Spieker Properties' $424 million, two-yearpipeline and the additional 157 acres of developable land it owns are raising some concerns in the industry. After completion of the merger, the combined pipeline will carry a total cost of $1.12 billion (Equity Office's share is approximately $1 billion) and encompass a potential 4.5 million sq. ft., nearly 4 million sq. ft. of which is located in the San Francisco Bay area.
Standard & Poor's (S&P) said while there is healthy preleasing associated with the projects — Spieker reports they are 69% preleased — ongoing uncertainty over near-term demand in the development markets is of “modest” concern. The rating service also said the impact of increasing energy costs, which are especially severe in, will be a factor with such a geographically concentrated pipeline.
At the close of 2000, Spieker had six office properties, representing nearly 1.6 million sq. ft., under construction in all of its. Included in that pipeline are: Watergate Tower IV, a 344,433 sq. ft. office building in Emeryville, Calif.; Santa Monica Gateway, a 76,000 sq. ft. redevelopment project in Santa Monica, Calif.; Skyport I, a 598,913 sq. ft. project near the airport in San Jose, Calif.; The Towers at Shores Center, a 334,754 sq.ft. office building in Redwood Shores, Calif.; Skyway Landing II, a 121,171 sq. ft. building in San Carlos, Calif.; and Kruse Oaks I, an 80,769 sq. ft. building in Portland, Ore.
Spieker completed 14and redevelopment properties in 2000, which added up to approximately 2 million sq. ft. at a cost of about $346 million. S&P expects that the current pipeline will be completed successfully, suggesting Spieker's experienced development team is critical to that success.