California-born Cyrus Sanandaji grew up largely in Dubai, but returned to the Golden State to attend college, where he caught the San Francisco bug. On a 12-hour flight between San Francisco and Geneva during graduate school at University of Oxford, he chatted with his seatmate about literature, politics and real estate. By the end of the plane ride, he had a job offer with the U.S. General Services Administration, where he spent about three years working on projects for the federal government. By 2012, he knew enough to launch his own development company, Presidio Bay Ventures. The company now has over 2 million square feet of development under its belt and has a number of projects in the pipeline, including over 100 units at San Francisco’s Lucky Penny site at 2670 Geary Blvd. and around 250 units on Pier 70 with TMG Partners.
What was your focus at the GSA? I worked on problem projects in the region. The FBI, and other law enforcement, intelligence, military-related uses were the primary clients, from things as mundane as leasing 10,000 square feet in Antioch for Social Security, or as complicated as the Secret Service moving out of Spear Street. I got my hands dirty and got to handle all these different aspects of the business. Being entrusted with that was, looking back, a point in my life that I’m really grateful for and really shifted everything for me.
What deals did you pursue when you first went out on your own? We didn’t take any market risk or buy anything without a lease in place. It was 2011, 2012, so it was much easier to tie up a building for six months or a year than now. The focus was whatever bite-sized solicitations that came up, and we were able to land five or six of those in the first 18 months. We still do a lot of that corporate build-to-suit work, but we’ve expanded beyond the federal government.
How did you jump from that to developing multifamily and mixed-use? We started doing base building work on 1045 Bryant (a renovation project). … It all worked out and we delivered the space to Airware, then a hot drone company. It was PDR (production, design and repair) before PDR was cool, and we ended up doing the lease in the low $50s — this was more than six years ago. After that, a handful of other opportunities started emerging. 85 Bluxome was one of them, and that became our first foray into the next vertical, which was creative office.
Then all of a sudden, CIM Group went and bought 330 Townsend for one of the most expensive price-per-foot deals, and we had 85 Bluxome under entitlements at the time. Then every other institutionally backed developer suddenly got the idea that this is great, we can go do this, and then land prices skyrocketed, and everyone started scrambling for what are now the Central SoMa sites. But nobody was focused on (residential) and we said, nobody’s chasing sites where you can do multifamily where prices haven’t run away yet. That became our third pillar, and that’s really the business now.
What deals have flopped and what did you learn? At 360 Spear, we had a great business plan with a great team. It was to perfect the small (office) cap allocation that Digital Realty had pursued but not pulled permits for. Madison Capital and PGIM Real Estate just had a far more aggressive capital arrangement than we did. When you go up against competition as great as Madison and (PGIM), if you’re not aggressive all the way to the end, you’re not going to get the deal.