News Summary
Kennedy Wilson has secured a $183 million construction loan for the Alexan Icon multifamily project in South San Francisco. This development will provide 480 residential units, including 60 affordable units, on a 4.1-acre site. The project aims to address the housing demand in the Bay Area, offering various amenities and proximity to key employment centers, while reflecting a broader push to increase housing availability amidst rising rents.
Kennedy Wilson Provides $183 Million Loan for Multifamily Development in South San Francisco
Kennedy Wilson, a global real estate investment company, has secured a $183 million construction loan for the development of a new multifamily project known as the Alexan Icon in South San Francisco. This ambitious project marks a notable addition to the local housing market, which has been grappling with a significant housing shortage.
Details of the Alexan Icon Project
The Alexan Icon will cover 4.1 acres located at 1587 and 1588 San Mateo Avenue and will comprise 480 residential units. Developed by R&V Management, based in San Diego, the project will consist of two seven-story buildings complemented by 560 parking spaces. Notably, the plan includes 60 affordable housing units aimed at addressing the growing need for budget-friendly living options in the area.
Residents and potential tenants can look forward to a range of amenities that are proposed to enhance the living experience at Alexan Icon. These amenities are set to include a pool and spa, coworking spaces, club lounges, and even a speakeasy, catering to both leisure and professional needs.
Strategic Location Near Biotech Hub
The project’s location is advantageous, situated less than two miles from the prominent biotech hub at Oyster Point. This area is home to major employers like Pfizer, Biogen, Genentech, and Amgen, making it a favorable choice for those seeking employment in high-demand fields. Furthermore, the Bay Area’s robust rental market and diverse employment opportunities make this loan a strategic investment.
Kennedy Wilson’s Loan Trends
With this new financing, Kennedy Wilson continues its trend of providing loan support for multifamily construction projects. The company has issued approximately $3.5 billion in loans for multifamily developments throughout 2024 alone, with significant investments also made in the fourth quarter. Overall, the company’s platform has financed around $6 billion in senior loans for a variety of multifamily and student housing initiatives across the United States.
Broader Housing Market Context
The need for residential development in San Francisco is underscored by the recent proposal of a new project at 88 Bluxome St., which aims to construct two high-rise apartment towers with a total of 1,500 homes, 10% of which will be reserved for very-low-income residents. This initiative is part of broader zoning changes designed to foster more residential development in a city facing a severe housing shortage, planning to add 82,000 housing units by 2031.
The average rent in San Francisco has skyrocketed to $3,260 per month, nearly double the national average. However, there is growing concern as construction has lagged, with only 1,200 units completed in 2024. The city’s office vacancy rate is stabilizing at 25.8% while apartment vacancies have dropped to 4.9%, the lowest rate in a decade. This changing dynamic has resulted in a 4.3% surge in rents over the last year, highlighting the urgent need for new housing projects.
Challenges and Future Prospects
Despite the pressing demand, ongoing challenges remain. A project at 88 Bluxome St., originally intended for office space, faced delays during the pandemic but is now transitioning to focus on residential construction. Nearby, the Strada Investment Group is moving forward with a 16-story building at 555 Bryant St. as part of the city’s push for increased housing. Meanwhile, Martin Building Co. is advancing a 303-unit tower at 1101-1123 Sutter St., which is also expected to include affordable units amidst construction delays related to water recycling compliance.
Additionally, the Midway Village redevelopment project in Daly City aims for the creation of 555 affordable units, but ongoing challenges related to interest rates and construction costs persist. Overall, multifamily project starts in the Greater San Francisco area have fallen sharply in 2024, reflecting the difficulties in expanding affordable housing options.
Deeper Dive: News & Info About This Topic
Additional Resources
- Connect CRE: San Francisco Multifamily Demand Drivers
- Wikipedia: Housing in San Francisco
- Multifamily Dive: San Francisco Housing News
- Google Search: San Francisco housing crisis
- SF Chronicle: Sutter Street Tower Developments
- Google Scholar: San Francisco affordable housing
- Business Wire: Modernization Project in South San Francisco
- Encyclopedia Britannica: Urban Development
