SAN FRANCISCO—Columbia Property Trust has learned to play all sides of the market in San Francisco. With 27 primary market properties, the firm has found that CBDs outperform other locations and multi-tenant office assets best suit its long-term goals. With all of this in mind and a conscious decision to build or invest in the best areas, Columbia has become a significant office landlord in downtown San Francisco.
Using San Francisco as a model, combining a mix of value-add and multi-tenant properties, the firm first purchased 333 Market, a 657,000-square-foot building leased entirely to Wells Fargo in 2012. This was followed by the purchase of the 378,000-square-foot 221 Main Street with rehabbed rooftop garden in April 2014. Finally, in September 2014, Columbia bought the 478,392-square-foot 650 California, which lies squarely in the North Financial District, from Tishman Speyer and Prudential Real Estate Investors for a total purchase price of $309 million.
The philosophy behind the purchases went beyond the types of properties, digging deeper to provide a balance of locations (one north, one south and one in the middle). This positions Columbia to appeal to not only technology users but also a financial and more traditional tenant base. The firm's annualized lease revenue broken down by location shows that approximately 46% is located in the Financial District and approximately 20% is South of Market. The balance is outside San Francisco at University Circle in Palo Alto, CA.
650 California is a traditional class-A office tower, originally built for Hartford Insurance in the mid-1960s and at one point, it was the tallest building in California at 33 stories. The tower has protected panoramic views of the Bay, Nob Hill, Telegraph Hill and the Golden Gate Bridge above the fifth floor via postcard windows.
Even in this type of timeless location, the uses of space change.
David S. Dowdney, senior vice president of the western US with Columbia Property Trust, tells GlobeSt.com: "More tenants these days have open ceilings, open floorplans and polished concrete floors. Tenants these days often collaborate in and outside the space so we are adding collaborative seating areas and food service to the lobby, in addition to the gym, conference center and bike storage facilities. The building is well leased at 90%-plus. However with many of the leases expiring in the near future, the building will have to compete to attract today's tenant. Recognizing the need to create unique spaces, we recently converted the second floor from traditional office buildout to a high ceiling, modern collaborative suite, complete with all-glass conference rooms and even industrial ceiling fans. We have found that when prospective tenants tour the suite, they have remarked 'wow this building really is cool'–not something one would typically find in a Financial District location."
This building has a traditional high-rise appearance to it, but is appealing to the mixture of both financial and technology tenants as it has an offset center core. This variance in depths works well for more creative open floorplan users on the deeper side and more traditional users on the north side.
The 50-year-old tower underwent substantial renovations in 2007 and 2013 and has received LEED Gold certification in the USGBC's rating program for Existing Buildings: Operations and Maintenance.
The largest tenants at 650 California include Littler Mendelson, an employment and labor law practice; Credit Suisse, a financial services company; and advertising agency, Goodby Silverstein & Partners.
As previously reported, Columbia Property Trust recently sold a Virginia property.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
