CBRE Grabs Boutique Office Building in San Fran’s Financial District
- Oct 30, 2014
CBRE Global Investors has bought 235 Pine St, a 150,159 square-foot Class A office facility located in the center of San Francisco’s financial district.
The property was acquired by a fund managed by CBRE through its Strategic Partners U.S. team for a reported $89 million, according to The Registry. The seller was TA Associates, Phil Hench, senior managing director & principal with the Strategic Partners U.S. fund series told Commercial Property Executive.
“235 Pine offers a combination of unique attributes that made this acquisition particularly attractive,” Hench said.
Among the attributes Hench mentioned included quality of the building, which he called “a beautiful jewel-box building;” the location, floor-plate size, parking garage and the opportunity itself.
Built in 1990, 235 Pine St., which features 207,500 square feet on 25 stories, is located in the heart of San Francisco’s Financial District between California and Market streets near amenities including restaurants, gyms and public transportation.
The building has relatively small floor plates of 8,000 square feet and a side core design that allows small tenants to have a full floor identity or two or three tenants can share a floor and all have elevator identity, according to the senior managing director and principal. It also includes a 110-space parking garage.
The office complex is currently fully occupied with a sizable presence by the General Services Administration. But between early 2015 and 2017, almost 50 percent of the space will be going vacant, including the GSA Bankruptcy Court, which is moving to a federal building. This will give Strategic Partners an opportunity to implement value-add strategies by offering tenants a market-leading environment in a high-quality building, according to a news release.
“We liked the opportunity that the pending vacancy brings to reposition the building with more traditional private sector tenants,” Hench concluded. “The GSA space being vacated is at the top of the building with the best views.”
According to a third-quarter 2014 Marcus & Millichap report, the San Francisco office market is among the strongest in the country due to continued demand from technology firms. It is predicted that asking rents in the city could overtake Manhattan by year end.
“Tight conditions and the recent run-up in rents have pushed most value-add investors out of the market. Those remaining are being creative when considering ways to generate value above appreciation and rent growth,” according to the report.
Office rents in the San Francisco metro are said to climb aggressively again this year as full-service rates reach $48.52 per square foot in the fourth quarter, an annual gain of 8.1 percent.