TMG Partners has won awards for many projects
including honors for “Best Mixed Use,”
“Best Office,” and “Best Historic Rehabilitation”.
Big tech firms circle SoMa renovation
TMG Partners will start construction in late November on the $87 million rehab and expansion of 680 Folsom St., a project that represents the largest speculative office construction development San Francisco has seen since before the Great Recession.
The project at Third and Folsom streets, which is set for completion in late 2013, is already attracting serious interest from a number of large tech tenants looking to expand in the tight South of Market neighborhood. While TMG declined to comment on any negotiations, tenants that have seriously looked at the building include Google and Advent Software, according to market sources.
Construction is set to start at a time when SoMa is booming in a way that recalls the early days of the dot-com explosion. The SoMa market has 4.5 percent vacancy and property owners are now asking for an average of $47.06 per square foot - more than landlords are charging in the city's traditional central business district.
San Francisco-based TMG has hired Plant Construction Co. as general contractor on the redevelopment and is looking to break ground on Nov. 28.
The redevelopment, which is being designed by Skidmore Owings & Merrill, calls for 680 Folsom St.'s existing 1960's concrete exterior to be replaced with a clear glass curtain wall skin. A two-story vertical addition and several small horizontal additions will also be added to the building, increasing the gross building area by 100,000 square feet to 505,000 square feet. All building systems will be replaced and a new public plaza will be built on the corner of Folsom and Third streets, where there eventually will be a new 15,000-square-foot retail or cultural building constructed. A new glass, steel and granite lobby will have 30-foot ceilings with floor-to-ceiling glass and a floating staircase.
TMG Partner Matt Field confirmed that construction is imminent. He said the building offers the sort of efficient 35,000-square-foot floor plates that technology tenants covet but that are no longer allowed in the downtown core under current building codes, which require thinner, less bulky buildings set back from the street. It also has 15-foot ceiling heights that are unusual downtown. Field called it "a Silicon Valley floor plate in downtown San Francisco."
"We think the building is unique because it has the extra-large floor plates which are extremely attractive to modern companies looking for efficient space," said Field. "It's a truly state-of-the-art, brand-new building capitalizing on the unique bones of an older building that are not reproducible in downtown."
TMG has a long history of pumping new life into obsolete buildings. The developer rehabbed and re-tenanted the Landmark at One Market and 650 Townsend St. TMG recently bought 155 Fifth St. and has brought in the University of the Pacific's Arthur A. Dugoni School of Dentistry to take it over. With 35,000-square-foot floor plates, 680 Folsom St. has a lot in common with the Landmark at One Market, which is currently occupied by Salesforce, according to Chris Roeder, a senior director at Jones Lang LaSalle who is marketing 680 Folsom St.
"It's the right project in the right place at the right time," he said.
The start of construction comes four long years after TMG and former equity partner RREEF originally introduced plans to rehab the building, which Pacific Bell owned and occupied until 2007. That project, along with all other construction in downtown, was put on hold during the recession. In October 2010, as SoMa began to heat up again, TMG brought in a new equity partner, Rockwood Capital, to revive the project. RREEF is no longer involved.
The Folsom Street project will be the third office rehab project to get under way in San Francisco this year, joining two Shorenstein Properties developments, Market Square at 1355 Market St., the future home of Twitter, and 188 Spear St. Other entitled sites that the construction industry is watching include Tishman Speyer's 222 Second St. and GLL's 350 Mission St. Both could get going in 2012. Mike Theriault, secretary-treasurer of the San Francisco Building Trades Council, said unemployment has come out of the lows of 2009 when more than 25 percent of union construction workers were without work.
"I do have the sense that it has improved, but it's still not good by any means. We've gone from God-awful to just plain awful," said Theriault. "We are all watching Europe and hoping we don't sink into a double-dip recession."