Five Point Holdings is looking to ramp up commercial development at its Candlestick Point master-planned project in San Francisco in an apparent bet on future demand for offices in the region.
The Irvine-based developer has long planned a redevelopment of the nearly 700-acre property that includes the demolished site of Candlestick Park, the former home of the San Francisco 49ers football team and Giants baseball team.
FivePoint received entitlements in 2019 for north of 7,000 houses and roughly 1.2 million square feet of commercial space on the property; now, the developer is seeking new approvals to up the commercial space at the site to 3 million square feet, according to a city meeting held this week.
That commercial space could be used for research and lab space or offices for the fast-growing artificial intelligence industry, La Shon Walker, a vice president of FivePoint, told the San Francisco Chronicle.
Prior entitlements for Candlestick Point called for 750,000 square feet of office, 304,000 square feet of retail and a hotel totaling 130,000 square feet. The company's plans to develop land for 7,000 houses appears to remain unchanged.
The new plans come as San Francisco's office market continues to battle with near-record vacancy levels approaching 23%, up from the pre-pandemic rate of 6% and above the national average of 14%, according to CoStar data.
It's among the largest office-focused mixed-use projects underway in San Francisco. FivePoint hopes to break ground on the development by next year, city filings indicate.
State of the Office Market
FivePoint has three other mixed-use projects in various development stages throughout California, including Valencia in Los Angeles, Great Park Neighborhoods in Orange County and the San Francisco Shipyard, formerly the Hunter's Point Naval Shipyard.
The Shipyard, another bayside community located a few miles north of Candlestick Point, received entitlements in 2018 for 3,000 houses and 5.5 million square feet of commercial use. Roughly 2 million square feet of that planned commercial space is slated to be transferred to Candlestick as part of the developer's new plans.
Very few office-focused commercial projects of this scale have begun construction in California in the wake of the COVID-19 pandemic that kept workers at home and, in some cases, out of the city.
In one of the largest office projects planned for San Francisco, Brookfield Properties has filed plans for a roughly 1.5 million-square-foot project on Pier 70 in Mission Bay.
There's 1.5 million square feet of office under construction in San Francisco, compared to 7.8 million square feet in 2019. Candlestick Point is in the city's Bayview neighborhood and has 630,000 square feet of office product, according to CoStar data. There hasn't been construction in the area in the past three years.
Demand from artificial intelligence has served a bright spot for the city, however. The industry was in part responsible for an increase in tenant demand this year in San Francisco, the first year-over-year since the onset of the pandemic, according to CoStar data.
Most recently, Scale AI inked a tentative deal to triple the size of its headquarters and take 180,000 square feet at 650 Townsend, according to previous CoStar News reporting.
Need for Housing
Meanwhile, California developers have shifted their focus to building new residences to meet state mandates.
Candlestick Point is San Francisco’s largest proposed housing development in more than a decade, records indicate.
San Francisco is required to build more than 80,000 housing units by 2031, the highest mandate for the Bay Area and among the more ambitious requirements for the state of California, as the state works to increase housing inventory to offset climbing prices.
Data from the U.S. Department of Housing and Urban Development reveals San Francisco issued 1,136 residential permits in 2023, a 13-year low.
Statewide, California is short some 3 million houses to accommodate the state's population, according to the Public Policy Institute of California.
San Francisco has completed just shy of 15,000 units in the past eight years, according to CoStar data. Among the larger housing projects underway in the city is Strada Investment Group’s 501-unit proposal at 555 Bryant St., slated to open next year.