NY Real Estate Investment Firm to Convert Downtown SF Office Building to Medical Use

SAN FRANCISCO—White Plains, NY-based Seavest Healthcare Properties has secured approvals from the city to convert what had been a vacant office building in the Van Ness corridor into a 119,292-square-foot medical office building.

The San Francisco Planning Commission approved Seavest’s application for a health services conditional use authorization for the building that previously had been zoned strictly for commercial office use.

The seven-story 939 Ellis, which Seavest Healthcare Properties acquired in June 2018 for $49 million, consists of 87,189 square feet of rentable office space, and 53 parking spaces. The acquisition marked Seavest’s entrance into the San Francisco real estate market.

Seavest chief investment officer John Winer says the acquisition and repurposing of 939 Ellis fits well with the firm’s long-range goals and business plan.

“Seavest has been actively seeking to grow its portfolio in the western United States,” he says. “This acquisition now gives us a toehold in the robust San Francisco market, and we are eager to acquire other buildings or partner with developers to grow our asset base in the Bay Area.”

The previous owner of the property– 939 Ellis LLC, a joint venture of San Francisco-based Long Market Property Partners and Seattle-based Columbia Pacific—undertook a $10.8-million capital improvement program that included modernizing the exterior façade; renovating the main lobby and 4,480-square-foot roof deck; replacing part of the roof; installing Americans with Disabilities Act (ADA) upgrades; and upgrading the common area restrooms, elevator lobby and elevator finishes.

Seavest officials say the firm now plans to invest another $1.8 million in the building, which will include elevator modernizations, a new building management system, a new HVAC system and more. Real estate developer and investor Meridian, which is headquartered in San Ramon, CA, is serving as Seavest’s local market consultant.

Seavest VP of acquisitions David Braunstein says, “It’s very difficult for healthcare providers to obtain large blocks of space in San Francisco because of low vacancy rates, high rents and city restrictions limiting new development. That’s why this was a compelling opportunity.”

The building was also attractive to Seavest because the previous ownership had secured a major tenant for the long-vacant property. Kaiser Permanente signed long-term lease for approximately 50% of the rentable space for a behavioral health initiative,” Braunstein says. “Kaiser is one of the leading healthcare providers in the country, so we’re pleased to have them as the anchor tenant. We are also meeting with a number of other prospective tenants that are well-known healthcare leaders.”

In April, Seavest and Trammel Crow Co. opened the new three-story, 60,000-square-foot Children’s Hospital of San Antonio Health Pavilion. In November 2018, Seavest and Trammell Crow announced they were building new, class A, 75,000-square-foot care facility for AHN, a leading integrated delivery care system in Western Pennsylvania.

Two months earlier, Seavest Healthcare Properties, in partnership with Denver-based Fleisher Smyth Brokaw LLC, announced they had acquired the two-story, 18,417-square-foot fully-leased Lincoln Court Healthcare Building in Littleton, CO. No financial details of that transaction were disclosed.