We got Lend Lease GM of California Bruce Berardi to tell us why we are undersupplied on multifamily—and what's getting ready to break ground next. (Anyone else wonder if this multifamily craze is part of a conspiracy by the corporate futon lobby?)
Lend Lease is currently building Tishman Speyer’s Lumina, a multi-tower 656 unit condo complex. Next up is Transbay's 41 Tehama, Hines and Invesco's 35-story apartment tower with 418 units. He expects to break ground some time in Q1 2015. After that will be 119 7th for APIC, slated to start in the same time frame with 39 market-rate units. (APIC also has another project in town tee’d up at 25 Mason and its affiliate, SingHaiyi Group, a large Candlestick site.) Despite all these units, he doesn't think we're flooding the market. S.F. has been undersupplied for three to four years on the condo front, and there's still healthy demand.
Above, this month's pink hard hat ribbon atop Lumina. (Where's Waldo, er, Bruce?) On average, S.F. delivered and absorbed over 700 new condo units a year from 2000 to 2010. Over the past few years only about 300 per year were delivered, he says. Lots of sources of capital are looking for deals right now, particularly overseas money flowing into S.F. and LA. Foreign equity sources are involved in over 75% of the projects Lend Lease is working on in the state, he says.
The GC is also doing precon for Group I's 970 Market, two mixed use towers with a hotel, condos, and performing arts center. His group is pursuing several P3 projects, which entails being the developer, builder and long-term operator. They’re on a team competing for a big one at UC Merced, which wants to double the size of its campus. They’re also on a team that’s a finalist on another in Long Beach that entails a new civic center, library, and county office buildings.
Bruce, who started at Lend Lease out of college 27 years ago, says activity in NY and S.F. is bigger than anything he's ever seen, and he expects the same for LA over the next three years. The long-term limitation to growth, he says, will be tied to traffic, infrastructure, and the city residents' appetite for further development. There's lot of land still, with no shortage of planned sites. He spits off a few: Pier 70 (pictured), 5M, Mission Rock, Blocks 2 and 4, and multiple towers planned for Market and Van Ness area. The challenge is construction and land escalation costs. We need to find creative ways for delivering units for less, whether it’s higher density or different construction methodologies.
