SF office mid-rise appraises at $275 psf, 40% off its 2014 value

A new appraisal of 149 New Montgomery Street finds that the mid-rise office building near the Moscone Center is now worth just $20.7 million — nearly a 40 percent drop from its appraised value in 2014 and about the same as a $21 million loan on the property. 

With so few sales Downtown last year, the new value of about $275 per square foot “can serve as a comp for Class B buildings” in the market, according to a report on the property from credit rating firm Morningstar. 

At the end of last year, 115 Sansome Street sold in a short sale for about $300 per square foot, while 350 California Street went for closer to $200 per square foot in a partnership between Swig and SKS last spring. 60 Spear Street traded last year for about $260 per square foot, though its new owner Presidio Bay Ventures plans to spend millions more to turn it into the city’s first “office resort.”

149 New Montgomery LLC has owned the six-story, 77,000-square-foot property for decades, according to public records. The LLC is a subsidiary of Monahan Parker, a Marin-based real estate investment company. It also developed the 16-story condo building next door at 199 New Montgomery. 

The company did not reply to a request for comment. According to its website, 149 New Montgomery was damaged by the 1989 Loma Prieta earthquake, purchased vacant and “restored with a full seismic upgrade and new tenant finishes.” 

In 2013, the LLC took out a $21 million interest-only loan with Natixis Real Estate Capital, a subsidiary of French bank Groupe BPCE, according to loan documents. That loan was then packaged with others into a commercial mortgage backed security pool in 2014. At the time, the property was worth more than $30 million, or about $400 per square foot.

The loan matured last year and has sat in special servicing since June, according to Morningstar’s David Putro. Limited financial reporting has been revealed since then, but occupancy had fallen to 71 percent as of the most recent update. 

Cushman & Wakefield is advertising three openings in the building on its website, totaling about 18,000 square feet. The largest is 11,195 square feet on the second floor, with an asking rental price of $60 to $64 per square foot. Local coworking company Werqwise is the building’s biggest tenant, taking up four floors, with a lease that runs until 2028, according to CompStak.

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