TMG, Rockwood Sell San Francisco Office Projects to Boston Properties for $62M
- Sep 05, 2012
In San Francisco’s bustling SoMa neighborhood, TMG Partners and Rockwood Capital L.L.C. have sold the abutting office buildings at 680 Folsom and 50 Hawthorne streets and the neighboring site at 690 Folsom. The new owner is Boston Properties, which, in exchange, forked over $62.2 million in cash, assumed a $170 million construction loan commitment and issued 1,588,100.206 Series Four Preferred Units of limited partnership interest in Boston Properties L.P.
While its name is no longer on the deed, TMG will remain involved with 680 Folsom and 50 Hawthorne.
The buildings are currently undergoing construction and the real estate company will stay on as development manager. Architectural firm Skidmore, Owings & Merrill is behind the design of the project, which will yield a 521,000-sf complex of coveted Class A office space. Already, the tenant roster is 85 percent full due to two major pre-lease deals. During the first quarter of the year, Macy’s.com staked a claim to approximately 242,800 square feet under a 15-year agreement and Riverbed Technology Inc. committed to 202,500 square feet, courtesy of a 10-year lease.
It is unlikely that Boston Properties will have to break much of a sweat to bring the office complex to maximum capacity. The timing is good and the location is even better. “[The demand in San Francisco is coming from] a lot of the tech firms and social media and digital media firms,” Marc Intermaggio, executive vice president at the Building Owners and Managers Association of San Francisco, told Commercial Property Executive. “We have the talent, we have the creative people, we have the energy, we have the outlook and the enthusiasm — it’s all right here. It’s the place people want to be.
SoMa, in particular, is high on the list, thanks to growing interest among the tech set in the area’s trendy, loft-like office offerings. According to a report by commercial real estate services firm NAI Northern California, SoMa is “virtually 100 percent leased.” As demand skyrockets, rents are going on a notable upswing, with Class B and C rates reaching a level comparable to prices found at Class A properties in the central business district.
“SoMa is on fire and going up and spilling over into the rest of the city,” Intermaggio added.
At 680 Folsom and 50 Hawthorne, general contractor Plant Construction Co. is on track to complete development activity in time for Macy’s to set up shop in January 2014. If the cry for space in SoMa grows too loud for the office market to answer, Boston Properties will have the ability to respond should it choose to redevelop the 22,000-square-foot vacant building and vacant parcel at 690 Folsom.