Barings looks to sell 20-story office building in SF for $80M

Guidance price marks a nearly 50% discount from a decade ago

Barings Looks to Sell 20-Story Office Tower in SF for $80M
Barings' Michael Freno with 33 New Montgomery Street (Barings, Google Maps, Getty)

Barings is looking to sell a 20-story office tower in San Francisco’s Yerba Buena for $80 million, or 46 percent less than it sold for nearly a decade ago.

The North Carolina-based investor will list the 240,000-square-foot building next month at 33 New Montgomery Street, the San Francisco Chronicle reported, citing unidentified sources.

The building with the five-story clock tower at New Montgomery and Market streets is home to such tech companies as Bitly, Shopify and Stackla. It’s 70 percent occupied.

Cornerstone Real Estate Advisors, now a Barings company, bought the office building in 2014 for nearly $148 million, about $617 per square foot.

The building, marketed by Newmark, will hit the market with a price guidance of $80 million, or $333 per square foot.

If sold at that price, it would join a series of office buildings across the city traded at steep discounts after a pandemic shift to remote work.

Higher interest rates, difficult financing and a growing number of empty offices — the vacancy rate in San Francisco just hit a record 35.9 percent — have set a new baseline for commercial properties.

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The values of many San Francisco office towers have tumbled below the values of their loans, leading to foreclosures and fire sales. The building at 33 New Montgomery was financed a decade ago with a $75 million loan, according to the Chronicle, citing public records.

Institutional investors now scramble to reduce their exposure to office properties, while local buyers pick up distressed buildings.

In September, a 13-story building once occupied by Wells Fargo Bank at 550 California Street in the Financial District sold for $40.5 million, or $114 per square foot — less than half its value nearly two decades ago.

At the same time, a 21-story office tower and home of Union Bank at 350 California Street sold for $61 million, or $205 per square foot — 76 percent less than its worth before the pandemic. 

In August, a 157,000-square-foot office building at 60 Spear Street in the Financial District sold for $41 million, or $261 per square foot, less than half its value in 2014.  

— Dana Bartholomew

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