SAN FRANCISCO-A fund of Apollo Real Estate Advisors has acquired 444 De Haro Street from a joint venture of Page Mil Properties LP and Flynn Properties. The two-building, 152,000-sf office property covers a full block (1.84 acres) in the Showplace Square area. The sale price came in around $300 per sf, according to industry sources familiar with the transaction, which translates to a price in the low $40-million range.

The buildings are former warehouses built between 1927 and 1937. They were renovated, seismically upgraded and converted to office in the mid 1980s. The oldest building is a two-story concrete building with 140,178 sf that includes underground parking for 67. The building is 68% leased. The remaining 12,000 sf are in an adjoining three-story, wood-frame building that is unoccupied.

An affiliate of Flynn Properties acquired 444 De Haro in 1999 for about $23 million. Flynn put it back on the market in 2005 for around $25 million and in November of that year sold a 70% stake to Page Mill Properties, a DivcoWest-sponsored fund formed in 2001 to invest in the tech- and dotcom-crash markets with local minority partners.

The building’s anchor tenant is Avolent, a software firm that leases 21,000 sf and has been in the building since the late 1990s. Other tenants include Medical Research Institute, which leases 10,400 sf, and K2A, a technology firm that leases about 5,000 sf. The largest contiguous availability is about 20,000 sf on the street level, facing the future Whole Foods store. Current gross rents at competitive properties in the submarket are be leased at rates in the low-to-mid $30s.

Jonathan Korol in Apollo’s acquisitions department tells that the zoning for the area is in flux right now and may eventually allow for a mix of uses. Right now everything is zoned for manufacturing, though 444 De Haro operates as an office building and, across the street, a Whole Foods is going in as a conditional use.

“Rents throughout San Francisco are shifting upwards due to increases in tenant demand,” says Apollo partner Steven Wolf in a prepared statement. “Rising construction costs, the extremely short supply of land dedicated to commercial development, and local government constraints have been effective regulators of new office projects in San Francisco. These factors should continue to preserve the strength of properties located in the SOMA submarket and limit future inventories.”

Divco hired Cornish & Carey Commercial to market the property for sale. The listing agents were Michael Leggett, Gerry Rohm, Rita Meehan, Bart O’Connor and Donette Clarens, all of the company’s San Francisco office.

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