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SAN FRANCISCO-The owner of 165 O’Farrell St., a 24,000-sf building that is under renovation in the Union Square shopping district here is ready to begin singing tenants for the building. Union Square Investments LLC, controlled by venture capitalist Naveen Singha, has tapped Grubb & Ellis to find tenants for the six-story building.

Constructed in 1908, the building is located between Union Square and the newly expanded Westfield San Francisco Centre, one half block from Powell Street, the main streetcar route. In addition to the top-to-bottom renovation, Singha has approved plans for a two-story, 7,000-sf penthouse that could be built to suit an interested tenant, such as a restaurant.

Ross Portugeis with G&E in San Francisco and Gary Schwartzman with G&E in New York have the marketing assignment. International marketing assistance is being provided by Asia Pac International. Portugeis tells GlobeSt.com that the owner is entertaining both single-tenant and multi-tenant scenarios for leasing up the building.

Portugeis wouldn’t speculate on the lease rate, but the blended rate for similar multi-floor spaces in the Union Square shopping district is approximately $120 per sf. A mid-2007 rent survey by Colliers International found Union Square to be the second most expensive rental market in the US, with an average street-level asking rent of $485 per sf per year on the square. One block off Union Square, where 165 O’Farrell is located, the street-level rents would be in the low $300s per sf, local sources tell GlobeSt.com.

In July 2007, a fund focused on high-end retail properties in major metropolitan cities has paid $70 million or $1,819 per sf for 240 Post St., a 38,475-sf, four-story Union Square building being vacated by Ann Taylor. Mark Schurgin, president of fund operator Festival Companies told GlobeSt.com at the time of the acquisition that he hoped to have a new tenant open for business in the space by the 2008 holiday shopping season. Schurgin was not immediately available Monday for comment.

Earlier this year, City Center Retail paid more than $1,300 per sf for 33 Grant, a 6,479-square-foot two-story retail building fully occupied by two tenants, the Agnes b boutique and the Utopia Salon. The leases roll in a couple of years. If the tenants decide not to stay, a major renovation of the property will occur. If the tenants decide, the renovation will be less extensive, according to a source with the acquisition lender, Holliday Fenoglio Fowler LP.

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