CLSA in the San Francisco Business Times: SSF developer ‘suspends’ plans for 1,200 homes at Oyster Point

By Richard Procter and Ron Leuty | Read at the San Francisco Business Times
Mar 28, 2018

A controversial plan to convert part of a massive South San Francisco development from biotech labs and offices to 1,200 housing units has been put on hold.

Leaders of Oyster Point Development, the developer of the Landing at Oyster Point, told South San Francisco city officials Tuesday that they will suspend the residential part of the plan, said Alex Greenwood, the city’s director of economic and community development.

It was unclear if the decision by Oyster Point Development, led by Chinese developer Greenland USA, is indefinite, but Greenwood said that he believes the developer wanted to “press pause” on the residential plans.

Greenland tried to secure support for the plan, especially among biotech companies, but nearby biotech giant Genentech Inc. and the California Life Sciences Association trade group, among others, had opposed the project. Part of the opposition to the residential aspect of the project has been driven by the biotech industry’s desire to keep swaths of land open for expansion.

Opponents also have argued that residential development on the bayside end of Oyster Point Boulevard — one of the main arteries for the largest biotech cluster in the world — would add to already-critical traffic problems and hurt companies’ ability to attract and retain workers.

Genentech, whose 4.7 million-square-foot campus is a half-mile away from the development, last month delivered a caustic rebuke of the city’s environmental review of the project, which could place mid-rise and high-rise housing alongside research-and-development space.

Oyster Point Development had sought dual zoning for the site, allowing it to build housing or offices/labs on part of the project. As it stands, the project, OPD, which inherited the 2011 R&D entitlement when it bought the property in 2016 from Shorenstein Properties LLC and SKS Partners for $171 million, is moving forward with building 1.5 million square feet of biotech space.

The residential work is earmarked as the third and fourth phases, but could have run parallel to the first office/R&D stage that begins this year.

Greenland had faced whispered questions about its ability to take on the project, given that the Chinese government reportedly is reining in high-capital projects abroad. What’s more, it struck a deal last year with Kilroy Realty Corp.(NYSE: KRC), a Southern California developer focused mainly on office projects, to buy the development’s first two phases.

Kilroy has a right of first offer to buy the final two phases.

The first phase of work at the site, about a mile east of Highway 101, includes demolition of buildings and construction of a temporary road to reach a ferry terminal and marina. That work would ready the construction of 580,000 square feet of five-, six- and seven-story R&D and office buildings that are expected to start construction in the summer.

Those buildings would be ready for occupancy in 2020 or 2021.

The next phase would include 1 million square feet of office/R&D space, depending on leasing of the initial buildings.

If Oyster Point Development won rezoning to include housing, it faced the option of shedding an additional 725,000 square feet of office/R&D space in favor of the 1,200 residential units.

The first five residential buildings — three as rentals, two as for-sale condominiums — would be four to five stories over two-story parking garages. On the north side of the development, OPD has shown plans with either the same type of residential buildings or towers of 15 and 22 floors.

Read at the San Francisco Business Times.