OAKLAND — The site for a residential tower that might have enhanced downtown Oakland's skyline has fallen through attributable to a loan default, raising questions on the long run of the project.
The current proposal for the location calls for a 39-story residential tower at 2044 Franklin Street in Oakland, not removed from the nineteenth and Broadway BART station and the shores of Lake Merritt.
According to the plans of R2 Development, the project developer and land owner, the project would have included 425 residential units.
But these plans now appear to be in limbo since the loan for the property can’t be repaid.
R2 Development, which owns the property at 2044 Franklin Street through an affiliate that also took out the mortgage, is behind on repayments of a $6 million loan for the project, in keeping with documents filed Aug. 15 with the Alameda County Registry of Deeds.
According to county real estate records, the actual estate company received the loan from the Lone Oak Fund in 2020.
R2 Development had advocated for a streamlined permitting process for the proposed project under the provisions of SB 330.
The company, affiliated with R2 Development, purchased the project site in 2016, paying $14.3 million for the property.
The site currently features a two-story industrial constructing and an above-ground car parking zone. The developers planned to have the location graded to make room for the residential tower.
Since the corporate affiliated with R2 Development purchased the location eight years ago, the property owner has submitted several plans for towers of various heights at the location.
In recent years, as plans were revised and the project stalled, R2 Development began on the lookout for a partner for the project.
However, no partner got here on board and in recent months R2 put the location up on the market.
This news organization has reached out to the ownership group that holds title to the event site for comment.
Waves of foreclosures, record-high emptiness rates and falling rents are putting a strain on the Bay Area's existing office buildings and have derailed plans for brand new office projects across the nine-county region.
The default of the 2044 Franklin project in downtown Oakland is a comparatively rare example of a residential high-rise project defaulting on its loan repayment.
Many of the issues of the office market have spread to the residential high-rise development sector.
Exorcistically high rates of interest, brutal inflation and rapidly rising costs for constructing materials and labor are making it difficult for developers to implement their projects – especially large ones comparable to a high-rise tower.
The loan default on the downtown Oakland project is a sign that expensive money and expensive constructing materials can hamper housing projects, even in times of high demand for housing.
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