Here’s what happened in the San Francisco Bay Area Residential and Commercial markets since 1/18:
Swig’s office building next to Blu at 635 Folsom is breaking ground in June albeit on a smaller footprint give neighbors opposition. It will be 270,000 sq. ft. and the legendary Gary Arabian and his team will be in charge of leasing. We wish him the best. Comps in the area for Class A office space are around $80 per sq. ft. per year.
We are big fans of the Mehran family who built Bishop Ranch (Massoud) and greatly improved it (Alex Sr and Jr). Alex Jr had big shoes to fill. Not only is he a world-class sailor but he also managed something very difficult i.e. improving on an already very successful product (9M sq. ft. of office space). Under his leadership the campus offers every amenity than that of the best SV campuses at a fraction of the cost and it comes as no surprise that in the last couple months him and his team inked over 100,000 sq. ft. of leases from multiple tenants.
355 Sutter an 18,000 sq. ft. office space over retail is in play. We hear it could go for almost $1200 per sq. ft. per sq. ft. but we’ll see.
500 Pine street is also in play at 56,000 sq. ft. we hear it could go for $1300 per sq. ft.
The record purchase price per sq. ft. is 222 2nd, which Tishman purchased from its partner for $1250 per sq. ft.
424 Brannan @ Ritch will be a hotel: 85 ft tall with about 100,000 sq. ft. of hotel space and about 7,000 sq. ft of retail.
180 Townsend at 41,125 sq. ft. sold for $28M or $681 per sq. ft.
As reported by many 6X6 the 250,000 sq. ft. building on Market next to Nordstrom’s is filing for an authorization to convert most of its retail to office space.
The 270,000 sq. ft. Ferry building could fetch $300M or $1,100 per sq. ft. It is 190,000 sq. ft. of office and the rest retail.
The 206,959 sq ft. 101 Mission Street is also in play. We hear asking is $800 per sq. ft.
28 2nd street a class C office space at 27,000 sq. ft. sold for $20M or $727 per sq. ft.
The long awaited Central Soma Plan will start the legislative process on March 1 with a 20 day notice period and hearings. Developers have purchased numerous plans in anticipation for the plan to go through and it should but you never know in SF. Again the Central Soma plan up zones an area bounded by Folsom, 2nd , Townsend and 6th street. In that area the highest proposed height limit is the site of the creamery at 400 ft. followed by the Flower Mart at 270 ft. for example.
BOMA provides standards on how commercial buildings should be measured. Needless to say in tight market it is hard to argue that Landlords measurement of usable space is higher than the actual measurable space is. The usable square footage makes a big difference in rents which are a function of square footage e.g. $80 per sq. ft. per year. Leases typically mention BOMA Standards, which are basically guidelines on how commercial space should be measured. The matter becomes even more complicated when common areas or portions thereof are assigned to specific spaces. The 2017 standards involve the inclusion of rooftop terraces and private galleries into usable space for example. It also allows the allocation of conference rooms and loading docks to a specific tenant. Bottom line: During lease negotiation and renewal both procuring and listing Brokers should pay particular attention to the language of the lease as it pertains to usable space. Listing Broker will make a case for the usable square footage using BOMAStandards and Procuring Broker can either accept the standard or argue otherwise with specific appraisal. Needless to say demand for the commercial space will weigh heavily in negotiations i.e. in a down market procuring broker has a far better chance to pay only for the space tenant is using.