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.







Here’s what happened in the SF Residential and Commercial Real Estate Market since 11/15:


454 Rentals will rise on the 4800 sq. ft. parking lot at 469 Stevenson between 5th and 6th.


90 Condos will rise at 1075 Market Street.


There will be 242 condos at 950 Market.


201 California, an office building, sold for $179M or $725 per sq. ft.


A widely circulated research piece by several SF brokerages show that leasing comps for Class A and Class B commercial properties ranged from $50 per square foot up to $85 per square foot during Q3 of 2017: Law firm Mayer Brown leased 1,816 square feet at 101 Second Street in August 2017 for $77.14 per sq. ft. MIT leased 235 Pine Street in September 2017 for $75 per sq. ft. Drive Motors leased 3,445 sq. ft. for $72 per sq. ft. Standard Chartered Bank renewed its 4,827 sq. ft. lease at 50 Fremont Center at $51 per sq. ft. Neptune Financial leased 2,789 sq. ft. in the Transamerica Pyramid at 600 Montgomery Street for $62 per sq. ft. SKS Partners leased 9,385-sq. ft. office space at 601 California Street for $68.51 per sq. ft. Symantec leased 49,000 sq. ft. at 100 California at $80 per sq. ft.Periscope leased 43,489 sq. ft. at 1125 Mission Street for $70. Granular leased a sub-lease at 731 Market Street for $74. JETRO leased 6,787 sq. ft. of space at 575 Market Street for $73. Hearsay Systems renewed its lease for 20,633 sq. ft of office space for $75.50 per sq. ft. Stride Health leased 501 2nd street at $75.64. Calegari and Morris leased 15,063 sq. ft. at 650 California for $66 per sq. ft. Fetch leased 10,000 sq. ft. at 141-153 Kearny Street for $ 63. AirBnB is expanded to its 650 Townsend for a total of 287,000 sq. ft. in that building for $65 per sq. ft. Okta leased 207,000 sq. ft. 100 First St at a non reported price and Dropbox 736,00 sq. ft at the same address for a non reported price as well. Tech tenants now represent about half of all office tenants in SF.



A ballot measure if passed would allow new office projects in Central Soma to avoid Prop M which is a cap on the amount of square footage the city can approve each year to 950,000 sq. ft. If the measure passes 6M sq. ft. of office space in Central Soma would not be barred by Prop M if developers dedicate land for affordable housing, buy existing housing and keep it as affordable, pay their affordable housing fee within 30 days of approvals or alternatively a 25 percent larger fee for affordable housing.

Prop M does not apply to projects between 25000 and 49,999 sq ft that have a different cap of 1M sq ft.


Office space in SF is tight at about 8% vacancy rate.


725 Harrison St. now appears to be 765,000 square feet of office space, 4,000 square feet of retail and 35,000 square feet of light industrial space.



Transbay is now scheduled for 2019 which means that the former Oscar Park now called Under Ramp will be delayed to 2019as well. The Park loosely connects Transbay to Folsom street and will occupy about 2.5 acres over three blocks, the park is located below (see green T shaped park by Block 10) the existing highway and future bus ramp with approximately 25% of the site open to the sky. See map courtesy of San Francisco’s Transbay Joint Power Authority.










Here’s what happened in the San Francisco Bay Area Residential and Commercial Market since 9/8:



In a widely disseminated Cushman report we learn that China’s State Council released new guidelines whose goal is to regulate China’s investments abroad including Real Estate. China ranked #1 in Commercial Real Estate Investment in the US in 2016. Surprisingly the bulk of Chinese investment in Real Estate is not SF but NY (46% vs. 15% for SF) and Seattle is only 2%. We’ll see how the new regulations impacts the SF Real Estate Market…

Image courtesy Heller Manus Architects


350 Bush which is yet to be completed attracted software vendor Atlassian who is leasing 125,000 sq. ft. and French owned Global Advertising powerhouse Publicis who is leasing 67,000 sq. ft. The other tenant of the 375,000 sq. ft is Amazon’s Twitch.




Upcoming large footprints for office space are 250 Howard, 1800 Owens and Oceanwide Center.



The sale of 44 Montgomery for $475.4 M did not get the press it deserved given how quickly it sold.



Dropbox 736,000 sq. ft. lease at the Exchange is the largest ever in SF. This 15 year lease is larger than Salesforce’s 714,000 sq. ft. lease at Salesforce Tower.


