When it was first listed in 2020, the asking worth for 350 California Avenue in Downtown San Francisco was $250M. In an indication of the instances within the beleaguered metropolis, the workplace tower now has been bought for about $60M.
MUFG Americas has bought the 286K SF tower at 350 California Avenue to San Francisco-based developer SKS in a deal estimated at $200 to $225 per SF. A Korean actual property investor is partnering on the deal, in line with a report within the San Francisco Enterprise Occasions.
The 22-story Monetary District constructing is almost empty. Union Financial institution, the anchor tenant at 350 California Avenue, has vacated the constructing. In 2021, bidding on the constructing by no means exceeded $180M and the house owners took it off the market.
It stays to be seen whether or not different constructing house owners attempting to promote towers in San Francisco will undertake the fire-sale worth of 350 California Avenue as a brand new benchmark.
Final fall, Columbia Property Belief and Allianz Actual Property introduced that they’re promoting a 33-story workplace tower at 333 Market Avenue in San Francisco’s Monetary District that’s leased in its entirety by Wells Fargo.
In June, the financial institution renewed a 10-year lease for the 622K SF tower. The asking worth on the market of the Market Avenue tower has not been disclosed. Columbia paid $395M for the tower in 2012 and now owns a majority stake within the property.
Practically a 3rd of the workplaces in San Francisco are empty, a emptiness price that approached 30% within the first quarter of 2023.
As main tech gamers retreated from workplaces in San Francisco all through 2022, the emptiness price within the metropolis grew by greater than 10%; it’s grown by a further 2% because the finish of final 12 months, in line with a report from CBRE.
Empty workplaces now embody 27M SF in San Francisco, eight instances the quantity in 2019, when emptiness was 5%. Out there house has risen above 34%, together with the rising quantity of workplaces listed for sublease that aren’t but vacant.
The quantity of workplace house available on the market for sublease is approaching 10M SF. Greater than 900K SF was listed in Q1 2023, together with substantial listings from Pinterest, Meta and Slack.
This week, San Francisco’s Planning Fee authorised an ordinance that may simplify the approval course of and necessities for changing workplace buildings into residential models. The ordinance additionally eliminated restrictions blocking a better number of enterprise and actions in Union Sq. and all through downtown.
“We will create extra alternatives to fill our empty buildings, whether or not that’s to create housing or making it simpler to fill workplace and retail house,” Mayor London Breed stated, in a press release. “These modifications shouldn’t be one thing that requires granting exceptions by prolonged paperwork and exhaustive public hearings. We have to make the method simpler for getting our buildings energetic and full.”
Amongst different modifications, the laws can even present for different paths to Constructing and Fireplace Code compliance for adaptive reuse tasks that might in any other case battle to satisfy necessities designed for brand new ground-up development tasks.
