchasing a unit, early buyers will get a second parking spot in an a secure outdoor lot.
Holliday said they have lowered target prices 20 percent since taking over the development in October 2008. The sales office will open in late June when construction is done.
“It’s close enough to downtown being on the Third Street line you can feel the city coming to you in the next three to five years,” said Holliday. “It’s what Dogpatch felt like to me 10 years ago. You’re on the forefront of where the city is changing and you own it.”
For now it seems the next wave of housing along Third Street will take a while. At 4800 Third St. there is an 18-unit condo project nearing completion that will feature Radio Africa Kitchen restaurant on the ground floor. Housing prices in the neighborhood are still slightly below replacement costs, so unless the market starts to rise, new construction will be tough to justify, according to Pacific Marketing Associates’ Paul Zeger, who is marketing 5800 Third St. Zeger said developers are watching Third Street carefully.
“There are a lot of people out there looking at sites,” said Zeger. “Other developers will want to see people living here and the grocery store open,” said Holliday. “They will want to see the tangible results rather than the promise. Then there will be a surge of reinvestment here.”
J.K. Dineen covers real estate for the San Francisco Business Times. Contact him at email@example.com or (415) 288-4971. Read his blog postings at Bay Area BizTalk.