San Francisco Giants pursue aggressive real estate play at Mission Rock

A rendering of what the San Franciso Giants' planned mixed-use development, Mission Rock, will look like from the seats at Oracle Park. (San Francisco Giants)

  • MLB club’s mixed-use development plans across from Oracle Park are nearly 15 years in the making
  • Affordable housing component arrives amid real estate market currently out of reach for many local residents
  • Mission Rock plans involve a complex mix of team, city, state and port officials

Imagine, if you will, a community, a small city-within-a-city just south across McCovey Cove in San Francisco from what is now called Oracle Park.

“The backdrop to the ballpark will change,” says Jack Bair, executive vice-president and general counsel for the San Francisco Giants and the president of Giants Development Corp., the Major League Baseball franchise’s real estate arm.

“Right now at night it’s just a black sky. In the future it will have buildings. It will animate the view and make it more intimate,” he says.

This is not mere pie-in-the-sky imagery. As plans come to fruition on the mixed-use development being called Mission Rock, in a few years it will be very real. And that reality will in turn transform not only the landscape of the city of San Francisco, but the operations of the Giants, winners of three World Series titles this decade and long regarded as one of the most progressive and forward-thinking organizations in not only baseball, but all of US pro sports.

The Giants have been working on the Mission Rock project with the City of San Francisco and the Port of San Francisco since 2005, only five years after the ballpark itself opened, wading through a byzantine maze of public referenda, approval processes, and financing models.

Upon 27-acre Lot A, which is now flat tarmac and home to 2,000 parking spots, 10 buildings, a parking garage, and a five acre park will rise over the next seven to eight years at the cost of $2.5bn to the Giants and their co-development partner, New York-based international development firm Tishman Speyer. The two entities are 50-50 partners on the project.

The current plan is to have a shovel in the ground on Phase 1 of the project by the end of the year – four buildings by different architects on the northwest corner of the lot closest to the ballpark. Plus, the five acres of green space nestled next to the Cove as it twists toward the San Francisco Bay.

The Giants are currently awaiting appraisal of ground leases for the four parcels of the initial build out. Once that’s finished, they intend to break ground by the end of this year starting with infrastructure concerns, and then moving on to building construction in 2020.

If that timetable holds true, Bair says the Giants are tentatively eyeing a public opening of the initial phase of Mission Rock by the spring of 2022.

When it’s all said and done, 40 per cent of a projected 1,200 apartment units will be designated as affordable housing rented to lower-class and middle-class families, a sizable move in a city now home to some of the most expensive real estate, on average, of any American metropolitan market. The developers can’t sell any of the units, by terms of their deal with the Port.

“We’re talking about teachers, public servants, non-profit workers, nurses, firemen,” Bair says. “The goal is keep these people in the city.”

The goal is to build a diversified community hugging what is now a thriving Mission Bay neighborhood.

Imagine again, if you will, driving south down Third Street toward what used to be Candlestick Park. There’s already a flourish of new buildings, and a secondary campus for the University of San Francisco Medical Center.

This is already reality.

The new $1.4bn Chase Center – future home of the NBA’s Golden State Warriors – is nearing completion on the water side where 16th Street crosses Third Street. It looks like a silver spaceship with panels of elevated windows peering out on the bay.

That’s about a mile and half from the ballpark, less from the southern tip of Mission Rock, which is named after a rock formation that’s nestled in the bay nearby.

The name had more pizazz than Mission Bay, “which sounds so tranquil,” says Bair, who has been with the franchise since 1992 when the Giants almost moved to St. Petersburg, Florida, and was then saved by the National League and the current ownership group.

Echoes of the past

The push to create Mission Rock in many ways is simply a continuation of the Giants’ long and often arduous path to develop Oracle Park, now widely regarded as baseball’s crown jewel facilities with its picturesque vista overlooking San Francisco Bay.

And that path really begins from the moment the current Charles Johnson-led ownership group arrived more than 27 years ago. For their first eight years, the Giants were merely operating in survival mode at Candlestick, an aging multipurpose venue it shared with the National Football League’s San Francisco 49ers with suboptimal sightlines for both baseball and football.

“We were in a really good market, but in a really bad facility,” Bair says.