975 Bryant will most 243 rentals. You may recall developer paid 275M for the land in 2015.



Roger and Mike Abuyaghi, have filed a proposal to build 51 condos at 921 O’Farrell St. in San Francisco.



The Austin is selling new condos at 1545 Pine. Another building to be completed nearby at 600 Van Ness will offer 150 condos and another one at 1200 Van Ness will have 96 condos.


Facebook lease price of 436,000 sq. ft. space at 181 Fremont is not public but we read on various blogs asking rent was in the $80 per sq. ft. range.


180 Townsend is in play asking 33.4M for 41,125 sq, ft. or $812 per sq. ft.



Macy’s Union Square’s 250,000 sq. ft. will be as we covered in the past repurposed into 6 retail spaces at street level and the top floors will be about 50,000 sq. ft of office space and at the very top there will be an 11,000 sq. ft. restaurant.


Rentals at the Local 38 building on Market will be built shortly at 1629 Market over retail.



New hotel will rise on the site of Lulu at 816 Folsom.


Pokemon Go most likely paid over $100 per sq. foot fro the 17,500 sq ft space formerly occupied by Coblenz Patc a law firm.


Pier 70 will be 2150 homes near Illinois and 22nd streets in Dogpatch neighborhood. The built will take about 10 years though in phases. It will join existing/upcoming projects nearby such as Shipyard, Portrero Power Plan and India Basin. As if Forrest City did not have enough on its hands with this one it is also working on 5M between 5th and Mission. 5 M will be Housing/Retail/Office.


CIM owns Oakland’s 1 Kaiser Plaza, 2101 Webster St., 2100 Franklin St. and plans a new office tower appreciatively 1 million square feet at 2 Kaiser Center. It is also rumored to plan 2 residential building and a hotel at Jack London Square. Oakland office rents surpassed $50 per square foot per year.



The 50,021 square-foot 555 De Haro St. in San Francisco sold for $27 million or about $540 per square foot.


The 51,205 square foot property at 55 Green Street in San Francisco is rumored to be in play for $30 million which includes the office part of it or 42,600 sq. ft. but also almost 9,000 sq. ft of parking which translates to $585 per sq. ft. Replacement cost in SF is about $1,000 per sq. ft.  which means the 2 transactions above are good deals.





Summer usually means slower Real Estate transactions. Here’s what happened in the SF Residential and Commercial market since 7/14:


Amazon leased 180,000 sq. ft. at 525 Market. Asking was in the high 70’s but we don’t know what number was finally agreed upon.


Kudos to LBG and Aviva Investors for purchasing the Richmond Hilltop mall covering over 1.1M square feet. The property is zoned for 9600 Homes, a hotel and even office. All we know is that the Buyer paid well below $50M...Anchor tenants are 24 Hour Fitness, Macy’s, Sears and Walmart.


901 Battery a 72,000 square foot office building sold for $55 million or $763 per square foot.


The developer behind of the retail building at 945 Market  wants to turn the top 2 floors of retail into office.

Tishman who had put the 452,418 square foot 222 Second Street property for sale last year ended up purchasing the unit and buying out its partner by paying JP Morgan Asset Management 530M or $1200 per sq. ft. for the property.


Pacific Place, a mixed use building home of Old Navy at 4th and Market in SF, sold for $475M for $1082 per sq. ft. The property includes about 200,000 sq. ft. of retail leased to Old, Navy, Trader Joe’s, Levi’s and the container store and about 235,000 sq. ft. of office space leased to Intuit.Finally, the building also includes Hotel Palomar.


201 California in SF, an office building about 262,000 sq. ft. , is on the block and could fetch over 183.5M or $700 per sq. ft.


288 Pacific will soon release 33  brand new luxury condos in Jackson Square and we can’t wait.


Plaid just leased 26,000 sq. ft. at  85 Second St., taking almost 26,000 square feet for a  under $75 per sq. ft per year.


The parking lot at 424 Brannan is going to be a hotel but needs to go through entitlement first.

634 2nd street, a 46,752 sq. ft. building, is on the block for a rumored $40M or $849 per sq. ft.


401 Washington Street is also for sale for a rumored office building in San Francisco. The potential sales $15 million or $942 per sq. ft. 


130-138 9th Street and 122 9th Street are on the block for a combined $15.5 Million. We are trying to determine the exact footage to give you an idea of the price per square foot.


The All Star Donut site at 5th and Harrison is likely to become a hotel rather than housing now. It is part of the Central Soma Plan which means developer can upzone. Further as a hotel there are no affordable housing requirements…


It is too bad OSH could not convert 975 Bryant (right before the hall of justice, Cafe Roma and the freeway off ramp) into a store. We are now going to have rentals on the site. More to come.


