[BTinSF]

Friday, March 20, 2009
Mission Bay’s Fourth Street could be its fast lane
San Francisco Business Times - by J.K. Dineen

Residents moving into the Strata at Mission Bay have bocce courts and barbecue pits, twinkling downtown views and a 24-hour gym.

But as the first renters took up residency in the 192-unit apartment complex this week, one small detail was missing: Fourth Street, the brand-new boulevard leading to the Strata, is still closed as construction crews wrap up the final touches. Phil Owen, president of Mission Bay Development Group, which is responsible for building the street, said it would open by early April.

“We are just finishing up the sidewalk, striping the streets, going through a punch list,” said Owen.

Strata, at 1201 Fourth St., is the first development to open on what is Mission Bay’s next frontier, a half-mile stretch of Fourth Street going from Mission Creek to the southern edge of Mission Bay at 16th Street. While it is not every day a new street is built in an older city like San Francisco, Fourth Street is especially significant because it was conceived as a central shopping and leisure boulevard for Mission Bay. Planners see it as the neighborhood’s answer to 24th Street in Noe Valley or Chestnut Street in the Marina: a hub of neighborhood commerce tailored to pedestrians and cyclists.

During the Strata’s opening weekend March 14 and 15, developer Urban Housing Group signed 15 leases and had 55 groups tour the property. The developer aims to lease 25 units a month, putting the company on pace to lease the entire building in eight to 10 months, according to Dan Deibel, Urban Housing Group’s vice president of development.

The Strata brings to 723 the number of housing units in Mission Bay South. Bosa Development has 99 units at the Radiance but has put its next phases on hold until market conditions improve. University of California, San Francisco, has completed 431 units of student housing.

Given that it will be a few years until Fourth Street flowers as a shopping and dining strip, Urban Housing Group pumped more money into amenities and common space than they might have otherwise. The Strata has a 20,000-square-foot courtyard with gardens, stretching areas and communal rooms for cooking, entertaining and movie watching. Deibel said it was important to give the building “buzz and cachet” to lure people to a part of Mission Bay that is still only half developed.

“We knew we were going to be south of the channel. And so we gave a lot of thought to creating a destination community here where you come home at night and you feel comfortable with everything you have here,” said Deibel.

The Strata is Urban Housing Group’s second San Francisco development. The developer sold the 193-unit Edgewater Luxury Apartments at 355 Berry St. for $115 million in May 2008 to United Dominion Realty Trust. The $595,855 per apartment price tag was record breaking.

While rents have softened in recent months, the San Francisco apartment community has held up much better than for-sale housing. In particular, the Mission Bay submarket, which includes AvalonBay’s Mission Bay communities and developments like South Beach Marina and Bay Village, all have occupancy rates above 90 percent, Deibel said. Average asking rents are about $3.25 a square foot at the Strata, about 10 percent lower than they would have been a year ago. Units range from $2,100 to just under $4,000 a month.

“We are at market,” said Deibel. “San Francisco had been growing at a pretty good clip, and I’d say the last six months it’s been flat. So we lost six months of the growth we planned. It’s a competitive market, and we will be competitive as well.”

On the retail side, Urban Housing is looking for a white-tablecloth restaurant, as well as other neighborhood-serving retail businesses. Brokers from Cornish & Carey Commercial have been touring the property with restaurant owners and had one deal fairly far along before the economy soured last year.

“Now that the Strata is open, we are looking forward to a lot of positive activity, and certainly the opening of Fourth Street will help as well,” said Marissa Miller of Cornish & Carey. “Once the street is open, tenants will be able to get a feel for how great Mission Bay will be.”


Email J.K. Dineen at jkdineen@bizjournals.com / (415) 288-4971

Source: http://sanfrancisco.bizjournals.com/...23/story5.html