Jamestown Commits to Creative Work Space Property in San Francisco
- Jan 13, 2015
The Jamestown Premier Property Fund has acquired 731 Market St., a six-story, 93,107-square-foot, historic mixed-use property in downtown San Francisco from Harvest Properties for $65.2 million.
JLL represented the seller in the transaction.
“One major appeal of 731 Market is that it’s located near another Jamestown owned property at 799 Market Street, which is a neighboring creative office asset that is also fully occupied by a number of top technology tenants,” Michael Phillips, Jamestown’s president, told Commercial Property Executive. “This new acquisition further adds to Jamestown’s commitment of creating an urban campus of innovation buildings that are focused on tech and media. Our work in that sector began with adding 22 Fourth St. and 799 Market to our portfolio and now 731 Market.”
The building contains 92,023 square feet of office space featuring creative work environments with open-floor plans and exposed brick walls. It also has 12,067 square feet of ground-floor retail space, currently occupied by CVS Pharmacy.
Harvest Properties and capital partner Invesco acquired the property less than three years ago for approximately $30 million and invested nearly $8.7 million for renovations. Built in 1908 and originally known as The Bancroft Building, renovations to the building included upgrades to the building systems and lobby.
The building is currently 100 percent leased to a tenant roster of eight companies, including Internet-based fashion retailer Stitch Fix, private-cloud services provider ConnectSolutions and online ski ticket sales and revenue manager Liftopia.
Located at the confluence of SOMA, Mid-Market, Union Square and the Financial District, 731 Market Street occupies a prominent location on the south side of Market Street, between Third and Fourth Streets.
The property is situated along a transit-rich section of Market Street, with immediate access to BART, MUNI, bus lines and San Francisco’s renowned cable car. It is also located in close proximity to the future Central Subway line.
The Jamestown Premier Property Fund also owns Ghirardelli Square, a 100,394-square-foot boutique retail, dining and entertainment complex; Waterfront Plaza, a 297,260-square-foot office complex in the North Waterfront submarket, and Alameda South Shore Center, an open-air regional shopping center with approximately 594,000 square feet in Alameda.
According to Marcus & Millichap’s 3Q 2014 market report, the San Francisco office market is among the strongest in the country due to an insatiable demand from technology firms. So much so, that rents are predicted to surpass Manhattan sometime soon.
The report notes that the rapid expansion by cash-rich technology firms has resulted in one of the lowest vacancy rates in the country and will enable operators to aggressively lift rates on available space in 2015.
Overall, average cap rates for stabilized Class B assets are in the low-5 percent range, depending upon tenant roster and location. Class A office buildings trade at cap rates well below the 5 percent threshold.