San Francisco Office Building Sells for 75% Discount
New York Life Investors and Bridgeton grabbed the Mission Bay asset after Clarion handed it back to its lender.
SAN FRANCISCO–San Francisco office buildings are still trading for steep discounts.
New York Life Real Estate Investors and Bridgeton have acquired an office building at 410 Townsend St. for $22 million, a discount of nearly 75% compared to the last time the property traded in 2019.
The four-story, 76,000-square-foot building, once described as a “Startup Village,” was last purchased by Clarion Properties for $86 million, or about $1,100 per square foot. CBRE represented the buyers in the latest transaction, which is priced at about $290 per square foot.
In December, Clarion handed the keys for the building, which was 75% vacant, back to Nationwide Life and Annuity Insurance. Clarion took out a $39 million loan from Nationwide when it bought the building, located in the SoMa submarket, in 2019.
“It’s our opinion that this is the start of the recovery for the San Francisco real estate market and 410 Townsend provides us with the opportunity to acquire a best-in-class creative brick-and-beam office asset well below replacement cost and where the asset traded in 2013 and 2019,” Albert Pura, senior director of transactions for New York Life Real Estate Investors, said in a statement.
According to a report in the San Francisco Business Times, another office building is under contract to trade at a hefty discount.
Redco Development and GCI General Contractors are acquiring 300 California Street for $28 million from Lefrak. New York-based Lefrak acquired the eight-story, 119,000-square-foot building for about $58 million in 2014.
The building bought by San Francisco-based Redco and GCI is next door to 350 California Street, which also sold at a fire-sale price.
When it was first listed in 2020, the asking price for 350 California Street in Downtown San Francisco was $250 million. MUFG Americas sold the 286K SF tower to San Francisco-based developer SKS and The Swig Company in a deal estimated at $60 million.
The office vacancy rate hit 36.6% in San Francisco during the first quarter of 2024, up from 35.6% in the fourth quarter of 2023. Total availability, which includes occupied space, ticked up to 38.7% from the 38.5% recorded at the end of 2023.
According to CBRE’s numbers, tenant requirements jumped to 6.3 million square feet in Q1 2024, rising from 4.2 million square feet in the fourth quarter and nearly double the 3.4 million square feet notched in Q1 2023.