Prior team owner Bob Lurie had known this all too well, having unsuccessfully put up four ballot initiatives during the 1980s to fund a successor facility, including one immediately after the massive 1989 Loma Prieta earthquake that suspended that year’s World Series between the Giants and their crosstown rivals, the Oakland A’s.

By 1992, Lurie was fed up with the pursuit. Of course, he wanted public dollars apportioned to pay for a new facility, which eventually wound up being built with $357m (private) dollars in the then-dilapidated China Basin district, where Lurie last wanted a ballpark.

The late Peter Magowan and his group of investors then stepped in and bought the team from Lurie. They also signed then-reigning National League Most Valuable Player Barry Bonds to lead an on-field turnaround. It turned out to be a winning combination.

“Our goal was to save the franchise and keep it in San Francisco,” Bair says. “Our goal was a little narrower than what some teams are doing now.”

The Giants under the new ownership still went for another ballot initiative. But this time it was for the right to acquire permits and entitlements for the area located at Third and King Streets, and some infrastructure help from the City of San Francisco.

The effort, again requiring years of political groundwork, succeeded beyond anybody’s wildest expectations. Not only is Oracle Park beloved for its architectural beauty, it served as an important catalyst for a broader development boom in the surrounding SoMa area that is still in full flight.

And on the field, the Giants won World Series titles in 2010, 2012 and 2014 and have reached the playoff four other times in their tenure at Oracle Park. They have hosted a wide variety of football games, concerts, and other events at the ballpark. The club also sold out a National League-record 530 straight games between 2010 and 2017, and in late 2016 paid off the last of its ballpark development bonds, settling the debt several years ahead of schedule.

During that run, the Giants also became known as sports industry thought leaders in a wide variety of areas, including non-baseball uses of the facility, social media, in-venue mobile connectivity, and new approaches to ticketing.

That same organizational aptitude quickly became apparent to D. Allen Palmer, managing director of Tishman Speyer, following the club’s selection last summer of the firm as its development partner and co-developer for Mission Rock.

“I thought when we set this up that the Giants are a baseball team, and we’re the real estate developer,” he says.

Hardly. The Giants already had the real estate experience. And by the time of their appointment of Tishman Speyer, the preliminaries to set the Mission Rock project in motion were already about 80 per cent complete.

“We developed the ballpark ourselves,” Bair said. “We didn’t have a real estate developer. I was one of the leads for the ballpark development, as you know. We chose the site. We chose the architect [Populous], designed the ballpark, worked on the political component, the entitlement process.

“All we cared about at the time was building the ballpark and having enough parking. If we were doing the same project today, we would have folded in the ballpark with the development project,” he says.

A ground-level rendering of the planned Mission Rock development showing retail and restaurant activity. Credit: San Francisco Giants

A vision for Mission Rock

The Giants opened Oracle Park in 2000 with 5,400 parking spots in the vicinity. By 2005 that number had dwindled to the 2,000 that still exist in Lot A, a number which ultimately will be matched in a multi-tiered garage built on the southern-most portion of the parcel.

The other parking spots steadily disappeared as private development began organically on the north end of the ballpark up and down the Embarcadero amid the SoMa building boom. That ultimately left just the 27-acres of Lot A, which includes a one-acre public park snuggled on McCovey Cove.

Take a trip again south down Third Street toward the new Warriors arena and the lack of available parking, and available land more generally, is easily apparent.

Within that growing space crunch, the Giants at once wanted to preserve its parking capacity and develop Lot A. And that meant starting a long and tedious approval process with the Port of San Francisco, a semi-independent body that manages the city’s waterfront.

Getting any real estate deal of consequence accomplished in California is a massive undertaking, given the variety of political stakeholders involved and the need to maintain environmental safeguards. And this effort was no different. Over the course of nearly 15 years, the Giants’ efforts to create Mission Rock involved not only Port officials, but the California state legislature, the San Francisco Board of Supervisors, and multiple city mayors.

The Giants then benefited from a successful 2015 city-wide referendum, prevailing by nearly 50 percentage points, to waive existing height restrictions on waterfront buildings and allow the club to build taller structures at Mission Rock.

