Grosvenor Grabs Office-Retail San Francisco Gem
- Sep 23, 2016
San Francisco—Grosvenor Americas adds to its high-street retail holdings in San Francisco with the acquisition of 240 Stockton St., a luxury retail and office property in upscale Union Square. The company purchased the 40,400-square-foot building for approximately $80 million, according to local real estate news publication The Registry.
Grosvenor took 240 Stockton off the hands of Bently Holdings, which had owned the property since snapping it up for roughly $25.9 million in 2002, as noted in documents of the San Francisco Planning Department. Commercial real estate services firm Newmark Cornish & Cary represented Grosvenor in the transaction.
Originally developed in 1908, 240 Stockton is a 10-story Art Deco structure occupying a prime corner spot. The building’s prominence in the market is obvious—it’s 100 percent occupied, with Gucci anchoring the ground and second floors. Despite its age, 240 Stockton boasts such state-of-the-art features as a 30×50-foot billboard leased to Apple and LEED Gold certification. And it’s not just the building itself that’s a model of green; all tenant build-out spaces are LEED certified as well, as had been mandated by Bently.
The property, however, does more than just bolster the square footage of the real estate company’s portfolio. “The purchase of 240 Stockton Street enhances Grosvenor’s position as a high-street retail specialist,” Michael Beattie, Grosvenor’s chief investment officer, said in a prepared statement.
While Grosvenor isn’t confirming any financial details of the 240 Stockton transaction, current market statistics indicate that the price tag for such a space would be quite hefty. Fundamentals tell the story. The direct retail vacancy rate in the Union Square submarket was an enviably low 2.7 percent in the second quarter, per a report by commercial real estate services firm Cushman & Wakefield, while rental rates were on the upswing, reaching $685 per square foot. It all adds up. “[Union Square] continues to have the lowest cap rates in the world,” according to the C&W report. “Investors will continue to pursue, and pay, top dollar for premier San Francisco high street retail sites.”
In the Union Square area, Grosvenor also owns the retail/office buildings at 251 Post St., 180 Post St. and 185 Post St., where Dior debuted a 10,000-square-foot flagship store in April.