Mixed-use tower development headed for South City 

With the market for technology and life science office space so hot right now, the developers and marketers behind the Centennial Towers project in South City expect to capitalize on the demand.

Last week, crews broke ground on the $300 million Centennial Towers, the third phase of Myers Development’s Terrabay project. Once named Mandalay Terrace, the two-tower project has since been changed to Centennial Towers, in honor of South San Francisco’s centennial in 2008.

Controversial because of its location near habitat for endangered butterflies on San Bruno Mountain and a Native American shell mound, the project will bring roughly 670,000 square feet of new office space to the foot of the mountain and the center of the biotech world at Oyster Point.

The first two phases of Terrabay are already completed, and include single-family residences and Peninsula Mandalay, an 18-story tower made up of residential condominiums.

Critics say the single tower of Peninsula Mandalay stands out and does not fit the character of South San Francisco, but the two new towers will "complete the picture," said Jack Myers, CEO of Myers Development.

"The original project always contemplated that the first tower up on the hillside along Sister Cities Boulevard would ultimately be a part of a composition that included other high-rise development," Myers said. "It’ll be a much more complete planning model when Centennial Towers is complete," by the end of 2008.

The project also includes 2,000 parking stalls; 25,000 square feet in retail space, including a top-notch restaurant; a 100-child day care center; and a 200-seat performing arts center.

Myers said he is targeting technology and life science businesses for the office space needs with prices ranging from the high $50 to low $60 per square foot per year.

Myers called those prices a "bargain" compared to San Francisco’s, which he said were trading at between $60-80 per square foot per year. "We’re feeling very confident that we’ll be an attractive economic alternative," he said.

The 2007 first-quarter market report from CB Richard Ellis, a global real estate services company that is handling the leasing for the towers, showed a 7.1 percent vacancy rate for office space in South San Francisco with average prices at $38.40 per square foot per year. The same report showed San Francisco’s price at $41.55.

The single-digit vacancy rate is an excellent indicator that the demand is there for this type of space, said Tim Grant, a senior vice president at CB Richard Ellis.

Yet, while Myers is targeting tech and life science companies, some in South San Francisco would like to see a "diversity of businesses" in the buildings to protect against a bust similar to what happened with dot-coms.

"I’m hopeful that [Myers] brings in other businesses just in case there’s a biotech crash — not to have all your eggs in one basket," said Council member Karyl Matsumoto. "Just as a safety net, not that I’m not confident."

dsmith@examiner.com

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