Financial district office sales push market toward record year
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- Cory Weinberg
- Reporter- San Francisco Business Times
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It's not just technology companies driving the accelerating San Francisco office market. Two financial district office buildings that cater more to law firms, insurance companies and other traditional businesses are changing hands at 275 Battery St. and 235 Pine St.
The Rockpoint Group is close to a deal to buy 275 Battery, home to law firms such as Squire Sanders and Gordon & Rees, sources who spoke on the condition of anonymity told the Business Times. CBRE Investors also just closed a deal to buy 235 Pine, home to the soon-to-be-vacating GSA Bankruptcy Court, the buyer confirmed.
The Registry reported that Rockpoint will buy the 472,200-square-foot Battery Street tower from TIAA-CREF for $307 million, though the deal hasn't closed. Industry sources told the Business Times that the 150,100-square-foot Pine Street building closed for about $89 million.
The purchases are the most recent large office sales in 2014, which is expected to be the second-biggest year for office purchases in the city's history, after 2007. Nearly $5 billion worth of sales have already closed, according to CBRE, with about $6.7 billion expected in total this year.
"It demonstrates the confidence in the San Francisco office market," said Colin Yasukochi, CBRE's director of research and analysis. "With the cost of developing new buildings continuing to rise, existing buildings are still selling for below replacement costs. That has increased substantially along with land values and cost of construction."
Phil Hench, principal at CBRE Global Investors, said the company saw the Pine Street building as a valuable asset not only because of its proximity to BART, but also because the bankruptcy court will soon give up its more than 50,000 square feet on the top six floors.
Cory covers real estate and economic development.
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