[Pedestrian]

Tennis club dropped from 88 Bluxome plans
By Laura Waxmann – Staff Reporter, San Francisco Business Times
Apr 6, 2021 Updated Apr 7, 2021, 10:43am PDT

Alexandria Real Estate Equities is making changes to its 1 million-square-foot mixed-use development in SoMa, nixing plans for a tennis club at the 88 Bluxome St. site.

The change comes after the project lost its anchor tenant in August, when Pinterest Inc. terminated a 490,000-square-foot lease at the development.

Pasadena-based Alexandria (NYSE: ARE), one of the Bay Area's most active developers, removed the 164,350-square-foot club slated from the basement, co-CEO Stephen Richardson told me.

“We lost our anchor tenant, Pinterest, a couple of quarters ago so this project has been front and center for us and we really have been evaluating the components of the project, the viability of the project, as well as the market,” he said.

The Bay Club sold the 88 Bluxome site — home to Bay Club San Francisco Tennis — to Alexandria in 2017 for $130 million and was set to operate the new club there as part of a deal negotiated with San Franciscans for Sports and Recreation (SFFSR), a nonprofit group that had advocated for a replacement club at the site. The project was approved in 2018 as part of the Central SoMa Plan . . . .

Alexandria will pay a one-time termination fee of $7.5 million to SFSR. Richardson said that the group agreed to the fee payment — which will be used to expand public sports and recreation spaces across the city — should market conditions change and the club no longer be feasible to build.

However, Seth Socolow, executive director of SFFSR, told me on Tuesday that the group has not accepted the payment and is "currently evaluating all options," though it acknowledges that the previous agreement allows for the one-time payment if market conditions changed.

"ARE have been excellent partners to date in supporting our efforts to improve public recreation throughout San Francisco and in providing an interim 12 court indoor tennis facility at the Cow Palace for use during construction of the planned indoor tennis facility at 88 Bluxome," Socolow said. "Our board were all shocked and deeply disappointed on learning today that ARE does not intend to build the indoor tennis facility that they contractually committed to us to build and is included in their current plans on file with the City Planning Department."

As part of the 2016 deal, Alexandria agreed to pay for and construct an interim indoor tennis club prior to the demolition of the. The Bay Club operates the interim site, which opened at the Cow Palace last year.

Richardson said Alexandria remains committed to the other components of the project and promised community benefits. These include a fully engineered pad for the construction of 107 units of 100% affordable housing, which will be donated to the Mayor’s Office of Housing for development; a public recreation center with two new swimming pools; an on-site child care center; retail amenities; production, distribution and repair (PDR) space; and the Bluxome Street linear park envisioned by the city’s Central SoMa Plan.

When asked if it was adding more office office space, Richardson told me the rest of the plan stays the same for now . . . .

Vertical construction has not yet begun on 88 Bluxome St., and it is unclear when the project will move forward in the absence of an anchor tenant.

“A project of this scale and size really commands an anchor tenant commitment in order to kick off, which is what we’ve done as a company for nearly a decade now — anchor projects with preleasing,” said Richardson. “Until we get to that point it's very much of a ‘stay tuned’ type of approach that we’ve got here.”

During an earnings call with investors in October, Richardson had indicated that 88 Bluxome St. could be built out to attract a life science user in response to muted demand for office space.

Richardson said this week that the company would like to “keep optionality” in regard to the 88 Bluxome St. development.

“I think that’s another aspect of the ‘stay tuned’ — we will see how the market unfolds,” he said.

“It doesn’t escape us that this once-in-a-century pandemic has had impacts on almost every aspect of every person’s life. And broadly the commercial office market in the U.S. has been very adversely impacted with people having to work remotely, and San Francisco has been amongst the hardest hit in the country.”

https://www.bizjournals.com/sanfranc...Pos=9#cxrecs_s

Sounds to me like it's not going vertical until they find another anchor tenant, either infotech/office or "life sciences", and there could be litigation in its future from San Franciscans for Sports and Recreation.