A Market Street office building once home to tech firm Zendesk is headed for a foreclosure auction.
The six-story building at 1019 Market Street is poised for sale later this month, the San Francisco Chronicle reported.
The building, which spans 77,000 square feet, has lost nearly 80 percent of its value. The ownership, reported by the San Francisco Business Times as a Deutsche Bank investment fund, bought the property in 2014 for $48 million, or $623 per square foot. Its value, previously appraised at $71.4 million, fell to $14.7 million in a recent appraisal, according to Morningstar Credit.
Occupancy has been abysmal, reported at just 3 percent since 2022, according to Morningstar.
The trustee, Chicago Title Company, filed a notice of mortgage default in April on behalf of the lender, JPMorgan Chase, according to public records.
Software company Zendesk exited the building in 2022 and planted its flag at 181 Fremont Street. The software company moved to Mid-Market in the first place as part of the “Twitter tax break” that the city awarded to help revive the neighborhood in 2019, before office vacancies across the Bay Area spread following the pandemic-era switch to remote work.
In the past five years, other tech companies like Uber, Block and X have left the area for other parts of town. At the same time, retailers and restaurants also closed their doors, throwing the corridor’s viability into question.
The city filed plans in 2023 to buy 1019 Market Street and convert it into a mental health center for homeless and uninsured residents. The plan hasn’t advanced, however, and the property hasn’t been sold.
Elsewhere in the area, other distressed office buildings are heading for foreclosure.
Kylli, the U.S. branch of Chinese investor Genzon, was sued for foreclosure by lender Deutsche Bank earlier this month after defaulting on a loan for the 22-story office tower at 225 Bush Street.
K-Star Asset Management, meanwhile, has been trying to avoid a foreclosure auction for 222 Kearny Street and 180 Sutter Street after Gem Realty Capital and Flynn Properties defaulted on a $47.5 million mortgage loan tied to the properties. The KKR affiliate is now looking for a buyer for the debt, though not the building itself just yet. — Chris Malone Méndez
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