Can fully leased San Francisco office building reap a premium price?

Invesco Real Estate has listed a five-story office building in San Francisco’s South of Market that could fetch around $44 million.

The Dallas-based real estate investment trust has put the 108,800-square-foot building up for sale at 631 Howard Street, the San Francisco Business Times reported, citing a brochure.

The asking price for the Art Deco building, constructed in 1929, was not disclosed.

But two unidentified sources told the Business Times that the unit of Atlanta-based Invesco seeks more than $400 per square foot — or $43.5 million.

That would be a major loss for Invesco, which bought the building in 2014 for $62 million, or $570 per square foot.

The building is 100-percent leased to cleaning supplies maker SC Johnson and fintech Finix, whose leases are set to expire in fall of next year, according to the brochure.

Brokers Rob Hielscher, Erik Hanson and Adam Lasoff of JLL hold the listing for Invesco.

Even at a discounted price, $400 per square foot is higher than recent office building trades. The question is whether a fully leased property justifies the higher price, given that the leases expire next year, according to the Business Times.

For comparison, last spring Palo Alto-based Peninsula Land & Capital bought a 13-story, 355,000-square-foot office tower at 550 California Street for just over $40 million, or $120 per square foot., a 60 percent discount off its former trading price. ASB Real Estate Investments has now listed a 187,000-square-foot office building at 795 Folsom Street for $52 million, or $275 per square foot, about half what it paid in 2013.

In 2019, Rockpoint bought an office building at 255 California Street for $860 per square foot. It’s now marketing the building as part of a lender-assisted sale in the high $200s per square foot range, according to the Business Times.

— Dana Bartholomew

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