The Fast Frame site at Gough and Market will be rentals over commercial.


980 Folsom at 5th will be 33 condos over commercial.








Here’s what happened in the SF Commercial and Residential Market since 5/18:

Zhuguang a Honk Kong based Chinese developer purchased 525 Harrison St. (former site of the Factory by One Rincon) from developer Hines for $36 million. The 16,000 sq. ft. lot site is entitled for 205 units/ a 250-foot tower and only 15 percent affordable housing. Zhuguang also purchased 88 Arkansas from Martin Building Co.  a 20,000 sq. ft. lot for $26 million. The site is entitled for 127 units.

It appears that Pembroke who purchased 140 New Montgomery a 295,000-square-foot building  ended up paying about $283 million or $960 per square foot.

Not too far the parking garage at 147 Minna St. next to Moma is rumored to be on the block for $40M...for 145,500 square feet. This reminds us of several projects where developers purchased an older building and “re-skinned” it with glass (Riverbed office building on Folsom for example).

Another nearby garage is also coincidently on the block: the SF owned 255 3rd street is up zoned to 320 feet or about 300,000 sq. ft. so it should go fast…The price for Entitled or Buildable land in SF is $200 per sq. ft.

40 Condos over commercial to go up at 1433 Bush.

Folsom and 6th will see several projects mostly rentals  about 400 units : 345 6th, 363 6th and 377 6th.

33 Gough will have over 400 units of rental in a proposed tower in excess of 250 feet.

The Tenderloin is seeing new projects: 242 condos  and 232 hotel rooms at 950 Market. 1066 Market will be home to 304 rentals.

Macy’s Stonestown as we reported is going to be a 285,000 multi-retail center. More to come.

The 72,000 square foot office building at 901 Battery sold f $55 million or $763 per square foot.

We have all seen the Oceanside site next to Golden Gate University. What we didn’t know until now is that the owner of the small building 88 1st (10,000 sq. ft. building on less than 4,000 sq. ft lot present home of Perilla on Mission and El Faro on 1st) held off until recently and managed to sell it for…$32.5M! That’s $3200 per square foot and we take it our hat off.

The parking lot at 425 Broadway next to Crowbar about 14,000 sq. ft. sold for $11M.



123 residential units most likely rentals will be built at 360 5th street and another 109 at 2177 3d street.

While approved for development at the end of 2015, the paperwork to secure the demolition and building permits for an 8-story Hub District building to rise upon the two-story FastFrame building site on the northwest corner of Market and Gough wasn’t filed until the second quarter of last year.

And with the necessary permits for the approved project – which includes 42 residential units, a mix of 14 studios, 21 one-bedrooms and 7 two-bedrooms, over 2,000 square feet of new commercial space and a storage room for 42 bikes – nearly secured, the 1700 Market Street site is now back on the market as a development opportunity and seeking bids rather than preparing to break ground.



Here’s what happened in the SF Bay Area Residential and Commercial Real Estate Market since 3/21:


When Transbay opens the temporary Transbay Terminal between Howard, Beale, Folsom and Main will become the Transbay Park with a 165 foot tower on Beale and Main and another 450 foot tower facing Howard. More details as to whether condos or rentals to come.

rendering credit: Transbay Center/Pelli Clarke architects


539 Bryant a 60,000 sq. ft. office building sold for $46M or $768 per sq. ft.


Google leased 166,000 sq. ft. at Rincon Center ll. Terms of the deal are not public as of this writing. Google now leases:

  • 386,000 square feet in Hills Plaza at 345 Spear St.
  • 250,000 square feet in One Market St.
  • 88,000 square feet in 188 Embarcadero


A Chinese developer  purchased a 50 percent interest  in a 400-foot tower to be completed at 160 Folsom. The price paid for this interest is not known. What is public info from permits filed is that construction costs is approximatively $200M and it will be 391 condos.

Amazon  leased 214,000 square feet of office space in Palo Alto terms of the deal are not known. However it is rumored that Amazon is looking for the same square footage in SF… Class A office space in Palo Alto leases for about $70 per sq. ft. per year.

The San Francisco court  of Appeal struck down a 2015 city law that allows payments of up to $50,000 in relocation assistance from landlords to tenants that have been evicted when a rental property goes off the market (Ellis Act).

