TMG Partners Buys Offices in Financial District

TMG Partners is the new owner of a Class A office building in San Francisco’s Financial District.

The San Francisco-based developer partnered with Bridges Capital to acquire 149 New Montgomery Street, according to a news release.

TMG secured the mortgage loan from U.S. Bank as trustee last month; the company has now bought the property through a deed in lieu of foreclosure after former owner Monahan Pacific defaulted on its mortgage. The final sale price was not disclosed.

The 149 New Montgomery building spans 80,000 square feet across six stories. It was originally built in 1907 at four stories with the fifth and sixth floors added in the 1930s. The structure is home to tech companies like Scality and SuperAnnotate with ground-floor retail at the street level, including restaurant Café Madeleine.

San Francisco’s South Financial District is predicted to be “in high demand from tech, [artificial intelligence] and professional services firms” due to its proximity to Market Street, Salesforce Transit Center and the Moscone Center, Ben Kochalski, president and CIO at TMG Partners, said in a statement. TMG is planning renovations that would “enhance the creative office elements of this brick and timber building while preserving its architectural charm.”

The New Montgomery corridor has seen some buildings trade hands in recent years, whether through foreclosure sales or outright acquisitions.

In October, Ridge Capital Investors acquired a 20-story office tower at 33 New Montgomery Street for about $75 million, or half of what it sold for a decade prior. In November 2023, lender CrossHarbor Capital Partners nabbed the 100,200-square-foot building at 55 New Montgomery Street in a foreclosure sale for $15 million after Swift Real Estate Partners defaulted on a $71.4 million loan.

Office sales in San Francisco have seen better days. In the past two years, two-thirds of office properties in the city have sold for less than their previous sale prices, according to Yardi Research. San Francisco was second in the country only to Houston. An average of 42 percent of offices sell for less than their previous prices nationally.

As of the second quarter, San Francisco holds the crown for the highest office vacancy rate in the country at about 35 percent, per Cushman & Wakefield’s second-quarter report.