Mid-Market Flourishes as Influx Continues

The building is fully leased with WeWork occupying the majority of the space.

SAN FRANCISCO—Since the implementation of the payroll tax exemption program in 2011, the Mid-Market neighborhood has become a stronghold for tech companies. Twitter, Uber, Square, Spotify, Dolby, Zendesk and Yammer have all set up shop there. In fact, in the past three years, more than 3 million square feet has been absorbed by new tenants there. Vacancy is currently just 1.6% and rental rates have increased by 40%. The influx of companies and workers precipitated the next stage of growth in Mid-Market. More than 7,000 residential units are currently under construction, approved or planned, while retail and hotel development is also active. One building in the thick of it, 995 Market Street , has sold to Bridgeton Holdings for $62 million. Long Market Property Partners and Columbia Pacific Advisors sold the building to Bridgeton, according to NGKF Capital Markets , part of Newmark Cornish & Carey . “We are extremely pleased to have acquired this high-quality asset in downtown San Francisco’s Mid-Market District,” said Atit Jariwala , CEO of Bridgeton Holdings. “995 Market Street represents our third major San Francisco acquisition and we look forward to continuing to grow our portfolio in this vibrant city.” The 15-story property has a commanding corner presence as the tallest building within a two-block radius offering 360-degree views of San Francisco. The office building is fully leased with collaborative co-working space leader, WeWork , occupying the majority of the space. Justin Shapiro , principal of Long Market Property Partners, tells Globest.com: “From early on in our efforts to purchase the project, we felt that 995 Market could be renovated to become a unique office asset that both benefited from and contributed to a neighborhood burgeoning with revitalization of all asset classes including retail, hotel, residential and office. The fact that no one asset class is driving all this development really speaks to the mixed use nature of Mid-Market.” In 2013, Long Market Property Partners and Columbia Pacific Advisors jointly purchased 995 Market Street and began a comprehensive redevelopment of the property which included significant base building upgrades, a seismic retrofit, exterior improvements and upgraded tenant finishes. Newly renovated, the property was well positioned to attract substantial interest from both domestic and international buyers. “The successful renovation and repositioning of 995 Market is a key part of the turnaround of one of the fastest growing neighborhoods in San Francisco,” said Todd Seneker , managing director of real estate equity at Columbia Pacific Advisors. Kyle Kovac , Newmark Cornish & Carey senior managing director, marketed the property for sale with Daniel Cressman , executive managing director, and Michael Taquino , senior managing director. “995 Market Street is a prime example of the radical transformation that has taken place in the Mid-Market neighborhood over the past few years. Since 2012, more than $1 billion of commercial redevelopment has been invested into the area, creating the most dynamic submarket in San Francisco,” said Kovac. Bridgeton is also set to open its San Francisco office this spring to focus on sourcing and executing investment opportunities on the West Coast. Akash Sharma , managing director, will head up the new office.