Here’s what happened in the SF Residential and Commercial Real Estate Market since 6/25:
Two unentitled parcels at 360 5th St. and 399 5th St. are for sale. We’ll track the sales price.
Hines’ Salesforce tower is 1.4 M sq. ft of office space, which will hit the market in 2017. Salesforce will occupy about half of it (714,000 sq. ft). Needless to say, when one tenant leases half of a new building which is the case here or an entire building e.g. Linkedin leasing 450,000 sq. ft. at 222 2nd street or Uber expanding by 130,000 sq. ft. at 1455 Market, it does not bring the price per square foot down because the newly created inventory is immediately absorbed which explains why as of June 2014 SF office space vacancy is around 7% and rents are averaging $60 per sq. ft. We often hear that 65% of the 3.6M sq. ft. of planned office building is spoken for which makes it quasi impossible for tenants who are looking for large plates to find much in SF. As we have often argued in this blog, we are certain that this will help the Oakland office market boom. We are also going to go one step further and argue that the Oakland downtown residential market will boom as well as a direct result of companies moving to SF.
Cornerstone Real Estate Advisers owner of 33 New Montgomery (paid 149M in June for the 240,000sq.ft. building) purchased 201 California street (across from Tadich’s), a 242,145 square foot office building for a rumored $133 million or $549 per square foot. Replacement cost is about $757 per sq. ft. More to come.
Harbert US sells the Zendesk/Zoosk building at 989 Market Street for $61.3M, which is $550 per sq. ft and 4.2% cap rate (pro forma year 1 cap rate).
Here are the 10 largest leases in San Francisco of 2014:
- Salesforce, 714,000 square feet, Salesforce Tower
- LinkedIn, 450,000 square feet, 222 Second St.
- Twitter, 313,000 square feet, 1 Tenth St.
- Dropbox, 182,000 square feet, 333 Brannan St.
- Splunk, 182,000 square feet, 270 Brannan St.
- Uber, 130,000 square feet, 1455 Market St.
- Dropbox, 111,000 square feet, 185 Berry St.
- Dropbox, 110,000 square feet, 345 Brannan St.
- Practice Fusion, 102,000 square feet, 650 Townsend St.
- Eventbrite, 98,000 square feet, 155 Fifth St.
Here are the only 100,000 sq. ft. plates available now:
- 181 Fremont St.: 416,206 square feet
- 415 Mission St.: 661,175 square feet
- 535 Mission St. : 224,501 square feet
- 505 Howard St. : 139,186 square feet
- 199 Fremont St. : 125,069 square feet
- One Market Plaza, Spear : 101,571 square feet
26 condos will go on sale any day now at 870 Harrison.
Ed’s Autohaus at 768 Harrison Street will be 26 residential units over commercial. We don’t know if the developer plans condos or apartments.
525 Harrison site of the Factory Club and Auto Spa site will be 180 condos over commercial.
1066 Market Street will be 300 apartments over commercial space.
Blackstone Real Estate Partners purchased a 49% interest in the 1.6 million square foot One Market Plaza office building for $600 million or $750 per square foot.
39 condos over commercial will soon appear on 7th and Minna.
Folsom and Spear streets will be 390 condos over commercial.
Our friend Eric Tao of AGI is converting a commercial property at 1201 Tennessee into 258 condos.
The elephant in the room is Proposition M. Proposition M is a 1986 law whose intent is prevent excessive office and there is a cap to development. It appears that the cap is about 3M sq. ft. for 8M sq. ft. of projects in pre-approval. Apparently office square footage that is converted to non-office uses cannot be returned to the cap i.e. an office building that became a loft or a hotel cannot be turned to office space if the cap is reached. Another wrinkle is that the Transbay area does not count towards proposition M. Needless to say, this is an interesting issue to follow…
The Metropolis Hotel at Mason and Turk will be residential over commercial no news as to whether condos or apartments but the plan is for about 100 residential units.
Realogy owner of Coldwell banker paid $166M for the unprofitable Zip Realty.
Salesforce is SF’s #1 tenant with about 2M sq. ft. of office space. Google is 2nd with about 700,000 sq. ft., which includes 188 the Embarcadero (across from the post office) the 250,000 sq.ft. Office building Google just purchased for $65M.
New Home Co. is building 76 condos in San Mateo: Tidelands is by San Mateo’s waterfront on East Third Ave. and Mariner’s Island.
490 South Van Ness will be 72 condos over commercial.
The Marin County Employees’ Retirement Association is selling $129M worth of real estate assets in the Peninsula and Walnut Creek comprised of office buildings and commercial spaces. We do not have any more information at this point.
As everyone knows, the City failed to include a provision in the contract holding the developer of the Transbay responsible for funding the rooftop park of the Transbay. Rumor has it that the City is considering a special tax assessment in the immediate area for $37M.
325 Fremont St. will be 750 apartments not too far from the same developer’s 320 condos at 45 Lansing or 524 which is planned to be 285 residential units (no word as to condos or apartments). There will be a lot of new residents in the area when you add this group to the 299 apartments at 1 Rincon Hill and the 348 at 340-350 Fremont and the 452 apartments at 399 Fremont.