Wells Fargo Bank has found a mystery buyer for its 13-story office building in San Francisco’s Financial District, and appears poised to take a $60 million bath on the sale.
The San Francisco-based bank has chosen a buyer for its 355,000-square-foot building at 550 California Street, expected to sell for between $42.6 million and $46 million, the San Francisco Business Times reported.
The pending deal works out to between $120 and $130 per square foot. Wells Fargo bought the building in 2005 for $108 million, or $304 per square foot.
The identity of the prospective buyer for the 63-year-old tower, chosen late last month, is not known, according to the Business Times.
Both Wells Fargo and brokerage Eastdil Secured, which reactivated the listing after the bank pulled it from the market last year after lackluster bids, declined to comment.
Last June, the bank tapped JLL to list the building for $160 million, but got no takers because of plunging office values. Bids reportedly came back at $110 per square foot, or less than $40 million.
Wells Fargo is vacating the building, built in 1960, as employees shift to a hybrid remote work model. Last year, it announced it would cut costs by whittling real estate holdings by 7 percent.
Last June, the bank renewed its lease for another decade in a 622,300-square-foot office building at 333 Market Street. The 33-story tower was listed last fall for an undisclosed price.
The bank has hung on to its headquarters at 420 Montgomery Street, around the corner from the building being sold in what could be a $60 million loss at 550 California.
“We’re at a point in the market where price discovery is still evolving. Vacant buildings certainly have the lowest value since there’s no income,” Colin Yasukochi of CBRE’s Tech Insights Center told the Financial Times. “We’re also at a point where financing is very difficult.”
One out of three offices in San Francisco — or 26 million square feet of space — sits vacant. While rents have not dropped as much as in previous downturns, that could change as the number of building sales at low price points increase this year, Yasukochi said.
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