But there were still more obstacles, as the Port looked at its seven-mile expanse of the San Francisco waterfront and wasn’t sure how $2bn worth of total intended infrastructure improvements could be funded.

“They looked at revenues coming in and the money for improvements and it didn’t pencil out,” Bair says.

The Port then went to the California state legislature, which passed legislation so it could develop some of its property to generate infrastructure costs. Lot A was the biggest parcel.

The Giants were required to apply through a competitive bidding process to be that developer. They were one of four competing entities, then one of two finalists. When the Great Recession hit the US economy in 2008, withering much of the country’s commercial and residential real estate markets, the Giants were the only ones left standing.

That still didn’t give the club the full green light. Like the ballpark, they had to procure from the City of San Francisco all the entitlements to build on the land, representing yet another costly and laborious step in the process.

Following a complex series of negotiations, the Giants and Tishman Speyer won’t own the property. Rather, they will lease it from the Port, paying fair market value for each of the individual parcels on which the 10 planned buildings and parking garage will stand.

And rather than a single assessment for entire 27 acres, the City of San Francisco will individually appraise each parcel, a process that has already begun on the four pieces of property that will comprise the project’s first phase.

“It’s really a very good mechanism,” Palmer says. “If the economy slows, we haven’t paid above [market] value on the ground leases. From the Port’s part, if the economy soars it gets the higher fair-market value.”

Bair describes the final deal as a win-win for all involved.

“The Port will generate some ground lease revenue to pay for their infrastructure issues,” he says. “The city will generate all this money in property taxes from an area that right now is a parking lot. And the Giants will have a chance to build something that will last and raise revenue.”

Not a ballpark village

The currently favored concept in new stadium and arena development is the ballpark village, a venue surrounded by a larger mixed-use development around it and deliberately designed to generate the necessary revenue to construct the stadium.

The foremost example of this in the US is in Atlanta, where the MLB Braves’ SunTrust Park opened in 2017 and is located within The Battery, a large collection of restaurants, theaters, office, apartments and hotels built a combined cost of $1.12bn.

The same model is currently under construction in Arlington, Texas, where the MLB Rangers’ forthcoming Globe Life Field will be joined by the Texas Live! development around it.

And it is also happening in Inglewood, California, where a stadium for the NFL’s Los Angeles Rams and Chargers will also involve two real estate projects costing more than $8bn combined.

But the Giants insist Mission Rock is actually not happening in this same vein, and will be less dependent on what is happening at Oracle Park.

“This is not a ballpark village at all,” says Staci Slaughter, the Giants vice-president of communications, who once held the same position in San Francisco mayor Frank Jordan’s office. “This is a neighborhood that happens to be next to a ballpark. Giants fans will have an opportunity to enjoy it, but this is a year-round destination.”

The commercial and residential elements of the Mission Rock project are targeted for an even, 50-50 split between apartment rentals and office space, with locally-flavored restaurants and retail sprinkled along the ground floors of the 10 buildings.

No national chains or big-box stores need apply to sell their wares at Mission Rock. And the project also contemplates a tree-lined complex with an internal open space and courtyard where residents, office workers, and fans can all mingle.

“You have a dynamic mix when you have 50-50,” Bair says of the planned split between residential and office components. “In the mornings, during lunch, and in the evenings. Plus, you have three million fans, hopefully, a year [from Oracle Park] who can wash into the development. You have the Chase Center not too far away where we think we’ll get a lot of spinoff activity.

“If we do this properly this will be the kind of place where people will kind of hang out in the neighborhood,” he says.

When Bair stands in the upper deck of Oracle Park on a crystal clear evening, he can almost see the twinkling of the lights from the buildings across McCovey Cove.

With San Francisco Bay in the distance, even now, it’s perhaps the most spectacular setting for a ballpark anywhere in the country.

Mission Rock is next.

“We’ve been doing this since 1992,” Bair adds. “Developing the ballpark, developing improvements around the ballpark and spring training facility in Arizona, working on this project. We had the staying power throughout this process. It started in the 2005-06 timeframe and here we are almost 15 years later getting ready to break ground.”

Despite easily winning a 2015 referendum to waive height restrictions for waterfront buildings, the Giants’ plans for Mission Rock still call for significant amounts of green space. Credit: San Francisco Giants

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