R2 Building Pulls Plug on Apartment Tower in Oakland

R2 Building has scrapped plans to build a 39-story apartment building in Downtown Oakland after failing to obtain financing, and has put the approved building site up for sale.

The Oakland-based developer has listed the 25,000-square-foot former bank building at 2044 Franklin Street, the San Francisco Business Times reported. The asking price was not disclosed.

The modular builder, which succeeded the defunct RAD Urban, had filed a preliminary application in February under the state’s “builder’s remedy” provision to boost the height of the apartment tower to 39 stories, from 22 floors.

The loophole in state housing law allows builders to get projects approved if cities fail to certify state-mandated housing plans. R2 Building had squeaked its application through a two-week window after the Jan. 31 deadline before Oakland had its Housing Element plan approved.

Earlier reports said R2 Building had updated its plans to 39 stories under Senate Bill 330, a sweeping housing measure enacted in 2019. The fast-track measure has been used by developers in tandem with builder’s remedy filings to bypass local zoning in cities with non-compliant housing plans.

Brokers Todd Vitzthum and Drew Malm of Apartment Capital and Realty Advisors hold the listing.

Vitzthum said R2 Building decided to sell the property after its year-long search for investors or a joint venture partner fell through.

He described the 0.6-acre property, home to a former Bank of America location built in 1966, as “one of the best, if not the best, high-density sites in Oakland.”

The builder’s remedy application calls for a 39-story, 425-unit tower with 134,000 square feet of shops and restaurants. The three-decade-old housing loophole remains untested in state courts.

“There is the opportunity to significantly increase the unit count,” Vitzthum told the Business Times.

The building site at Franklin and 21st Street has had numerous plans and approvals going back to 2016. That’s when RAD Urban proposed a 40-story tower at 2044 Franklin Street, plus a 28-story highrise at 1433 Webster Street, both using modular construction.

In 2018, RAD Urban was approved to build a 22-story, 357-unit building of small apartments at 2044 Franklin, and won approval for a 15-story, 168-unit modular residential tower at 1433 Webster Street.

Together, they were to have been Oakland’s tallest modular buildings, seen by developers as a way to save construction costs. But while RAD Urban was able to complete a 77-unit student housing project near UC Berkeley, the Downtown Oakland projects were never built.

— Dana Bartholomew