Quote:
Originally Posted by fimiak
Stop lurking and start posting!
I personally don't think there are real problems on either the salesforce site nor the transbay terminal site. Disagreements in cost and things of this nature are commonplace on ten-year projects involving dozens of city and private stakeholders. But the salesforce site is definitely going up full steam since more than half the building is already accounted for.
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Total agreed. And thanks Larkspirit for posting.
BXP and Hines are the equity behind SF Tower. Core funds, one publicly traded, the other funded by off-shore money. From all accounts, this is a very long-term play, build-to-core type of investment. They have gotten this far; they are likely close to locking down financing with a 55% pre-leasing commitment from a blue chip technology firm with a long (relative to industry) operating history, and this will be worldwide corporate HQ for them. Pre-leasing hurdles could be as low as 15-20%, though a construction loan won't be fully funded that low.
Also, in case nobody's noticed, SF is now the most expensive office market with one of the tightest class A vacancies, and undergoing a major tech boom. Now is NOT the time to sit on the sidelines. Of course this economy might not last, but if you have a longer term strategy, you need to capitalize now on what you know to be going on, and ride out any dips in the future (and then you'll be poised for the next upswing before the next round of construction gets going and you can sell!).
This tower is not getting built *because* of the TB Terminal. Employees will already be able to take BART/Muni to SF Tower, which they already do to all of the neighboring towers that Salesforce already leases well over a million square feet in.
For those who don't know, Jay Paul's tower is financed. Not sure if it's been announced, but it's financed at crazy terms and has no pre-leasing. That guy has big fuckin balls, as evidenced by how many times he's doubled-down in the Valley/Peninsula in the middle of downturns. If THAT tower's going up, Salesforce Tower IS GOING UP.
Oh, and a few million sunk into a project in Portland is one thing - in the grand scheme of a fund operated by a huge firm like Hines or BXP, that can be overlooked. Someone might get fired, but the world is not going to end. With no financing in place for SF Tower, Hines and BXP are in literally hundreds of millions of dollars already, if not on the land alone. That is a little more than a sunk cost at worst case scenario. With the kind of money they have, if things go REALLY sour, they are going to strategize to recoup that money (because they won't get half of what they paid for the land alone, and that's well more than $100M lost right off the bat by doing nothing considering what's in the ground), perhaps by lowering IRR expectations and going for multiple - extending term, giving lease freebies just to get cash flow sooner, etc etc. The "success" story alone of building/leasing and eventually selling way down the road is one that brings a ton of goodwill to these types of companies. "Failing" can do a lot of harm. We aren't talking mom&pop shops, or Hines using a pocket of money in a more value-add fund and partnering with a local developer (like a Jay Paul). No, this is Hines Skyline (I think)/Boston.
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