By Himanshi Akhand

(Reuters) -Lendlease Group and Alphabet’s Google are mutually ending development services deals for four master-planned districts worth $15 billion in the San Francisco Bay Area, the Australian company said on Friday, as developers continue to exit California’s real estate market.

Lendlease bagged the contract from Google in 2019 to develop the residential and retail space in Sunnyvale, San Jose and Mountain View, which could ultimately bring around 15,000 new housing units to the region.

California’s commercial real estate market is one of the hardest hit globally as remote working has reduced the demand for office space amid declining property values, with companies like Unibail-Rodamco-Westfield, owner of one of San Francisco’s biggest shopping centres, also walking away.

Under the project, Lendlease was to develop up to 15 million square feet of residential, retail and hospitality space and Google would develop office space.

“We’ve been optimizing our real estate investments in the Bay Area, and part of that work is looking at a variety of options to move our development projects forward and deliver on our housing commitment,” said Alexa Arena, senior director of development at Google.

As of June-end, 12,900 of the planned housing units were approved for development in San Jose and Mountain View, according to Google.

A spokesperson said the company is still looking to work with both developers and capital partners to move the Bay Area developments forward.

Earlier this year, Lendlease also paused its 47-storey Hayes Point project in central San Francisco, its largest investment in the Americas, looking to line up tenants or find a co-investor.

Lendlease said it will remove the San Francisco Bay project, which was expected to commence construction in fiscal 2026, from its development pipeline.

“While market expectations for the project had deflated over the past ~12-18 months, the change is negative for medium term (FY26-28) earnings,” analysts at UBS said.

Lendlease retained its forecast for fiscal 2024, with core operating return on equity at the lower end of its 8%-10% range.

(Reporting by Himanshi Akhand in Bengaluru; Additional reporting by Ayushman Ojha; Editing by Sonia Cheema, Rashmi Aich, Varun H K and Sohini Goswami)

The post Lendlease, Google finish improvement offers for $15 billion San Francisco Bay Space tasks appeared first on DAILY SAN FRANCISCO BAY NEWS.

Lendlease Pauses San Francisco Tower In Another Sign of Real Estate Woe | Engineering News-Record

This website requires certain cookies to work and uses other cookies to help you have the best experience. By visiting this website, certain cookies have already been set, which you may delete and block. By closing this message or continuing to use our site, you agree to the use of cookies. Visit our updated privacy and cookie policy to learn more.

This Website Uses Cookies
By closing this message or continuing to use our site, you agree to our cookie policy. Learn More
This website requires certain cookies to work and uses other cookies to help you have the best experience. By visiting this website, certain cookies have already been set, which you may delete and block. By closing this message or continuing to use our site, you agree to the use of cookies. Visit our updated privacy and cookie policy to learn more.

The post Lendlease Pauses San Francisco Tower In One other Signal of Actual Property Woe appeared first on DAILY SAN FRANCISCO BAY NEWS.

Dive Brief:

• Lendlease’s rough 2023 continues. The Australia-based builder and developer hit pause on Hayes Point, a $1.2 billion, 47-story mixed-use tower in in San Francisco, CEO Tony Lombardo told investors during an earnings call Monday.
• The project, originally set for completion in 2026, is the company’s largest investment in the U.S., according to Reuters. If finished, the project will hold 300 condos and over 300,000 square feet of office space, according to the San Francisco Business Times.
• The stall follows Lendlease laying off about 10% of its global staff — or about 740 workers — in mid-July. At the time of layoffs, an official statement from Lombardo claimed the worker reduction wouldn’t impact project delivery dates.

Dive Insight:

In its rocky earnings report released Monday, Lendlease announced an AU$232 million statutory loss ($150 million USD). Nonetheless, the company claimed its financial position was stable in its 2023 annual report, with AU$22.9 billion of work in progress and AU$8.7 billion in external construction backlog revenue. The latter represented a 17% drop from its full-year 2022 results.

Lombardo addressed Hayes Point in the earnings call, stating the project was paused to “de-risk” the investment, which has cost AU$260 million to date, until Lendlease secures more tenants or a capital partner.

“So until we get one of those two things to come to fruition, we won’t restart,” Lombardo said. “From a capital perspective, we still see good returns in that project. So we don’t feel at the moment there’s any risk of impairment.” 

Lombardo said that of the work Lendlease launched this year, Hayes Point was unique in that it didn’t have outside capital backing the project.

Within the U.S., the San Francisco property market has been hit particularly hard. Following remote work trends that started during the pandemic, office vacancies have remained persistently high. 

The post Lendlease pauses $1.2B San Francisco mixed-use tower, its largest US mission appeared first on DAILY SAN FRANCISCO BAY NEWS.

Dive Brief:

• Australia-based firm Lendlease has begun construction on its largest investment in North America: a $1.15 billion, 47-story mixed-use tower in San Francisco.
• 30 Van Ness, located in the city’s Hayes Valley neighborhood, will encompass 290,000 square feet of office and retail space along with 333 condominium units and is designed to Achieve net zero emissions during construction and ongoing operations.
• Designed by SCB Architects with anticipated LEED-Platinum certification, the all-electric building will be complete in 2025, according to a release. Len lease is the property’s developer, builder and owner.

