Ellis Partners and Baupost buy SF office building at 27% discount

Have values for San Francisco office buildings finally hit bottom? One SoMa complex has fetched 27 percent less than its asking price.

Three San Francisco office buildings re-listed at fire sale prices are now in escrow, including a 13-story office building at 180 Howard Street, the San Francisco Business Times reported, citing unidentified sources. 

San Francisco-based Ellis Partners and Boston-based Baupost Group have bought the 250,000-square-foot building in South of Market. The seller was the State Bar of California. 

The price is expected to be $62 million, or $250 per square foot. The building was shopped a year ago, but didn’t sell. It was re-listed early this year for $85 million, or $400 per square foot.

Two other San Francisco office towers listed since the pandemic but failed to find buyers willing to pay their asking price have found takers — at much lower prices.

An office tower at 350 California Street once occupied by Union Bank is under contract for 75 percent below what Mitsubishi UFJ Financial Group hoped to fetch in 2020. San Francisco-based SKS Real Estate Partners paid up to $67.5 million.

An office building at 550 California Street is expected to sell for less than half what owner Wells Fargo paid for it nearly two decades ago. The buyer was not disclosed.

All three deals are pending and have yet to close.

The advancing negotiations suggest that owners of single-tenant buildings struggling with vacancies may have come to terms with weakened demand in San Francisco — and are willing to take substantial losses. 

Other buildings in the market that could sell at steep discounts include the 157,400-square-foot tower at 60 Spear Street and the 138,000-square-foot 123 Townsend Street, according to the Business Times.

Defaults are rising as higher interest rates make it difficult to refinance buildings. Nearly one in three offices remain empty. And nearly $2 billion in loans are scheduled to come due in San Francisco this year, followed by nearly another $2 billion next year. 

— Dana Bartholomew

Read more

San Francisco

State Bar to sell 250K sf HQ building in San Francisco

San Francisco

SKS buys 350 California Street in San Francisco, paying $60M to $68M

San Francisco

Wells Fargo likely to sell 550 California Street at deep discount