220 Battery Street will be 2 townhomes with terraces about 2500 sq. ft. each.

Affirm leased 86,000 sq. ft. at 650 California and We Work leased about 61,000 sq. ft. Terms are not known as of this writing. Otto (Uber owned) truck company will lease 130,000 sq. ft. at Pier 70 (Dogpatch). Adobe leased 109,000 sq. ft. at 100 Hooper, Accenture leased 100,000 sq. ft. at in the Salesforce Tower at 415 Mission and App Dynamics leased 68,000 sq.ft. at 303 2nd.  Class A office leases average about $77 per sq. ft. per year according to CBRE. Oakland in comparaison now averages $57. Palo Alto office spaces are in the $70s and going up.

The demand for condos in SF is strong despite new construction. In other words, new construction does not satisfy demand and well priced condos whether new or resale continue to sell well. SF now has about 3 months of remaining inventory (the time it would take to sell all the inventory) which is low inventory. A balanced market has 6 months of remaining inventory. Any inventory metric under 6 months=low inventory or a Seller’s market. Note to all our residential clients. Contact our broker to list your condos and homes… New Construction sells for $1000 per sq. ft. and up and resale approaches or equals $1,000 depending on location, views, condition of unit etc. A condo in SF leases for about $58 per sq. ft. per year.

The Transbay Transit Center cost year to date is about $2.2B and it is projected to initially lose about $20M a year hence the need to maximize the 100,000 sq. ft. of retail space. SF has signed an agreement with a Retail Management Company. The Center is now a bus terminal and requires additional funding to connect to Caltrain and a High Speed Train.

The issue of soil contamination following the transfer of Navy Land to SF continues. Buyers at the Shipyard  backed out of purchase contracts for their condos citing health reasons after it was determined that the contractor the Navy used Tetra faked soil tests in the Bayview Hunters Point Area where the Shipyard project is located and which was a former Naval Base. Another testing will take place by another company shortly and we’ll find out whether the soil is contaminated or not.

211 Main St. sold for $313 million or about $750 per square foot for a 417,200 sq. ft. office building.

Bay Area traffic congestion is now officially the 4th worst in the World! The widely disseminated survey also indicates that 83 percent of voters say Bay Area elected officials need to treat traffic problems as an emergency…

44 Montgomery St., a 631,225-sq. ft. office building sold for $473M or $750 per sq. ft.

The 72,000 sq. ft. office building at 901 Battery sold for $700 per square foot or $50M.

The 417,266 sq. ft. office building at  211 Main Street office sold for $312.9 million or $750 per sq ft.

30 Van Ness sold by SF is finally closing at $70M for about  mostly 180,000 sq. ft of office space which is about $388 per sq. ft….

The 34 condos at 1650 Broadway are all sold at an average price of $1600 per sq. ft.

The garage at 550 O’Farrel will be 115 residential units and no word as to whether condo or rentals.

75 Howard now a garage but approved for 133 condos sold for $95 million or about $714,000 per approved unit.

As everyone knows Central Soma which is the area between Market, 2nd, Townsend and 6th is upzoned and approval is expected in 2018. Soma Square along with 394 Harrison St and 1335 Folsom St. will most likeley be upzoned and end up becoming a mega residential project.

DM Development 815 Tennessee in Dogwatch will soon start selling 69 condos ranging from 1/1 to 3/3 and starting at $700k. Marketing of these units is in the hands of the most capable Alan Mark and the Mark Company.

A 300-room hotel will be most likely built across from the Palms on the lot that hosts Wells Fargo. More to come.
The office building across from Soma Grand on Mission about 65,000 sq. ft. located at 1161 Mission sold for $42M or $640 per sq. ft.
300 Grant is in play at 40,000 sq. ft. of office space it included the building at 290 Sutter and 272 Sutter.


499 Jackson sold for $15M.


The 584 units rental building planned on Market including 1601 Market now housing the Civic Center Hotel across from 1 Franklin and also including the union buildings at 1601 Market and 1621 Market along with 1629-1637 Market is closer to reality and undergoing EIR.


600 residential units over retail  is  also close to reality at 725 Harrison across from Whole Foods. This is an enormous  907,000 square feet of office space, 10,000 square feet of retail, 54,000 square feet of flex space and 10,000 sq. ft. of open space along Harrison.


 719 Larkin will be 42 rental units in Tenderloin’s Little Saigon.





March 21, 2017


Here’s what happened in the Residential and Commercial San Franciso Real Estate Market since January 21:


6 stories planned on top of the building next to Sam’s Diner at 1236 Market which would extend in the back to Grove street. The existing building was the site of a gym and will become a hotel.


