Hines Lists Site of 61-Story San Francisco Project for Sale

Hines has disclosed it is selling the site of Transbay Parcel F, a 61-story mixed-use tower that was scheduled to rise at 442-550 Howard Street in San Francisco.

The Houston-based developer, which has $80M in loans associated with the project coming due in October, and its investment partners have listed for sale the high-profile site in the SoMa submarket, according to a report in the San Francisco Business Times.

Parcel F, which would become the fourth-tallest building in San Francisco, was approved by the Board of Supervisors in March 2021 after a four-year battle during which community activists tried to stop the project from moving forward—they didn’t want to be in the shadow of the mammoth skyscraper.

When the plans for Parcel F were unveiled in 2018, Salesforce inked a deal to take the 274K SF office component of the building. In 2021, Salesforce opted out of the pre-lease.

In addition to the office space, the tower will feature a 189-room luxury hotel and 165 residential units as well as retail and amenity space, according to the plans. An asking price has not been specified.

In a statement last week, Hines said it is selling the project due to the pending loan maturity and “dislocated market conditions and an over seven-year history of significant investment into the project.”

Hines and its partners, Including Goldman Sachs and Pacific Urban—the venture is known as F4 Transbay Partners—are seeking “new investment to recapitalize and protect the best interests of our investors and shareholders. The partners said they are open to staying involved with the Parcel F project but hope to finalize a sale of the entitled site by the end of the year.

“The commercial real estate market has experienced significant shifts over the last several months, prompting us to adjust our business plan. Our ownership team has a high degree of conviction in [Parcel F] and remains committed to participating in the development if desired by a new investor,” the statement said.

The Transbay Joint Powers Authority (TJPA) sold the property to the partnership in 2016 for $160M. According to the terms of the original agreement, F4 Transbay Partners will have had to pay $70M to the TJPA if the mixed-use tower wasn’t delivered by the end of this year, and additional $15M for every subsequent year of delay.

Last year, F4 and TJPA amended the agreement to reduce the penalty to $40M, to be paid in four annual installments ending in 2027, with the first installment due next year.

In 2021, Hines announced it had contracted with Rosewood Hotels & Resorts to manage the 15-story hotel planned for the tower.