“Nonprofits Get Free Space as Developer Waits to Build”


August 11, 2015
San Francisco Chronicle

Developer Build Inc. is turning bureaucratic pain into nonprofit gain at 1 Oak St.

With approvals for a proposed 37-story tower on the property still at least a year away, the developer has decided to put the existing Hayes Valley buildings to good use. Over the past few months Build has leased pieces of the property to organizations such as Health Initiatives for Youth, Compass Family Services and Artspan, which produces San Francisco’s open studios.

The tenants have to pay for improvements and insurance but don’t pay rent. The leases make it clear that the situation is temporary.

“We are not looking to make any money, but we are not looking to spend any either,” said Joe Peters, senior development manager with Build. “These buildings were more than half vacant when we purchased them. We wanted to activate this place and attract some positive attention to the site.”

In a city known for its long development review process, Build is one of a growing group of developers who are using that time to generate neighborhood goodwill as well as to experiment with uses that could eventually be incorporated into their projects.

“I think what is happening is that the real estate industry is finally starting to innovate in ways that it has never historically done, and one of those ways is to take advantage of existing assets,” said Michael Yarne, a partner at Build. “The idea is that interim activation can add value to the finished project, that a run-down office building or parking lot can be shared in creative ways.”

Space for artists

ArtSpan Executive Director Joen Madonna said the building will provide studio space for 20 artists in residence. While the group, which organizes the city’s open studios, would prefer permanent space, she is “thrilled” to have temporary digs, which will also be used for arts-related community meetings and events, in addition to work space for artists. There will be an opening block party on Sept. 13.

The space will allow Artspan’s artists in residence to “make themselves heard as they persist as a strong and necessary presence in our changing city,” Madonna said.

There are risks for developers offering a temporary home for low-budget nonprofits, small-time chefs or struggling artists. There is always a chance that the groups won’t want to move when it comes time — in the case of the Hall, the interim use could become so popular that local residents will balk at the idea of tearing it down to make way for 186 apartments.

Craig Young, a partner with Tidewater Capital, said that his group makes sure to emphasize that the Hall is temporary. At the same time he expects that a version of the Hall will take root in the 10,000 square feet of ground-floor retail space planned for the site.

“I think it’s been helpful to use it as a prototype and see what works in the space and what doesn’t work,” said Young. “We would love to figure out a way to put it in the permanent project, to create a bastion for small business and community development.”

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