New Benchmark in San Francisco Office Tower Fire Sale
Mid-Market tower that sold for $62M in 2016 goes for 89% discount.
Just when you thought the pricing for steeply discounted San Francisco office buildings couldn’t get any lower, a new benchmark has been established: a 90K SF Market Street tower has been acquired for nearly 90% less than its last trade.
An affiliate of Florida-based LNR Partners, a subsidiary of Starwood Property Trust, acquired a 16-story office tower at 995 Market Street at a public auction on April 18 with a bid of $6.56M, or about $72 per SF, according to a report in the San Francisco Business Times.
Eight months ago, New York-based building owner Bridgeton stopped make payments on a $45M CMBS loan backed by the building, which Bridgeton bought in 2016 for $62M.
LNR, which took over the $45M loan from the original lender, LStar Capital, has been acting as the special servicer for the loan, the report said.
Last week, New York Life Real Estate Investors and Bridgeton acquired an office building at 410 Townsend St. for $22 million, a discount of nearly 75% compared to the last time the property traded in 2019.
The four-story, 76,000-square-foot building, once described as a “Startup Village,” was last purchased by Clarion Properties for $86 million, or about $1,100 per square foot. CBRE represented the buyers in the latest transaction, which is priced at about $290 per square foot.
In December, Clarion handed the keys for the building, which was 75% vacant, back to Nationwide Life and Annuity Insurance. Clarion took out a $39 million loan from Nationwide when it bought the building, located in the SoMa submarket, in 2019.
Redco Development and GCI General Contractors are acquiring 300 California Street for $28 million from Lefrak. New York-based Lefrak acquired the eight-story, 119,000-square-foot building for about $58 million in 2014.
The building bought by San Francisco-based Redco and GCI is next door to 350 California Street, which also sold at a fire-sale price.
When it was first listed in 2020, the asking price for 350 California Street in Downtown San Francisco was $250 million. MUFG Americas sold the 286K SF tower to San Francisco-based developer SKS and The Swig Company in a deal estimated at $60 million.
The office vacancy rate hit 36.6% in San Francisco during the first quarter of 2024, up from 35.6% in the fourth quarter of 2023. Total availability, which includes occupied space, ticked up to 38.7% from the 38.5% recorded at the end of 2023.