Lane Partners Teams with Goldman Sachs for $1 Billion Project in South San Francisco
SAN FRANCISCO BUSINESS TIMES
OCTOBER 15, 2018
Developer Lane Partners and investor Goldman Sachs want to build 2 million square feet of new office or lab space in South San Francisco.
Menlo Park-based Lane Partners is close to submitting a formal proposal for the $1 billion development after a year of crafting a concept and acquiring multiple parcels to make up a 25-acre project site.
“It’s a great location in terms of amenities,” said Scott Smithers, founder and managing principal at Lane Partners. The site is across the street from the San Bruno BART Station and the Shops at Tanforan mall. It’s also less than two miles from Youtube’s headquarters.
“There are fewer opportunities for tenants the larger you get in square footage,” Smithers said.
Most of the land consists of warehouses that are generating revenue, which means Lane Partners will have some cash-flow while the developer works through the approval process. The project is one of 13 developments that Lane Partners is working on. The company’s portfolio stretches from more than 1 million square feet of office in Oakland to several developments in Silicon Valley.
Although South San Francisco refers to itself as “the industrial city,” it reigns as one of the nation’s largest biotech hubs with more than 11.5 million square feet of space housing more than 200 companies. On top of that, more than 5 million square feet of life science space is under construction or ready to start construction.
Most of the biotech space is clustered east of Highway 101 near the bayfront. The Lane Partners site is west of Highway 101.
“We’re excited to diversify our economy,” said Mike Futrell, South San Francisco City Manager, at at the Business Times Peninsula Structures breakfast on Oct. 12. “We remain the industrial city, we’re still growing and we are still open for business.”
The project, designed by DES Architects + Engineers, could appeal to other industries looking for space between San Francisco and Silicon Valley and near major transportation including light rail, freeways and the San Francisco International Airport.
“Tech companies have workers spending three hours a day going from San Francisco to their offices in Silicon Valley whereas this is 15 minutes from San Francisco,” Smithers said. Peninsula office tenants — especially tech companies — have gravitated toward office space near transit stations and in more urban locations such as a walkable downtown, said Mike Moran, a broker with Cushman & Wakefield.
At the same time, most large blocks of space are spoken for on the Peninsula — even in buildings that are still under construction. About 3.2 million square feet of new office space is under construction on the Peninsula, Moran said, and about 2.3 million square feet of that is already leased up.
Take Burlingame Point, a 767,000-square-foot, $300 million office campus under construction that social media company Facebook recently leased up, said Moran, who represented the landlord in that deal.
“Employers need to have other locations because they can’t bring all their employees to Silicon Valley,” Moran said at the Structures event. Tech employers are saying, “I need a minimum of 1 million square feet with a pathway to 3 to 5 million square feet.”
The project is about four to five years way from completion in the best case scenario in terms of securing approval to start construction.
“The fact that this project is so close to public transportation, it reduces some market risk,” said Marcus Gilmour, principal with Lane Partners. “Even if the market does go through a downturn, we’re confident we can execute our development plan because of the location.”