S.F. approves a 55-story residential tower, but don’t expect it to open soon

A rendering of the proposed 10 South Van Ness project that was presented to the San Francisco Planning Commission in January 2019.

A rendering of the proposed 10 South Van Ness project that was presented to the San Francisco Planning Commission in January 2019.

San Francisco Planning Department

The city’s second tallest residential tower — a 55-story flatiron style tower sprouting from the old Honda dealership site at Market Street and South Van Ness Avenue — is moving forward.

But, like developments all over the city, it might take a few years longer than originally hoped.

On Thursday, the Planning Commission approved a four-year extension for 10 South Van Ness, a 1,012-unit high-rise that will be the second tallest residential building in San Francisco, with only the famous Millennium Tower in the South Financial District exceeding it in height.

In approving the extension — construction would have to start by January of 2027 or the developer could risk losing entitlements — the Planning Commission also increased the unit count by 5%, about 46 units. The redesigned tower also reduced the number of larger units and upped the number of studios and one-bedrooms.

The extension comes as dozens of market rate developments are on hold in San Francisco as the city continues to struggle with tech job layoffs, empty office buildings and a looming budget deficit. Planning Director Rich Hillis said that he expected a rash of entitled projects to appear before the commission looking to extend the three-year period that developers have to start construction after winning approvals.

“As we know, projects don’t work right now,” said Hillis. “So we are going to see more of these extensions.”

An attorney for the developer, Crescent Heights, said that the extension doesn’t mean that it will wait four years to break ground, but that the lender on the project required the four-year extension as a condition of closing a loan. The previous entitlements would have expired in March of 2024.

“We are here because we have a lender who is requiring an entitlement extension in order to close a loan,” said Jim Abrams, attorney for Crescent Heights.

The 10 South Van Ness project is unique because the developer has already spent $40 million to satisfy its affordable housing requirement. Crescent Heights purchased the so-called “Monster In The Mission” property at 1979 Mission St., the parcel that sits atop the BART station at 16th and Mission streets. The company then handed that property over to the city to be used for low-income housing.

While some of the planning commissioners said they were not thrilled with reducing the number of larger units, or extending the deadline, they acknowledged that committing tens of millions of dollars to affordable housing well before starting construction on the market rate project was unusual.

Abrams said that the decision to cut some of the largest units was based on market conditions at NEMA, a Crescent Heights-owned tower at 10th and Market, two blocks to the east at 10th and Market. There, the studios and one-bedrooms are getting snapped up while the two-bedrooms are not renting as well, he said.

“They are doing everything they can to get this project moving forward and get financially feasible,” said Abrams.

The project calls for the demolition of the two-story existing building at 10 Van Ness, which in recent years has been used for immersive art shows. The new building would rise 590 feet and would include 374 studio units, 501 one-bedroom units and 137 two-bedroom units. The ground floor would be activated with about 19,000 square feet of retail. The project would have 255 parking spaces.

The tower at 10 South Van Ness would be the latest in a cluster of high-rises in what city planners call the Hub. While city planning staffers spent years working on a rezoning of the area, the plan stalled after the Board of Supervisors failed to pass it. Nonetheless, in the last two years new towers have opened at 1550 Mission St., and 30 Otis St., a combined 844 units, along with 96 affordable units at 53 Colten St. and 189 apartments at One Brady.

Commissioner Kathrin Moore said the commitment to 1979 Mission was “the reason I am inclined to support the project.” Commissioner Joe Koppel said he was impressed that Crescent Heights is working to get the project on track at a time when so many development sites, including one at First and Mission, have been long given up on.

“The market is certainly driving the bus these days,” he said. “I am just glad they are here asking for an extension. The last thing I’d like to see is for the project to be abandoned.”

J.K. Dineen is a San Francisco Chronicle staff writer. Email: jdineen@sfchronicle.com Twitter: @sfjkdineen