The first defibrillator won’t be used at the new California Pacific Medical Center on Van Ness Avenue for three years, but the $2 billion hospital is already sending shocks through the surrounding neighborhoods.
Betting that the 700,000-square-foot hospital will create huge demand for bedrooms and office space, opportunistic builders and property owners near Van Ness and Geary Boulevard are lining up development projects that will result in 2,000 new housing units, 1 million square feet of office space and possibly hundreds of hotel rooms.
The projects include the redevelopment of the KRON-TV building at 1001 Van Ness, where Oryx Partners is planning to build 165 units. On Geary just east of Van Ness, architect Michael Stanton has filed an application to build 130 apartments on a parcel currently occupied by the Opal Motel. The adjacent Opal Hotel would be retained and renovated as part of the project.
Meanwhile at 1200 Van Ness, home to a 24 Hour Fitness and a former Circuit City location, property owners have applied to build an eight-story rear addition that would more than double the size of the building to 265,000 square feet and house medical offices. And at 1100 Van Ness, CPMC has started construction on a nine-story, 250,000-square-foot medical office building that will be connected to the hospital by an underground tunnel.
“The hospital is going to be a high-demand generator,” Stanton said. “It’s going to be good for the Opal Hotel, and we think it’s going to be a great workforce housing opportunity.”
CONSTRUCTION UNDER WAY
The investments are being driven by the fact that construction of the CPMC hospital — 10 years in planning — is finally happening. Construction crews have knocked down the Cathedral Hill Hotel that used to sit on the property, finished digging the hole and started pouring concrete. Two giant yellow tower cranes hover over the site.
The activity — combined with the citywide tech boom — has sent property values soaring, said Daniel Cressman, executive managing director with commercial real estate agency Newmark Cornish & Carey. Cressman points to the case of 1001 Van Ness, the longtime home of KRON-TV.
In 2012 Young Broadcasting backed out of a deal to sell the building for $13 million, after concluding that it needed to find a new home before selling. Eighteen months later, after landing a new studio near Jackson Square, Young again listed the property for sale. The timing worked well — the winning bid was $26.4 million.
“The difference is that the second time it came on the market, construction on the hospital had started,” Cressman said. “Investors could see that it was real rather than just a rendering.”
As part of Highway 101 and home to the city’s “auto row,” Van Ness Avenue has always been more about cars than baby strollers or sidewalk cafes. But as auto dealerships started migrating to suburbs in the 1970s — several remain — city planning started looking at the wide boulevard as a chance to add housing and other uses to the heavily trafficked corridor.
In 1989, the city passed the Van Ness corridor plan, which changed the zoning from commercial to “commercial-residential” and raised height limits to 80 feet in some parts of the avenue and 130 feet in others.
The plan didn’t produce results right away, but over the next 20 years, projects popped up one by one. In 1999, TMG Partners converted the “Cadillac building” at 1000 Van Ness to lofts and a movie multiplex. In 2008 and 2009, four condo projects came online: the 130-unit Symphony Towers at 724 Van Ness, a 54-unit project at 818 Van Ness, a 50-unit project at 77 Van Ness and a 29-unit building at 1501 Greenwich St., at Van Ness. In 2013, after the market picked back up, Portland developer Gerding Edlen completed Etta, 107 apartments and a CVS pharmacy at Van Ness and Sutter, and Oyster Development built the 98-unit Marlow at 1800 Van Ness.
The hospital-inspired building boom could be good for the neighborhood, but only if plans to improve transit in the area come to fruition, said Marlayne Morgan of the Cathedral Hill Neighborhood Association. Primarily, that means the San Francisco Metropolitan Transportation Agency needs to deliver on long-stalled plans to build a bus rapid transit system along Van Ness, she argued. The project, originally slated to be completed in 2012, is in its final planning stages and will be finished in 2019 at the earliest.
“We are not seeing the timely commitment to transit that would support this kind of development,” Morgan said. “We have good developers who are conscientious and really committed to quality buildings. They are counting on the transit going in, but so far the city has not been reassuring that they have the ability to deliver. I think Geary and Van Ness is the most critical transit hub in the city.”
KEEPING PEDESTRIANS IN MIND
The key to the successful development of Van Ness will be to make sure that the new buildings include smaller retail spaces that make the blocks approachable for pedestrians, said David Lindsay, team leader for the city Planning Department’s northwest quadrant.
“One of the things we are after is making sure that the projects are alive and active on the pedestrian level, because of the width and length of Van Ness and, because of its microclimate of wind, it can be a challenging place for pedestrians,” Lindsay said.
J.C. Wallace, a partner with Oryx, said he’s hoping to start construction on the KRON-TV site by the middle of next year. The project will open in 2018 — a year before bus rapid transit and the hospital. He said the bus rapid transit is one of the reasons he invested in the property.
“Our property is going to be the third stop up from Market. It will knit together the whole corridor. Two stops and you will be at Twitter,” he said. “It will make Van Ness feel much more multimodal, where as right now it really feels like a car street.”
The hospital construction is a mixed bag for existing businesses, said Sam Katzman, whose family owns Tommy’s Joynt, the classic hofbrau across O’Farrell Street from the construction site. Tommy’s has missed the business the old Cathedral Hill Hotel used to bring, but it is looking forward to all the new housing units and hospital workers, he said.
“I don’t want to sound bitchy — we are thrilled about the new development,” he said. “More people in the neighborhood means more people to order martinis and brisket sandwiches. We always knew the hospital would create a lull in business, but that’s OK, because eventually there will be a major upside. We are upset the planning process took so long, but complaining about that would be like pounding my fist in the sand.”
Author: J.K. Dineen