Dive Insight:

The demand for office space has cratered across the country since the COVID-19 pandemic led many workers to pivot to remote work. In San Francisco, the vacancy rate for offices is more than 20%, according to The Real Deal.

Nevertheless, Lendlease said it is bullish on providing “next-generation” workplaces in major cities across the globe.

“With few other projects of this scale planned, we believe now is the right time to launch this long-term vision to deliver a global best-in-class asset of the future,” said Mark Dickinson, managing director of development for Lendlease Americas , in the release.

The building’s office space will feature outdoor terraces, open floor plates, 14.5-foot floor-to-floor heights and energy-efficient dynamic glass. It will also include touchless access throughout, ionic air purification in elevator cabs and a high-performance HVAC system with MERV-15 filters and 100% outside air capability.

The condos at 30 Van Ness will include Studio, one-, two- and three-bedroom floor plans in an average size of over 1,000 square feet. Twenty-five percent of the units will be designated as affordable and reserved to be sold below market rate to households meeting designated income thresholds, the release said.

Clarification: This story has been updated to reflect the correct value of the project.

The post Lendlease breaks floor on $1.15B San Francisco tower appeared first on DAILY SAN FRANCISCO BAY NEWS.

Dive Brief:

• Australia-based firm Lendlease has begun construction on its largest investment in North America: a $1.15 billion, 47-story mixed-use tower in San Francisco.
• 30 Van Ness, located in the city’s Hayes Valley neighborhood, will encompass 290,000 square feet of office and retail space along with 333 condominium units and is designed to Achieve net zero emissions during construction and ongoing operations.
• Designed by SCB Architects with anticipated LEED-Platinum certification, the all-electric building will be complete in 2025, according to a release. Len lease is the property’s developer, builder and owner.

Dive Insight:

The demand for office space has cratered across the country since the COVID-19 pandemic led many workers to pivot to remote work. In San Francisco, the vacancy rate for offices is more than 20%, according to The Real Deal.

Nevertheless, Lendlease said it is bullish on providing “next-generation” workplaces in major cities across the globe.

“With few other projects of this scale planned, we believe now is the right time to launch this long-term vision to deliver a global best-in-class asset of the future,” said Mark Dickinson, managing director of development for Lendlease Americas , in the release.

The building’s office space will feature outdoor terraces, open floor plates, 14.5-foot floor-to-floor heights and energy-efficient dynamic glass. It will also include touchless access throughout, ionic air purification in elevator cabs and a high-performance HVAC system with MERV-15 filters and 100% outside air capability.

The condos at 30 Van Ness will include Studio, one-, two- and three-bedroom floor plans in an average size of over 1,000 square feet. Twenty-five percent of the units will be designated as affordable and reserved to be sold below market rate to households meeting designated income thresholds, the release said.

Clarification: This story has been updated to reflect the correct price of the project.

The post Lendlease breaks floor on $1.15B San Francisco tower appeared first on DAILY SAN FRANCISCO BAY NEWS.

Construction of 30 Van Ness in San Francisco is expected to be complete in 2025.

SAN FRANCISCO — Lendlease, a global investment firm headquartered in Australia, has broken ground on 30 Van Ness, a $1.1 billion mixed-use tower that will be located in between San Francisco’s Hayes Valley and Mid-Market districts. The price tag represents Lendlease’s largest investment to date in the Americas. Completion is slated for 2025.

Designed by SCB Architects, the 540-foot-tall building will consist of 333 residential condominiums and 290,000 square feet of office and retail space. The property’s 38 stories of residential space will be constructed atop the nine-story podium that will house the office and retail components.

Residences will come in studio, one-, two- and three-bedroom floor plans and have an average size in excess of 1,000 square feet. About 25 percent of the units will be reserved as affordable housing, specific income requirements for which were not disclosed. The 10th floor of the building will house residential amenities.

Each level of office space will offer outdoor terraces and dynamic glass that lowers energy usage throughout the building. In addition, the site’s event and retail space will open into a public plaza at the northeast corner of Market and Van Ness streets. This space will be used to host both public performances and private events.

Lendlease is developing 30 Van Ness with numerous health and wellness features and concerns in mind. In addition to targeting LEED Platinum certification, the building will feature touchless entry and exit mechanisms, ionic air purification systems in elevators and MERV-15 filters in the HVAC systems . Lendlease also expects to achieve net zero emissions during construction and subsequent operations.

“This flagship project signifies our commitment to creating the next-generation workplace of the future in great locations within world-class cities,” says Mark Dickinson, managing director of development for Lendlease Americas. “With few other projects of this scale planned, we believe now is the right time to launch this long-term vision to deliver a global best-in-class asset of the future.”

—Taylor Williams

The post Lendlease Breaks Floor on $1.1B Blended-Use Tower in San Francisco appeared first on DAILY SAN FRANCISCO BAY NEWS.