NY Life and Bridgeton pay discount $22M for SF office building

New York Life Real Estate Investors and New York-based Bridgeton have purchased the office building at 410 Townsend Street for $22 million, according to a press release from brokerage CBRE. The price represents one quarter of the property’s market value when it last traded in 2019. 

Mike Taquino and Kyle Kovac of CBRE represented the buyers, who picked up the property for about $290 per square foot.

“It’s our opinion that this is the start of the recovery for the San Francisco real estate market and 410 Townsend provides us with the opportunity to acquire a best-in-class creative brick-and-beam office asset well below replacement cost and where the asset traded in 2013 and 2019,” Albert Pura, senior director of transactions for New York Life Real Estate Investors, said in a statement.

Clarion Properties bought the 76,000-square-foot four-story Mission Bay building for $85.65 million, or more than $1,100 per square foot, just five years ago. At the time, the property described in the Wall Street Journal as a “Start Up Village” — as it was once home to Yammer, Eventbrite and Zendesk, among other early-stage tech companies — was fully leased. 

By the end of last year the property was 75 percent vacant. Clarion handed the keys to lender Nationwide Life and Annuity Insurance rather than continue to pay the mortgage on the $40 million it owed on the property, even though it was not set to mature until 2029. 

NYREI, described as an investor group within New York Life on its website, was willing to take a chance that, despite the current vacancies, the property would continue to appeal to tech tenants given its proximity to the 280 Freeway, Caltrain and Muni stations. It also has onsite below-grade parking, high ceilings, open floor plates and views to Downtown San Francisco and Mission Bay, according to the release.

The deal is the first partnership of NYLREI and Bridgeton, a vertically integrated firm that has owned and operated multiple properties in San Francisco, some very close to 410 Townsend. It bought 260 Townsend, the headquarters of Swinerton Builders, in a partnership with Chilean company STAR REI in 2021.

“Given our investment history in San Francisco, we have a strong grasp on what will appeal to tenants in the market, especially along the Townsend Street corridor, and we believe this asset is primed for success,” said Akash Sharma, president of Bridgeton, in a statement.

Sharma said the city is showing strong indications of upward momentum, including a flattening in vacancy rates and notable leasing transactions. He further noted recent leasing activity in the building, which he said “has been a top performing asset.” 

“Acquiring the property without debt, at a historically attractive basis, and with move-in ready suites, 410 Townsend is well positioned to capitalize on the positive trends that are starting to occur,” he added.

This is one of the first major post-pandemic office trades in the city where the buyers come from outside the Bay Area and could indicate a new, broader interest in investing in the city compared to the last few years. Of the few commercial properties that traded last year, most were bought by San Francisco-based firms.

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