SF Office Market Surges as Mattson Heads to Trial

In a town of booms and busts, it takes a lot to surprise real estate industry insiders.

However, the speed and heft of the city’s turnaround over the last two years is hurtling toward record numbers. In the residential sector, the median home price sits around $2.2 million, and rent for a one-bedroom is $4,000, both all-time highs.

Meanwhile, the AI industry has created an office leasing frenzy, almost single-handedly lifting the city’s commercial real estate sector out of its post-pandemic pit.

Tenants leased 6.4 million square feet during the first half of this year, putting the city on pace to reach 15.3 million square feet by the year’s end, a new 30-year high.

A day in court

In other news, Ken Mattson, the embattled Sonoma County real estate developer charged with running a years-long Ponzi scheme, encountered dozens of his victims in a federal courtroom in Oakland on Monday.

Many of the mostly retirement-age victims, who traveled from across the Greater Bay Area, had made plans to attend the hearing after Mattson said he’d change his plea to guilty, effectively ending the prosecution of a criminal scheme that bilked hundreds of investors out of $100 million over the course of 15 years. In lieu of taking the stand at a trial, the victims originally prepared to read out statements, detailing the harm Mattson inflicted upon them.

But a few days earlier, Mattson, decided to change his mind again, and maintain his innocence. He will now fight the nine felony counts — including wire fraud, money laundering and obstruction of justice — and put his fate in the hands of a jury. Mattson is accused of luring investors into his real estate companies, LeFever Mattson Properties Management and KS Mattson LP, under false pretenses. Instead of using investor money to buy claims to two Riverside County apartment complexes, he allegedly used it to enrich himself

However, the trial start date remains a point of contention. Federal prosecutors want to begin in November, and Mattson’s attorney, Randy Sue Pollack, pushed for summer 2027. The sides will return to Oakland on July 1, when Judge Jon Tigar will set the trial calendar.

Luxury moves

Against the backdrop of a mansion shortage and the forthcoming Anthropic and OpenAI IPOs that will create a new wave of millionaires and billionaires in the region, three luxury properties in San Francisco traded this month, as buyers and sellers weigh their timing of when to hit the market.

In a sign of the heat, a Pacific Heights mansion hit the market for the first time in nearly 60 years, listed at $25 million. The property, at 2315 Broadway, was under contract within six days. The buyer’s identity was hidden behind a Delaware-incorporated LLC, but listing agent Erin Thompson with Compass confirmed that the new property owner came from the tech world. The home sold for $22.2 million, but the buyer agreed to pay the commissions on both sides of the deal, as well as the hefty real estate transfer tax, which brought the total price of the transaction around $25 million.

Then, in Presidio Heights, two properties within five blocks of one another closed a day apart. Richard “Dick” Bradley, founder of the once popular restaurant chain Victoria Station, offloaded his five-bedroom, five-bath mansion at 3501 Jackson St., for $21 million. The buyer, according to public records, remained hidden behind an LLC. The property was previously owned by former Charles Schwab CEO David Pottruck.

Down the street, Woodrow Levin, the founder and CEO of tech software company Extend, closed on a five-bedroom, four-bathroom property at 4 Presidio Terrace for $11 million. The neighborhood has had notable San Francisco residents over the years, including the Pelosis and Feinsteins. The seller was David Brailer, CTO of the health insurance powerhouse The Cigna Group, and former health information technology czar under President George W. Bush.