Downtown SF office building sells for far below estimated value
A downtown San Francisco office building has reportedly sold for roughly 75% less than its previously estimated value, a bad omen for the sagging commercial real estate market.
350 California St., which was first listed for sale in 2020, sold to SKS Real Estate Partners for somewhere between $60 million and $67.5 million, according to a report by the San Francisco Business Times.
The Financial District building is mostly empty — Union Bank, which occupied about 75% of the building, has largely vacated the 22-story tower.
This wasn’t the first time the owners of 350 California tried to sell the property. In 2021, bidding for the building never surpassed $180 million and owners took it off the market, according to the Wall Street Journal. In 2019, the property was estimated at around $300 million, brokers told the publication.
Office towers in San Francisco don’t trade hands often, with this sale setting new standards for today’s market. “We’re all really on the edge of our seats to see the first office trade in San Francisco,” J.D. Lumpkin, executive managing director at real estate services firm Cushman & Wakefield, told the Journal in April.
SKS Real Estate Partners did not return an SFGATE request for comment as of publication, nor did CBRE, which represented the property. Mitsubishi UFJ Financial Group confirmed the property has been for sale since Feb. 2023, but did not provide additional comment.
San Francisco-based SKS Real Estate Partners owns numerous properties in the city and Bay Area, including 888 Brannan and 181 Fremont.
San Francisco’s office vacancy rate hit a new record high of 29.4% in the first quarter of 2023, according to a recent report from CBRE. That far surpassed the previous pre-pandemic high of 19.1% during the dot-com bust in 2003, and it’s expected to continue to rise in the coming months. Still, office rental rates haven’t budged much, which could make it harder to attract new tenants to downtown buildings.
“Vacancy will peak next winter,” David Smith, head of occupier research for Cushman & Wakefield told SFGATE in April. “… Tenants in the market are signing for less space than what they had previously. We’ll continue to see that through the rest of the year and into 2024. It’s a year of rebalancing.”
Source: SFGATE
