SF Office Properties Attract Local, L.A. Buyers

SAN FRANCISCO-Locally based TMG Partners has acquired two office buildings totaling 405,000 square feet here for an undisclosed price, and Los Angeles-based REIT Hudson Pacific Properties has acquired two buildings totaling 144,440 square feet for $34.9 million.

The new TMG Partners buildings, which it bought in partnership with Rockwood Capital, are at 680 Folsom St. and 50 Hawthorne St. in the South of Market district. Hudson Pacific’s new property, which it bought from an affiliate of Canyon Capital Realty Advisors, is at 222 Kearny St. in the North Financial District.

The 680 Folsom St. building, which is vacant, is the former SBC headquarters and had been entitled for an upgraded office building and expansion of 100,000 square feet up to 505,000 square feet total. TMG has been in discussions with the City of San Francisco for several months to strategize the expansion and design to accommodate an expansion space for Moscone Center for the San Francisco Visitors and Convention Bureau. Michael Covarrubias, TMG’s chairman and CEO, says, “If that development plan is not viable, the office project renovation would proceed as originally planned.”

The Folsom Street property is the third transaction for TMG in the SOMA area this year and the 14th in its history. The company also recently acquired 208 Utah St. and closed a 270,000-square-foot lease at 650 Townsend with Zynga for its new headquarters.

Hudson Pacific’s 222 Kearny St., at the northeast corner of Sutter and Kearny streets, is composed of two buildings, a 10-story office tower built in 1986 and the five-story, 180 Sutter St. building built in 1915. A portion of the 222 Kearny building sits on a long-term ground lease.

Howard S. Stern, president of Hudson Pacific, says that the Los Angeles-based office REIT acquired the buildings in an off-market transaction via “Our relationship with the seller, which we have developed over many years.” Stern added, “San Francisco is one of our company’s top targets for expansion. We will continue to grow our presence here through the acquisition of other well-located-office properties.” Hudson Pacific Properties also owns 875 Howard St., a 286,000-square-foot South of Market office property across from the Moscone Convention Center.