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SAN FRANCISCO-The global financial services company Citigroup has inked a 10-year, 46,758-sf lease for the 19th through 21st floors of One Sansome Street, a 43-story, 734,341-sf class A building in Downtown San Francisco that is owned by a European entity and managed by San Francisco-based Rreef.

Citigroup reportedly leased the space in order to move a portion of its Cal Fed Bank operation into the building from 135 Main, where Citigroup is now said to be seeking a sublease tenant for the 90,000-sf space. Local brokers tell GlobeSt.com that Citigroup now leases about one quarter of One Sansome, which is also known as Citicorp Center. Annual full-service asking rates in the building range from the low $30s to the upper $30s on a per sf basis.

The owner’s broker, Scott Harper of Colliers International, would not reveal exactly how much space Citigroup leases in the building or the most recent rate it has negotiated, but he acknowledged that the company “leases a large portion of the building” and therefore would have some bargaining power. “More important than that is they are a credit tenant,” Harper tells GlobeSt.com, adding that Citigroup will be receiving “a full TI package” from the building owner.

Colliers recently reported that the first quarter of 2003 showed the first positive absorption in nine quarters. “The market is not as uniformly depressed as some media reports have stated,” said Shamm Kelly, a senior vice president at Colliers International who assisted Harper in the transaction. “This quarter has already seen eight deals completed in excess of 50,000 sf, compared with 12 deals of that size completed in all of 2002. Tenants know rents have bottomed and the best spaces are moving now.”

“It’s a pure flight to quality,” adds Harper, citing data that shows 73% of recent office leasing transactions have been completed in class A buildings in the Financial District. “These record high vacancies could persist for a while, but activity has dramatically increased compared to last year.”

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