Blackstone and DivcoWest are paying $111M to acquire a vacant 25-story office tower in downtown San Francisco, the first investment sale within the asset class the city has seen with a price tag of more than $100M in the post-pandemic era.
The 420,000-square-foot building at 199 Fremont Street, located next to Salesforce Park, will be rebranded as 300 Howard Street. The partners plan to renovate the early 2000s tower with a new conference center, lounge and gym, aiming to attract the booming AI sector, the San Francisco Business Times reported.
Gregg Walker, president of DivcoWest Real Estate Asset Management, described the acquisition as “a long-term partnership” with Blackstone in a statement.
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“300 Howard sits at the heart of one of the most innovative commercial corridors in the country,” Walker said. “Together, we’re making a bold investment to reimagine the building as a next-generation workplace, one that inspires, attracts, and empowers the talent driving the future of AI and technology.”
DivcoWest already had a 49% stake in the building with partner CalSTRS, the state teachers’ pension fund. DivcoWest and CalSTRS paid roughly $900 per square foot for the stake in 2020, meaning the $265 per square foot that DivcoWest and Blackstone are buying the entire building now for represents just a fraction of the previous value.
Office values bottomed in San Francisco at the end of last year as the office vacancy rate in the city peaked at nearly 37%. In 2025, office leasing in the city has surged to a 10-year quarterly high as rapidly growing GenAI players enlarge their footprints.
The emerging office recovery is drawing institutional players seeking bargains back into the San Francisco market. As investment sales heat up, more high-profile distressed office properties are heading for the selling block.
Blackstone is involved with another transaction, with San Francisco-based Shorenstein. The partners have tapped Eastdil Secured to list 45 Fremont Street for sale at the direction of lender Bank of America, which originated a $347M loan for the 620,000-square-foot office tower in 2019.
Blackstone, which acquired a 49% ownership stake in 45 Fremont in 2017, wrote its investment in the building down to zero in 2023. The 34-story tower is the second office building in Shorenstein’s San Francisco portfolio to go on the selling block this year, alongside 208 Utah Street.
Eastdil Secured is also marketing a $417M loan backed by Market Center, a two-building, 745,000-square-foot office complex at 555-557 Market Street that was the former downtown headquarters of energy giant Chevron. Paramount Group defaulted on the Market Center loan last summer. Lenders led by Amsterdam ING began exploring a sale of the debt at the end of last year.
San Francisco-based Flynn Properties is in talks to acquire the Market Center debt for about $230 per square foot, which would put the price tag at about $175M, according to a report in the Business Times.
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