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

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.

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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