1100 Broadway in Oakland, a 320,000 sq. ft.  entitled site sold for a rumored price of 9-10M. More to come.

Another entitled site in Oakland  is the 650,000-square-foot office tower at 601 City Center which is not yet in play and 3338 21 St street is going through entitlements for 800,000 sq. ft. of office space. Office rents in Oakland are above the $50 per sq. ft. per year for Class A. which is higher than the $35 of only a couple years ago but it does not quite  justify new construction hence the number of rehab projects.

In SF there is a redevelopment of 351-353 9th Street which will produce  31 apartments over 3,600 square feet of Commercial.


736 Hyde may become up to 11 residential units most likely rentals.


Another Fory Niner: the 49,580-square-foot office project at 345 4th St. is part of new office building construction that are not affected by proposition M which puts a cap on new office building construction. Owner paid $7.5M in December for those of you interested in calculating potential net profits. Keep in mind the cost of materials has gone up exponentially and even Forty Niners are expensive to build.


San Francisco traffic congestion problem is enormous: SF has the worst roads in the country and one of the highest number of pedestrian and bicyclist fatalities and injuries. It is also pretty safe to assume there are dire pollution consequences to the traffic congestion. Congestion pricing would be a solution to this issue but it is never brought up by City Planners. Automated Speed Cameras would help decrease fatalities but City Planners again do not address the issue. The current incentives to reduce traffic congestion are arguably doing nothing to improve the situation consider the incentives commercial and residential developers have: The current point system gives developers points for car sharing dedicated parking spaces, bicycles for tenants, setting up shuttle services for residents, dedicated child care etc. This system is not effective in our opinion and we are surprised a world class city like SF does not even attempt to implement congestion pricing which London and Singapore have successfully implemented. It is also surprising that automated speed cameras are not implemented.

Macy’s Stonestown at 280,000 sq, ft.  sold for $40.7 million or $148.9 per square foot. Congrats to the buyer. Great price.

Salesforce Tower has such tenants as Accenture and CBRE. We’re waiting to find out if any of the major Tech company express interest in some of the 1.4M office building.

634 Second St. at 46,752 sq, ft sold for $40M or $856 per sq. ft.

222 Kearny sold the 148,797 office building at 222 Kearny for $51,8Mo or $348 per sq. ft. Great purchase indeed.

One Oak at the South Van Ness Muni Station will be right next to 1554 Market and 435 foot tall. The building will create a hub with 4000 sq. ft of retail and a 15,000 sq. ft. foot plaza. More to come.


The 800 foot Transbay Tower at 550 Howard is also on its way.


Interesting condo building at 1965 Market in the works. Apparently 96 condos on this great location over commercial.


The small 2 story  building at 570 Market next to the 7 Eleven is in play for 16M or 1000 per sq. ft. since it is zoned for up to 300 ft.


The Action Rentals building at 1526-1530  Folsom is also in play and includes the parking lot at 1560 Folsom and two parcels at 135 Kissing and 276 11th street. Price unknown so far.


The site of the gas station on Howard and 9th is attempting to become t be 124 rental units over commercial.


Another good purchase was 600 Townsend which sold for $50.5M or $609 per sq. ft.


January 21, 2017

Here’s what happened in the SF Bay Area Residential and Commercial Real Estate Market since 11/26:

Tishman sold Foundry Square lll, a 91,093-sq. ft. building which it built and leased for $350M or $1200 per sq. ft. You may love them or hate them but the end result speak for itself.

Note for example that 140 New Montgomery sold for $284 M or around $962 per square foot back in April 2016…222 2nd street is next…

Screen Shot 2017-01-21 at 4.02.40 PM

The 100,325-sq. ft.  medical office building at 19000 Homestead in Cupertino directly across Apple sold for $67 M or $667 per sq. ft.

 118-unit residential development will be built at Golden Gateway and Van Ness.No news if it is going to be condo or rentals. There is a lot of activity in that area. We discussed French American building a 320 footer mixed use on the lot it owns across its campus on Franklin with at least 300 units, most likely rentals. Then at One Oak there is another tower planned which will be 300 condos. Another 329 condos will be built at 1001 Van Ness. CPMC will open its hospital on Van Ness in 2019. As readers of this blog can attest, we never tought the Van Ness corridor would undergo such transformation. It would be great to plan trees all along Van Ness from Lombard to Market…

We hear that Family Offices of Arab Royals are eagerly looking to purchase real estate assets in the US: The Qatar Investment Authority  bought the St. Regis for $175M. This raises an important issue for owners of branded condos such as the St Regis condos. The value of the condos is closely related to the quality and brand of the management.

