Bayhill Ventures Buys Distressed Mid-Market SF Offices

Another distressed office building in downtown San Francisco sold at a deep discount from its previous price.

Bayhill Ventures spent $7.6 million, or roughly $100 per square foot, to purchase 1128 Market Street out of foreclosure, the San Francisco Chronicle reported. The seller, East West Bank, took ownership of the distressed building in 2023 and offloaded the property the same week it purchased a Pasadena office building for about $98 million.

The $7.6 million price tag is 85 percent less than the nearly $50 million that former owners Canyon Catalyst Fund and Rubicon Point Partners paid to acquire the building in 2018.

Canyon Catalyst and Rubicon Point bought the building using a $42 million loan from East West Bank. The financial institution sued the investors, accusing them of falling behind on payments. Canyon Catalyst and Rubicon Point surrendered the property to East West Bank in late 2023.

Bayhill plans to reopen the vacant 76,500-square-foot building to office tenants, betting on its central location on the Market Street corridor.

“If you have a quality building near transit, tenants of all different flavors will consider your building,” Bayhill founder Paul Paradis told the Chronicle. The Mid-Market neighborhood has attracted tech tenants in the past like Uber, Zendesk, Square and Twitter.

The bargain-basement price ranks among the lowest in the area since the pandemic.

Another Mid-Market office building, at 995 Market Street, sold in 2024 for $6.5 million, or $72 per square foot, marking a nearly 90 percent drop from the property’s 2016 value. That sale also followed the former owner’s default on a large loan.

— Chris Malone Méndez