Clarion surrenders SF office building “startup central” to lender

Clarion Partners has surrendered a 76,500-square-foot office building in San Francisco’s South of Market to its lender.

The New York-based investor tossed the keys to Nationwide Life and Annuity Insurance for the four-story building at 410 Townsend Street, the San Francisco Business Times reported.

Clarion gave the building to Ohio-based Nationwide to avoid foreclosure, according to public records. The firm took out a $38.6 million loan from Nationwide when it bought the offices in 2019.

That loan won’t come due until July 2029.

But the building, fully leased when Clarion bought it, is now 75 percent vacant, according to marketing materials from Transwestern.

Clarion owed Nationwide $39.44 million on the property as of Dec. 7, according to the Business Times. Nationwide is effectively acquiring the building, built in 1912 and revamped in 1999, for the value of the loan, or $518 per square foot.

The industrial-looking gray building was once a bustling home for early-stage tech companies that set up shop in SoMa in the early 2010s.

Among its tenants were game developer Playdom, acquired by Disney in 2010; social networking platform Yammer, acquired by Microsoft in 2012; online ticket platform Eventbrite; and customer services company Zendesk.

From 2010 to 2019, tech publication TechCrunch, which chronicled many of the same companies, also occupied an office in the building, which it called “startup central,” according to the Business Times.

“We’ve got a competition with Yammer to see who will outlast each other in this building and get the other’s space,” Kevin Hartz, then-CEO of Eventbrite, told the Wall Street Journal in August of 2010.

The frenzy of leasing activity at 410 Townsend “reflects Silicon Valley’s broader tech recovery,” the Journal wrote that summer, noting the building was now 100 percent occupied, up from 40 percent occupancy in 2008.

Its surrender by Clarion to its lender is just the latest in a slew of office property returns in San Francisco and across the Bay Area, where office values have plummeted after a pandemic shift to remote work. At the same time, mortgage rates have soared, making refinancing difficult for building owners.

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