Invesco trades SF office building to Flynn Properties and Ellis Partners

A five-story office building in the heart of the South Financial District has sold at more than 40 percent off its decade-earlier price, another sign that substantial discounts are likely to continue in San Francisco’s downtown. 

The price for 631 Howard Street came to $36.4 million, or about $334 per square foot, according to public records. That was far below its $62 million price in the 2014 sale to Atlanta-based Invesco. The recent price is up from the sub-$300 per square foot paid by some of the first to jump into the post-pandemic downtown market last year, but still less than the reported $400 per square Invesco was said to have sought when the building came to market in March. 

JLL brokered both sides of the deal.

“I think we’re paying a fair price for this building; I don’t think we’re stealing it and I don’t think we overpaid,” said Greg Flynn, CEO of Flynn Properties, who bought the building in an all-equity deal in a first-time partnership with Ellis Partners. “I hope our price will look very cheap in a few years when the market has recovered.” 

Like many of last year’s buyers, Flynn and Ellis are both local companies with a long history in the city who believe San Francisco is ripe for a comeback. Flynn said he thought the city would eventually rebound and that as someone who has spent his entire life there it was time to put his money where his mouth is.

“If I believe the city is going to recover, and I want it to recover, I should be investing behind that,” he said.

Flynn said he is committed to the city but he also needs to be “a rational actor,” and may have to walk away from another of his downtown office holdings, currently in default at 222 Kearny Street in Union Square. 

Real estate is all about timing, Flynn said, and in the case of that $75-million 2019 buy, the timing couldn’t have been worse. The financial situation was made even more difficult given that one the building’s main tenants was WeWork, which rejected its 18,000-square-foot lease after it went into bankruptcy. Flynn said his company has never lost a building to a lender in 35 years and he would love to keep this one if he can get a workout. 

“It breaks my heart,” he said. “But sometimes there is no point throwing good money after bad.” 

The new acquisition at 631 Howard has 109,000 square feet fully leased to SC Johnson — the makers of Glade, Pledge, Windex, Ziploc and other household brand goods — as well as payment technology company Finix. It will provide immediate cash flow, with little capital investment, as the owners before Invesco, Divco West, gave the 1929 building a complete overhaul, Flynn said. 

Both leases expire in September 2025 and Flynn said they are in early conversations with both companies on extensions. And the landlord will survive if the tenants end up leaving.

“We’re ready for whatever the market has to throw at us and we have a very long-term investment horizon,” he said, citing the building’s historic architecture with renovated interiors and location at the dead-end of well-trafficked New Montgomery as two of its key selling points. “It’s like a billboard as a building and offers tenant signage opportunities really unrivaled in the city.” 

Flynn also owns hotel properties and bought the famous Huntington Hotel on Nob Hill in 2023, also in a partnership. Flynn said that though the Art Deco building atop Nob Hill cost $38 million, the ownership is spending $80 million to bring an icon that became “almost a symbol of decline” back to its former glory. 

Construction is underway and design details are being finalized, with an expected reopening in the latter half of 2025. Local favorites the Big 4 restaurant, named for the city’s early railroad tycoons, and The Nob Hill Spa will be spruced up, but stay true to their original looks, he said. 

“I’ve had several hundred people at this point say to me, ‘Please tell me you’re bringing back the Big 4. Don’t do anything to the Big 4,’” Flynn said. “The Big 4 is going to feel like The Big 4 that everyone loved and missed. It’s just going to be a lot nicer and cleaner.”

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