Transbay Authority calls off land auction — investors spooked

The Transbay Joint Powers Authority has called off a much-anticipated live auction of a key piece of land after several of the developers, spooked in part by the meltdown of international stock markets, informed the agency they wouldn’t be submitting bids.

While $200 million is less than 10 percent of the cost of the $2.1 billion transit center, it’s money that is badly needed because the project’s construction costs have been skyrocketing.

Real estate sources said that several of the prequalified bidders were uncomfortable with the auction process, which would have required a hefty nonrefundable payment before any project was approved for the property.

[...] at least two of the five bidders were Chinese and may have been reluctant to place a major bet at a time when stock markets in that country have lost 43 percent of their value since June.

The agency’s decision to hold a live auction was likely motivated by a desire to jump on a land rush, largely fueled by Chinese money in recent months, that resulted in a $297 million sale of a 1.17-acre development site at nearby 50 First St. The buyer in that case was Tohigh Property Investment, a wholly owned subsidiary of the Chinese group Oceanwide.

While money from China will continue to pour into San Francisco, it will be less likely to go after deals that come with the political and market risks associated with large downtown developments.

Darlene Chiu, who heads up ChinaSF, a city agency that helps bring Chinese investors to San Francisco, said she doesn’t expect any slowdown.

Patricia Yeh, a senior manager at architecture giant SOM, who works with Chinese developers, said that some foreign builders found that Block F, a mid-block site currently used for staging and access to the Transbay Terminal construction site, was trickier than initially thought.