San Francisco-based Carmel Partners is the front runner to build at least 600 residential units on a city-owned site at the corner of Market Street and Van Ness Street, sources say.

The residential developer is close to sealing the deal with the city to buy the site for at least $87 million. The buyer is expected to build a tower up to 400 feet tall at 30 Van Ness in the western portion of Mid-Market, which is on the brink of heavy development change (see map below). About 4,000 housing units are in the pipeline in the surrounding few blocks.

The deal is in due diligence between the two parties, said San Francisco’s real estate head John Updike, who wouldn’t confirm the identity of the chosen developer. Carmel Partners declined to comment. The precise unit count and project proposal likely won’t come to light for at least another week. The current building, which counts the Department of Public Works as its largest tenant, can’t be demolished until 2019 when city agencies move out.
But the approximately 600 units would make it one of the top 10 largest projects in the city’s development pipeline. Carmel Partners is also building 330 units in Oakland’s Jack London Square. The full-service firm has been aggressive in the Bay Area in recent years. Last year, it spent about $130 million buying more than 2 million square feet of development sites in East Bay cities – Pleasanton, Fremont and Hercules – according to the research firm Real Capital Analytics.

The 30 Van Ness property would be its biggest recent buy. The site was marketed by brokerage Newmark Cornish & Carey as being in the “most active commercial and residential neighborhood in San Francisco. Home to Twitter, Uber, Square, and more.”
The pick is surprising considering Carmel Partners was also fending off competition from Related California, a development giant that is already building a mixed-use project with a residential tower one block away. As part of that project, which will sit on a site that’s now a Goodwill store, Related will build a new city office building that will house the departments now in 30 Van Ness.
Related’s chairman and CEO Bill Witte said the company was recently told it wasn’t picked to develop the site.

Updike told me last month that the city got “record-breaking kind of interest” in the site with more than 100 groups signing confidentiality agreements to view the property. The fierce competition helped jack up the amount that will pour into city coffers.
The sale will help the city repay $32 million of debt on the building and help finance construction of 450,000 square feet of city offices that will be part of a mixed-use development on the nearby Goodwill site.