OAKLAND — The site for a residential tower that could have become an eye-catching addition to the skyline of downtown Oakland has toppled into a loan default, raising questions about the project’s future.
The current proposal for the property envisions a 39-story housing highrise at 2044 Franklin Street in Oakland, a short distance from the 19th and Broadway BART station and the shores of Lake Merritt.
The project would have produced 425 residential units, according to plans filed by R2 Development, the project’s developer and property owner.
But these plans now appear to have landed in limbo because the loan for the property is in default.
R2 Development, which owns the 2044 Franklin Street site through an affiliate that landed the mortgage, is in default on a $6 million loan for the project, according to documents filed on Aug. 15 with the Alameda County Recorder’s Office.
The real estate affiliate obtained the loan in 2020 from Lone Oak Fund, the county real estate records show.
R2 Development had been seeking a streamlined approval process for the proposed project through provisions of SB 330.
The R2 Development affiliate bought the project site in 2016, paying $14.3 million for the property.
A two-story commercial building and surface parking lot currently occupy the development site. The developers intended to bulldoze the site to clear the way for the housing tower.
Since R2 Development affiliate bought the site eight years ago, the property owner has floated several plans for towers of differing heights for at location.
In recent years, as the plans were revised and the project languished, R2 Development sought a partner for the project.
No partner has come on board, however, and in recent months, R2 placed the site up for sale.
This news organization requested a comment from the ownership group that holds the title to the development site.
Waves of foreclosures, record-high vacancy rates and slumping rents haunt existing Bay Area office buildings and have stymied plans for new office projects throughout the nine-county region.
The 2044 Franklin default in downtown Oakland is a relatively infrequent example of a residential tower project that is in default on its loan.
Many of the problems with the office market have spilled over into the sector for the development of housing highrises.
Sky-high interest rates, brutal levels of inflation and fast-rising costs for construction materials and labor have coalesced to complicate the ability of developers to launch their projects, especially major ones such as a tower.
The loan delinquency for the downtown Oakland project serves as a reminder that expensive money and materials can impede residential projects even during a time when demand for housing is elevated.