TMG Partners has won awards for many projects
including honors for “Best Mixed Use,”
“Best Office,” and “Best Historic Rehabilitation”.
A 2-million-square-foot pair of towers, one of which will be San Francisco’s second-tallest
With the unveiling of plans for TMG Partners’ First and Mission streets project — a 2-million-square-foot pair of towers, one of which will be San Francisco’s second-tallest — it’s clear that the city’s future skyline is being assembled in Transbay.
TMG and partner Northwood Investors submitted an application this week for an environmental evaluation of the proposed office, residential and hotel development near the forthcoming $4.5 billion Transbay Terminal.
The project, designed by starchitect Norman Foster of Foster + Partners and a local team from Heller Manus Architects, involves towers rising 910 and 605 feet respectively. Once built, the taller tower will only be shorter than the 61-story Salesforce Tower — which is under construction nearby.
“We saw the opportunity to create a significantly large and, more importantly, unique building,” said Michael Covarrubias, chairman and CEO of TMG Partners.
The project’s height and mix of uses mirrors the other frenetic development activity going on around the future Transbay Terminal, with plans calling for more than 6 million square feet of office, 4,400 units of housing, and 100,000 square feet of new retail space.
City officials and planners kicked around the Transbay Terminal concept for decades and then established zoning for high-rises such as the $1.1 billion Salesforce Tower, which will be 1,070 feet high, the First and Mission towers and 181 Fremont, Jay Paul Co.’s 54-story office and residential tower that will soar to more than 700 feet.
“The city turned the corner when the Transbay plan was approved,” said Jeffrey Heller, co-founder of Heller Manus. “The Board of Supervisors wanted the economic benefit. The attitude about tall buildings changed dra matically with the Transbay plan.”
The idea behind the Transbay plan was to center high-density and tall buildings around the upcoming transit terminal so that tenants and residents could easily access transportation.
“The city’s growing up,” Covarrubias said. “Transbay will have beautiful architecture. You’ll have people living downtown without a long commute. It’s what cities are supposed to be.”
TMG and Northwood are working on securing city approvals that could take another year. The goal is to start construction by early 2016 and complete the towers in 2018 or 2019. The project would take at least three years to build because of its size and because plans call for building four stories underground, which Covarrubias said takes much longer to construct than above-ground structures.
The developer has numerous details to iron out before construction starts — including the project’s official name. One key variable right now is finding a partner for the hotel project and figuring out where it will go within the project.
“We’re trying to judge the demand for hotel space and work around it,” Covarrubias said.
The rough plan is to build 1.1 million square feet of office, 260,000 square feet of hotel, and 700,000 square feet of residential, which could accommodate close to 216 units of housing in both towers.
TMG wants to put residential units in the top of the taller tower to provide residents the highest housing units anywhere in San Francisco with unparalleled views.
Both the office and residential markets in San Francisco are booming right now, Covarrubias said, which supports a mega-project such as the one at First and Mission and gives developers confidence to move forward. In 2012, TMG was able to pre-lease its 521,000-square-foot project at 680 Folsom to Riverbed Technology and Macys.com. Other tenants including Salesforce, LinkedIn and Dropbox also inked deals in yet-to-be-built buildings.
Covarrubias said his firm is already receiving lease inquiries for First and Mission even though the developer hasn’t started marketing the project. It won’t be ready for “prime time” until the developer can nail down a completion date.
“People are already thinking that far out past 2017,” he said.
TMG and Northwood just acquired the First and Mission project in the middle of 2013 after going through a complicated process of buying the development for $122 million out of a bankruptcy proceeding.
The previous owner, David Choo, had hired on another starchitect, Renzo Piano, as the designer before going into bankruptcy and losing control of the property during the recession.
“We picked a capital partner, Northwood Investors, that has very long-term money -— 15-plus years,” Covarrubias said.
TMG’s recent projects and transactions
680 Folsom: TMG Partners and Rockwood Capital bought the then-vacant former PacBell building for $24 million in 2010, started a $125 million renovation in 2011, leased up 85 percent of the space and then sold it to Boston Properties for $335 million in 2012.
State Street: Developing 140 townhomes and condominiums on three floors above 21,000 square feet of ground-floor retail in downtown Fremont with partner Regis Homes Bay Area.
Champion Station: Bought and renovated the former Cisco headquarters into an 800,000-square-foot research and development facility in San Jose.
Tackling the tough deals
Michael Covarrubias joined TMG in 1988 after working for 17 years with Union Bank in commercial and real estate lending. He worked with TMG’s founder, David Martin, on major projects such as the $400 million EmeryBay development, a retail and residential project in Emeryville, and has since worked on a variety of developments and deals throughout the Bay Area.
The 64-year-old took the reins of the firm in 1995. Now in its 30th year of operation, TMG has entitled, developed, acquired and managed more than $3.5 billion and 23 million square feet of real estate in the Bay Area. The firm is known for tackling difficult deals and investing in untested markets such as developing SoMa Grand, a 246-condo project at 7th and Mission with AGI Capital years before anyone had heard of Twitter, which is now headquartered three blocks away. TMG bills itself as the most active developer in San Francisco’s SoMa district for 25 years with 18 projects totaling 5.5 million square feet of office, retail and housing.
Covarrubias, a native of Oakland, earned a bachelor’s degree in business administration from the University of San Francisco.