55 Francisco a 145,000 sq.  ft. office building  with 274 parking stalls at Francisco and Montgomery sold. for about a rumored $93M or per sq. ft. or $641 per sq. ft.

Screen Shot 2017-01-21 at 4.04.18 PM

Park Tower at Transbay (corner of Beale and Howard) is about to start construction and will be  743,000 square feet of office space.

Screen Shot 2017-01-21 at 4.09.55 PM


NerdWallet is sub-leasing part of Twitter’s space on Market (about 100,000 sq. ft). Nexdoor and Thumtack are next and we don’t know the square footage they plan to sub-lease.



100 Pine street a 402,000 sq. ft. office building  sold for $289M or $720 per sq. ft.



CIM Topped the 350 unit One Mission Bay which will be rentals.



The 900 foot Oceanwide Center Next to Golden Gate University second in height only to the Salesforce Tower broke ground. It will be hotel office and condos over retail.



Meineke Car Care Centers is looking for 30 locations in the Bay Area…which comes as no surprise since the Bay Area and SF in particular have the worst roads in the country according to TRIP.


CIM Group (full disclosure CIM is a client) paid $123M to purchase 55 Hawthorne  a 143,000 square foot Class A Building or $860 per sq. ft.



400-430 California a 247,000 sq. ft. office sold for $135M or only $547 per sq. ft.




Our colleague Redfin who has written very insightful residential real estate reports indicates in a widely disseminated article  that bidding wars for residential real estate in SF have ended except for only 3 neighborhoods: inner Richmond, Dolores Heights and Parkside.




88 Bluxome Street site of the 230,000 sq. ft. San Francisco Tennis Club sold for for $140 million or $608 per sq. ft. and will lease it to Seller for unknown period of time. New owners plan to get entitlements to develop 1M square feet of office space. We always advise clients to entitle their assets which is the best protection against eminent domain and also the best way to command high prices. Note that the Central Soma Plan has not been approved and the buyers of this asset and other similarly situated assets also face the uncertainly of office rents going down, new condo prices going down while labor and material costs go up. Not easy to be a developer…


Here’s what happened in the SF Bay Area Residential and Commercial Real Estate Market since 8/29:

Another hotel has been proposed: a 480-room hotel  at 350 Second St. which is now a parking lot. Other hotel projects are at 55 Howard, 1125 Market, 744 Harrison, 399 5th, 300 5th (on the site of the Shell gas station across from Mosso).

The Tiffany building at 360 Post sold for 135M or $1400 per sq. ft.


Everyone knows by now that office leasing did slow down in Q3. Cushman issued a report indicating this is the lowest Thrid Quarter office leasing activity since 2001. This did not prevent Amazon’s Twitch from leasing 185,000 sq. ft. at 350 Bush or We Work to lease nearly 80,000 sq. ft. at 2 Embarcadero. Incidentally, there is softening in Residential Sales as well as Retail where a number of establishments have closed shop. More to come on the Residential  slowdown below and for Retail slowdown in upcoming posts. Also, Residential Rents are down and developers stopped building rentals. The doubling of affordable housing requirements makes them stop building condos and focus on hotels: Prop C passed in June requires new projects to include 25% affordable housing. The existing Residential Condos on the Market take longer to sell as illustrated below.


According to a Redfin post looking at August Residential Sales Data, 61% of the current inventory has been sitting for more than 30 days. In other words, no one sells in 10 days any longer and properties need to be marketed and shown for at least 30 days. Rincon Hill was the slowest where the typical home sold within 48 days. The article also points out that Russian Hill prices dropped the most compared to August of last year and almost 9% drop. We have no idea what Russian Hill deserves this faith. Conversely Bernal Heights prices increased by almost the same 9% Russian Hill dropped. This is the table that our colleague Redfin distributed in its newsletter:

