MoFo, as the firm is known, will occupy the second, 11th, 12th and 14th floors of the tower in late 2006. In so doing, it will vacate space at 345 California St. Founded in 1883, MoFo is the highest grossing law firm in the San Francisco Bay Area, according to data complied by the Recorder, a legal journal. Its headquarters remains at 425 Market St.
Neither the length nor the term of the lease was disclosed by the parties involved; however, one industry source familiar with the transaction estimated its value at around $18 million. Tom Poggi, Bill Cumbelich and Charlie Withers of CAC Group represented the ownership of the building. John Cecconi of CAC Group represented Morrison & Foerster. Cecconi did not return a phone call seeking comment.Assuming it was a 10-year deal, the effective rate would work out to about $37.50 per sf per year, full service. A number of large deals have been done recently in the mid-$40s per sf per year, full service, but 555 Market could easily be substantially lower given that the owners acquired Market Center for just $114 per sf, which is less than half of replacement cost.
The transaction drops vacancy at 555 Market St. to 10%, or about 28,000 sf of the 283,333-sf building. Market Center as a whole is 25% vacant, which means 575 Market, a 486,711-sf building, is about 29% vacant.
Market Center is one of the major components of the Page Mill Properties Fund. Page Mill and Rreef acquired the center largely vacant in November 2003 for $80 million. The two-tower property came to market in a lender-driven disposition that followed a loan default by then-building owner Tishman Speyer Properties, which paid $190 million for the property in 1999.
In October, GlobeSt.com reported that Divco and Page Mill were bringing some four million sf of properties to market, most of which are in the Page Mill fund. Properties in the fund include Market Center in San Francisco and the 200,000-sf Park Center development in Downtown San Jose. The balance of the large office properties are in Denver and Boston, including the 1.2-million-sf Cross Point development in Boston.
Aside from those larger properties, the bulk of the portfolio is a mix of smaller class A and b office buildings, mostly two- to four-story office and R&D properties. In addition to office space, the portfolio includes interests in two Bay Area boutique hotels.
Steve Silk, Stephen Van Dusen, Greg Cioth, Jay Borzi and Michael Van Konynenburg of Secured Capital's Los Angeles office have the disposition assignment. The sales transactions are expected to begin closing late in the first quarter or early in the second quarter. The assets are valued at close to $1 billion.
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