Hines Evaluates Options For 39-Story Oakland Tower

Houston-based Hines, which earlier this month disclosed that it is selling the site of its largest project in San Francisco, has halted its largest office project in Downtown Oakland.

Hines was planning to build a 39-story office tower—it would have been the tallest office tower in the East Bay—at 415 East 20^th Street in Oakland.

The developer has decided not to move forward with the project at this time because it is “not economically feasible” to develop under current market conditions, TheRealDeal reported.

Office vacancy in Oakland’s core business district hit nearly 36% in the second quarter, the fourth consecutive quarter the 6.3M SF submarket’s vacancy has risen, the San Francisco Business Times reported.

Overall vacancy in the city’s core business district, which spans Downtown, Uptown and Lake Merritt submarkets, rose 1% between the first and second quarter of this year, according to Cushman & Wakefield data.

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.

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.