The Port of San Francisco is working with Brookfield Properties on modifying the stalled Pier 70 development in order to break the logjam for 3.5 million square feet of homes and offices.
The port is examining “potential modifications” to the $3.5 billion project after the New York-based developer halted construction earlier this year, citing market conditions, the San Francisco Business Times reported.
Brookfield shut down the job after finishing a restoration project along with the first phase of infrastructure and road work on Potrero Point. It says it is committed to completing Pier 70.
The Pier 70 project will include up to 2,150 homes and 2.3 million square feet of commercial space, to be built in the next 10 to 15 years on 28 acres on the Central Waterfront. The delay means that the port can’t collect its portion of tax revenue generated by the project.
Rebecca Benassini, the port’s deputy director of real estate and development, didn’t disclose what modifications are being considered, but told the Business Times it doesn’t foresee any “material amendments to the project documents.”
Brookfield was required to buy or lease several land parcels within two years after construction began in 2018. It appears a deal could be delayed for years.
An appraisal of a housing site known as E2 came up short last year, triggering a “downmarket delay” and relieving the developer of its purchase-or-lease obligation for at least a year.
The Port had planned to reappraise E2 and another proposed commercial redevelopment in June to gauge market conditions.
The reappraisals never took place, Benassini said.
“Rather than using the unpredictable and blunt tool of reappraising E2,” the Port and Brookfield are working together to find pathways to move forward on the entire Phase 1 of the project, not just a single parcel,” she told the newspaper.
This means “looking at potential modifications to the project documents that could improve project performance,” Benassini said.
The appraisals can be conducted every year for five years before both Brookfield and the Port face “bigger consequences,” Benassini explained at a Port Commission hearing in April. She said the Port and developer are now “meeting frequently” to check market indicators to determine when the appraisals can be restarted.
A Brookfield spokesman confirmed the company is collaborating with the Port on the “best approach for the project to succeed,” calling market conditions during the last three years “unprecedented.”
The two parties are also working on Pier 70 marketing and special events, including a recent Oracle NetSuite Open squash tournament hosted in historic Building 12.
The developer has spent $237.4 million on its first phase, which includes infrastructure, road work and the restoration of Building 12.
Before the pandemic, it was cutting a deal with Google to lease all of Pier 70’s offices, or 1.75 million square feet. But the tech giant backed out in March 2020. Brookfield has since won permission to lease future offices for life science tenants.
The company has moved forward with its $2 billion redevelopment of the Stonestown Galleria mall in Parkside Merced.
— Dana Bartholomew
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