Place Median Sale Price Year-Over-Year Homes Sold Year-Over-Year Inventory Year-Over-Year New Listings Median Days on Market Avg Sale-to-List
Ashbury Heights $1,630,000 30.4% 15 -11.8% 4 0.0% 13 18 107.2%
Bernal Heights $1,350,000 8.7% 67 4.7% 30 15.4% 74 14 115.3%
Civic Center / Van Ness $803,763 1.7% 26 -23.5% 25 92.3% 49 35 104.0%
Crocker Amazon $908,000 9.5% 19 35.7% 11 0.0% 21 24 106.7%
Daly City $830,000 13.5% 67 8.1% 108 11.3% 70 25 107.1%
Excelsior $833,000 -0.2% 25 4.2% 14 16.7% 30 16 110.3%
Financial District $1,500,000 -16.8% 5 -37.5% 9 0.0% 12 38 99.1%
Forest Hill $2,285,000 23.5% 5 -44.4% 1 NA 5 13 109.8%
Haight Ashbury $1,269,000 -0.5% 7 40.0% 3 NA 6 20 104.3%
Hayes Valley $1,300,000 -7.3% 13 116.7% 11 22.2% 19 15 105.7%
Ingleside $853,000 -3.1% 17 112.5% 2 -50.0% 16 15 113.9%
Inner Richmond $2,065,000 30.5% 16 -60.0% 8 -27.3% 20 14 110.8%
Inner Sunset $1,355,000 -3.2% 22 -21.4% 14 75.0% 22 19 108.5%
Lower Haight $1,433,000 9.2% 15 7.1% 2 100.0% 10 27 108.0%
Merced Heights $670,000 9.8% 14 7.7% 4 -50.0% 12 26 106.7%
Miraloma Park $1,300,100 -8.3% 43 4.9% 20 122.2% 35 22 107.0%
Mission $1,185,000 -1.7% 39 -11.4% 19 -9.5% 41 24 107.4%
Mission Bay $1,220,000 3.4% 27 -10.0% 23 666.7% 39 36 99.2%
Nob Hill $1,480,000 6.6% 20 -25.9% 17 70.0% 24 32 99.2%
Noe Valley $1,650,000 -10.2% 69 1.5% 21 50.0% 66 25 105.3%
Pacific Heights $1,497,500 0.5% 66 40.4% 27 50.0% 60 22 103.2%
Parkside $1,250,000 5.3% 19 -47.2% 8 0.0% 25 15 117.1%
Portola $850,000 5.5% 9 -55.0% 6 -40.0% 10 44 103.2%
Potrero Hill $1,150,000 -18.0% 45 21.6% 14 180.0% 32 25 105.5%
Rincon Hill $1,225,000 7.5% 33 -15.4% 38 65.2% 52 48 99.4%
Russian Hill $1,285,000 -22.1% 30 11.1% 15 114.3% 28 29 100.9%
South of Market $849,500 -10.6% 68 -22.7% 78 169.0% 110 33 102.0%
South San Francisco $811,250 5.9% 44 22.2% 80 60.0% 51 18 106.0%
Sunnyside $1,060,000 -1.4% 15 -11.8% 8 300.0% 12 20 110.7%
Sunset District $1,250,000 -0.4% 138 -18.8% 54 -6.9% 136 15 115.7%
Telegraph Hill $1,500,000 30.4% 10 0.0% 4 300.0% 9 30 101.4%
Tenderloin $654,000 -18.2% 8 60.0% 5 66.7% 5 40 104.2%
Twin Peaks $1,833,500 101.5% 4 -63.6% 3 200.0% 5 18 101.1%
Visitacion Valley $760,000 4.8% 11 -8.3% 8 -27.3% 12 17 108.4%
Western Addition $1,020,000 -20.9% 16 -27.3% 11 120.0% 22 14 106.5%
San Francisco, CA $1,199,500 -0.0% 460 -0.4% 790 47.9% 427 30 106.6%

Chart courtesy of Redfin

We mentioned above and in previous posts that Commercial, Residential and Retail prices are going down. We also mentioned that Residential Rents are going down. Finally, we mentioned that developers given affordable housing requirements are moving away from building Residential Rentals or Condos. Another interesting wrinkly, with this background in mind, is that Developers are complaining about sub-contractor costs and availability. We often hear that sub-contractors profit margin gone from about 10% to 20% in the last three years which means construction costs must have gone up about 30% perhaps even more if you take into account the increase in the price of materials such as glass etc. In office leasing for example TIs are easily $100 per sq. foot. about 2x what it used to be in years past. In our opinion, both the Residential and Commercial market will continue to go down the only question is whether it is going to be a correction or a sharp drop.

We hear the 85,011 sq. ft. 400 Montgomery office building in San Francisco sold for about $50 million or about $588 per sq. ft.which if true would be a great price for the buyer considering similar assets even recently as you can read in previous posts trade close to $800 per sq. ft.



