JMA VenturesÔÇÖ Fairmont Heritage

Opportunity in challenges┬áThe historical preservation challenges of the Fairmont Heritage Place at Ghirardelli Square project in San Francisco turned out to be an opportunity in disguise for JMA Ventures, as Keith Regan learns.  San FranciscoÔÇÖs Ghirardelli Square is a well-known landmark, a key piece of real estate along the cityÔÇÖs storied waterfront and near the iconic FishermanÔÇÖs Wharf area, with historic roots in the regionÔÇÖs Gold Rush years. Yet when the former chocolate-factory-turned-retail-center in the square was made available for redevelopment, many firms shied away from the challenges of dealing with not only the National Register of Historic Places designation that the square earned in 1982 but also the need to upgrade buildings to meet current building code for structural integrity and earthquake readiness, work that would require emptying out an already bustling retail plaza.┬á For JMA Ventures, such challenges often represent true opportunity. The real estate development and management company often looks for projects that arenÔÇÖt large enough to attract the attention of the largest developers or appear on the surface to be too complex, says principal Joe Nootbaar. ÔÇ£WeÔÇÖre completely opportunity driven,ÔÇØ Nootbaar says, adding that JMA has developed or owns projects that fall into the retail, office, residential, and hotel/resort categories, as well as industrial and data center projects. ÔÇ£We donÔÇÖt focus on any particular sector. We just look for opportunities to add value and pick off opportunities that are complicated, slightly unusual or donÔÇÖt fit into other companiesÔÇÖ focus areas.ÔÇØThe Ghirardelli Square project, now known as Fairmont Heritage Place, fit firmly into that category when JMA got involved in 2004. The location and the importance of the square to the cityÔÇÖs history made it an enticing opportunity, and JMA felt confident that it could do what was necessary to bring the existing buildings up to code, which meant emptying out significant amount of the existing retail, restaurant and office spaces for several months while the structural work was being done. ÔÇ£The location is fantastic,ÔÇØ Nootbaar says. ÔÇ£ItÔÇÖs part of an authentic San Francisco neighborhood and also right near FishermanÔÇÖs Wharf. It lends itself to both high-end residential use and out-of-town visitors. WeÔÇÖre not a mall owner, so we looked at this project as something much bigger.ÔÇØBy adding the residential elementÔÇöthe project includes 53 one-, two- and three-bedroom units as well as related luxury amenities and servicesÔÇöJMA felt it could not only justify the expense of vacating the existing buildings of retail and restaurant tenants for a year or more but also boost the mall business after the redevelopment by bringing more after-hours traffic. From the early days of the project, JMA sought to partner with firms that would bring an appreciation and understanding of how the property fit into San FranciscoÔÇÖs history and how it could become even more of a destination in the future. While several potential partners expressed interest in working with JMA on the project, Fairmont has a long history in San FranciscoÔÇöits hotel was one of the few structures left standing after the earthquake and fire of 1906. ÔÇ£Their brand is high-end enough for the property, and they knew how to take this icon and make it into a destination.ÔÇØJMA also turned to several partners it had worked with in the past, including project architects Hornberger & Worstell, who worked with preservation architects Page & Turnbull to renovate a building that has been warmly received by the local development and historical preservation communities alike. It also turned to a longtime general contractor partner, Swinerton, which has a century of experience in the city. ÔÇ£On a complicated project, you want to work with people youÔÇÖve worked with before,ÔÇØ Nootbaar says. ÔÇ£We wanted people to know early on that we had consultants and vendors involved, and that they had the local experience to bring a sensibility to the project.ÔÇØThe team approach helped the project go smoothly. The buildings were vacated while eight monthsÔÇÖ worth of structural upgrades were completed, work that paved the way for the residential units to be built and that resulted in modernization of the mall area. ÔÇ£Whenever you peel back the layers of a 100-year-old set of buildings, youÔÇÖre going to find things youÔÇÖre not expecting, but we didnÔÇÖt run into any massive problems along the way,ÔÇØ notes Nootbaar.┬á The fractional-ownership residential units went on the market early in 2007 while construction was continuing. While the high-end part of the market has held up relatively well in San Francisco, the slowdown has been felt by the project, though sales have remained steady. The project appeals to both professionals wishing to keep a pied-├á-terre in the city, Nootbaar says, as well as those who want to use San Francisco as more of a playground. Both groups are drawn to the propertyÔÇÖs location, its iconic status in the cityÔÇÖs history, and its views of the bay. Thanks in part to the infusion of new residents at the Fairmont, the retail portion of the project continues to attract new interest, including from famed local restaurateur Gary Danko, who will open a second restaurant in the square. JMA, meanwhile, is already at work on its next wave of projects, but given the state of the real estate and credit markets, itÔÇÖs glad to be in the early phase of the work, with three projects currently in the approval pipeline that can take 18 months to two years to complete. ÔÇ£Given where the economy is, we feel pretty good about being a real estate company thatÔÇÖs at that stage of the cycle, with a couple years of fairly non-capital-intensive work to be done,ÔÇØ Nootbaar says. ÔÇ£When we get to the next stage, we can re-evaluate where we are. Hopefully by then things will have started to turn around a bit.ÔÇØ ÔÇô Editorial research by Jim Rose┬á