From today’s SF Business Times:
Trulia in talks to anchor downtown S.F. highrise
J.K. Dineen, Reporter- San Francisco Business Times
Jan 30, 2014
Online real estate firm Trulia (NASDAQ:TRLA) is in advanced talks to become the anchor tenant of Boston Properties’ 535 Mission St., the latest indication that San Francisco’s next wave of new office buildings will be substantially leased up before construction is completed.
Trulia has tentatively agreed to take around 100,000 square feet in the 305,000-square-foot building, essentially filling the bottom third of the 28-story highrise. Boston Properties topped off the building in a ceremony in early January. Upon completion in October, the tower will be the second office building to open in the current economic cycle, trailing only Tishman Speyer’s Foundry Square III.
Trulia, which employs more than 500 people in San Francisco, Denver, and New York, is currently headquartered in about 32,000 square feet at 116 New Montgomery St. The company currently has 25 San Francisco openings, according to its website. A spokesperson said Trulia doesn’t comment on “rumor and speculation.”
In an earnings call Jan. 29, Boston Properties Executive Chairman Mortimer Zuckerman said that “we are in active lease negotiations (with) technology tenants for the lower floors of (535 Mission St. for) somewhere between 80,000 and 100,000 square feet, with an expected occupancy in the fourth quarter of 2014 contemporaneous with the building delivery.”
With seven office buildings under construction, approximately 3.7 million square feet will be delivered to the market over the next two years. Of that, about 60 percent has been pre-leased, with Salesforce, Neustar, Riverbed Technologies and Macys.com committing to large blocks of space in the spec buildings, according to CBRE. Colin Yasukochi, research director for CBRE, predicts that the 37 million square feet slated for 2014 and 2015 completion could be spoken for by the end of this year.
The 535 Mission St. project is one of the first office towers in San Francisco to be pre-certified Gold through the LEED for Core & Shell program. Green features include storm water retention, natural day lighting and an insulated glass curtain wall system that uses solar-reflective coating to conserve energy.
Boston Properties bought 535 Mission in 2012 and began work with Swinerton Builders. Swinerton has been involved with the project since 2007, originally contracted to build the 28-story skyscraper with previous owner Beacon Capital Partners and broke ground on the site in 2008. However, the project soon became a casualty of the economic recession, and construction was halted later that year. After several years of steady economic recovery in the Bay Area, Boston Properties purchased the property and retained Swinerton as general contractor.
The total cost of the building will be about $210 million, or $700 a square foot, which Zuckerman pointed out is less than the $767 a square foot that a 15-year-old building, 101 Second St., recently traded for. He projected that once leased up, 535 Mission St. would yield 6 percent. HOK is the architect.
At the recent topping off ceremony, Angus Scott of CBRE, who is part of the leasing team, said he expected to sign multiple deals in the first half of 2014 and that tenant improvements could start as early as next summer, with occupancy by the conclusion of the year. “It’s as clean a building as you will ever find,” he said. “The nice thing with the smaller floor plates is that you get great light everywhere and that is what everyone wants these days.”