Our friends at FAIS proposed a 300 foot tower at the site they own at 98 Franklin. The project calls for Residential over School facilities (about 70,000 sq. ft.) and Retail. We find the benefits of such a project enormous for the neighborhood and have no doubt it will be approved.

We think that building over historical structures or even other structures will be very hard moving forward. Planning recommended against a tower on top of the Wells Fargo Bank at 1 Montgomery. Swig is back to the drawing board after Planning and Residents criticized its plan to build over the building it owns right next to Blu on Folsom Street. We bet that nothing will be built on top of the old Passport Agency across the street on Folsom. Our opinion is based on anecdotal evidence and a belief that it makes more business sense for a City to direct development to underutilized parcels and neighborhoods in needs of gentrification. At the same time, we think that political moratoriums restricting changes of use need to be eliminated immediately because they harm the neighborhoods affected. In other words, it is best to incentivize developers to build in areas that need gentrification rather than on top of existing structures in developed areas. It will be interesting to see if the structure planned on top of the Macy’s store will be approved: Macy’s sold its 263,640 sq. ft. building for $250M or about $950 oe sq. ft. In case some of you wonder why this is higher than office buildings in the Financial District and elsewhere the short answer is that some sub-markets like Union Square or even South Park command a premium.


The 117,000 sq. ft. office building over Retail (Blue Bottle and Treasury) at 115 Sansom sold for $83M or $709 per sq. ft.




88 Bluxome the 369,000sq. ft. site of the SFTC sold for $140M or  $379 per sq. ft.



950-974 Market will be 242 condos and 232 hotel rooms.


Here’s what happened in the SF Residential and Commercial Real Estate Market since 8/1:

Amazon’s Twitch leased 185.000 sf at 350 Bush which is not yet built. Amazon paid only $62 per sf per year and will receive TIs rumored to be $65.

123 Mission St. a 346,000-square-foot office building  sold for $255 million or about $736 per sf.

Twitter is sub-leasing close to 200,000 sf.


Macy’s is closing 100 stores and selling the 263,640 sf Union Square store. Saks is also quietly marketing the Men’s store at 220 Post…Regarding the sales price for either one, your guess is as good as ours. It will probably go for more than $1000/sf but Macy’s Union Square give its unique location may go for more…


The Central Soma Plan about 260 acres between 2nd and 6th and Market and Townsend is being up zoned and the big name developers have purchased a considerable amount of real estate despite the fact that Plan is only a draft as of now. Developers hope to get approval for upzoning of residential and commercial projects. Anything from condos to rentals to hotels etc. San Francisco is seeking over $2 billion in fees from developers for 7800 affordable housing and market rate units. All the specifics are not yet known and will most likely change but for now here’s some:

  • Residential projects would have to provide between 16 percent to 18 percent affordable housing on-site, or between 28 percent to 33 percent affordable housing off-site.
  • Taller residential projects that are 90 feet or higher than current zoning would also pay annual fees of $6.44 per square foot for condos and $2.59 per square foot for rentals. All residential projects would also pay a one-time $1.30 per square foot community facilities fee.
  • Commercial projects between 15 and 85 additional feet would pay fees of $15.55 to $35.50 per square foot.
  • Commercial projects of 90 feet and more would pay $3.75 to $24.50 per square foot, along with an additional annual fee of $.48 per square foot each year.
  • All commercial projects would have to provide a half-floor of production, distribution and repair (PDR) space, for light manufacturers and artists.

 The money will most likely also help build infrastructure such as hopefully parks, sidewalks etc.

A hotel and condos or rentals is proposed on top of the Wells Fargo Crocker Branch at One Montgomery. Prop C mandates that new residential construction of over 25 units must have either 25% affordable/market rate housing or that developers pay a fee equal to 33% of the units value and that’s why we see this type of proposal…


JLL is pitching 55 Hawthorne for about $125M and the owners are completing a new roof deck. The 143,000 sf building which is office over 300 parking spots should fetch about $850 per sf. Other buildings in play are 600 California, 655 Montgomery, 100 Pine, 150 Spear…

1075 Market Condos will be built soon on the site of the former Porn movie theater: Market Street Cinema. The majority of the 44 units will be 1 bedrooms.

Another effect of Prop C. The parking lot at 350 2nd right across the street from Kilroy’s 303 2nd will be the site of a 278,000 sf hotel over retail and public open space if the project gets approval.

 220 Post the building that houses the Sak’s Men’s store sold for $70M, at 38,400 sf the sale translates to $1,823 per sf….
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