The estimated $2.2-billion development proposal is for the creation of a new neighborhood, the Mission Rock District, which includes SWL 337, China Basin Park, Pier 48 and portions of Terry Francois Boulevard. The design shows SWL 337 broken into 10 city blocks built up with one million square feet office space, 240,000 square feet of retail space, 875 apartment units and open space. The plan for Pier 48 calls for 181,000 square feet of event space.
The developer team is asking for 75- and 66-year leases for SWL337 and Pier 48, the maximums allowed by state law. The Port is projected to receive base rent totaling $208 million between 2013 and 2053. Though the submittal has no specific proposal for base rent increases, the pro forma shows $254 million in “performance rent” between 2013 and 2053 roughly equal to base rent escalations every five years at the rate of inflation.
Its development proposal outlines an approximately four year period to conduct due diligence and obtain all required entitlements followed by a four-phase, 17 year site build-out commencing in 2013. The historic rehabilitation of Pier 48 is proposed to take place between 2022 and 2026.
However, the deal is not ready yet
Stern tells GlobeSt.com the exclusive negotiating agreement between the Port and the development team should be hammered out sometime this fall. The Port was not very impressed with the developer team’s initial proposal for Pier 48, which could be cut out of the agreement if a better proposal isn’t received, according to the latest staff report.
“The proposal’s treatment of Pier 48 seems to be incomplete, offering rents below current interim lease rates with major improvements at Pier 48 delayed until 2026,” states the report. “Based on the current proposal, Port staff does not believe a long-term lease is warranted at Pier 48. If the Port Commission chooses to proceed, Port staff would seek revisions to the proposal regarding Pier 48 or evaluate whether Pier 48 should be included in the scope of a long-term development agreement.”
SOURCE: GLOBE ST
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