EM Johnson Interest Inc. is the manager of Fillmore Development Associates, the firm selected in June 2001 by the San Francisco Redevelopment Agency to develop the 1.2 acre site at the corner of Fillmore and Eddy in the Western Addition. EM Johnson president Michael E. Johnson, managing member of Fillmore Development Associates, tells GlobeSt.com that the grading, shoring and excavation contractor will begin site work next Monday. Project construction will take 18 months to complete, he says.
The commercial base, which has been fully preleased, will include Yoshi's, a 27,000-sf Jazz club with one other location in Oakland, a Jazz Heritage Center and, The Blue Mirror Restaurant and Lounge, a 6,000-sf restaurant and lounge with an African American theme. The condominiums above that will include 68 market rate units and 12 Below Market Rate units targeted for income levels at 100% of median. Prices for the market rate one-, two- and three-bedroom condominium units are expected to be priced between $575 and $600 per sf, says Johnson. Presales will begin in the second quarter of 2006. The sellout is expected to be at or above $48 million.
A large portion of the project's public financing came from the city's redevelopment agency, which provided $15 million in land and development loans, as well as a $4.7 million grant to construct the belkow-grade public parking garage. The residential parking to meet the one-for-one requirement for condominium units will be constructed within a proposed second-level garage within the residential tower). Specifically, the redevelopment agency loans consisted of $8.2 million for predevelopment activities, removal of contaminated soil, and tenant improvements, a $6.5 million land loan, and a $5.5 million loan from the Mayor's Office of Community Development. Johnson says East Coast financial institutions provided the balance of the project's financing. Johnson says he has obtained a $28.2-million construction from the National Electrical Benefit Fund of Washington, DC and a $6.7-million mezzanine loan from Mugar Enterprises out of Boston. The remainder of the cost will be equity from the development partners.
Commercial rents at the project are in the $18-per-sf range, a below-market figure that was based on what was feasible for the specific types of businesses that are in the project. The redevelopment agency required that the project attract these types of tenants and provided loan interest tenant-improvement loans directly to the tenants to help make it happen, its goal being to further revitalize the district.
As for Fillmore Development Associates' return on investment, Johnson says the JV will get a 5% development fee for the public parking garage and another modest fee for the commercial portion of the project, which he says will provide a "decent cash flow over time." On the residential, Johnsons says FDA will lose money on the BMR units and is projecting a 15% profit as a percentage of gross sales on the market-rate units for a net profit of about 12%.
EM Johnson Interest was represented in its negotiations with the city, lenders and contractors by Wendel Rosen partner R. Zachary Wasserman. Webcor Builders has been selected as the general contractor. Design architects for the project are Washington, DC-based Devrouax & Purnell and the local firm of Hornberger Worstell. LDA Architects of San Francisco is the executive architect.
EM Johnson Interest has been in business for 12 years. The company focuses on infill for-sale housing projects in San Francisco, Oakland and currently in Richmond. Most recently, EM Johnson was a partner in North Beach Place development project in San Francisco.
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