Goldman and Tidewater ready for reset price on SF office building

351 California Street could fetch a third of what the owners paid for it in 2019

The ongoing reset of San Francisco’s office appears to have Goldman Sachs in line for a haircut on California Street in the heart of the city’s Financial District.

The New York-based financial behemoth — which owns the 140,000-square-foot, 16-story office building at 351 California Street with Tidewater Capital — has hired JLL to peddle the property, the San Francisco Business Times reported

Goldman acquired the building through its merchant banking operations in 2019 for $108 million, or $771 per square foot.

A price has not been attached to the listing, but Goldman and Tidewater Capital are likely in for a big trim as San Francisco’s office market continues to reset in the wake of post-pandemic work-from-home trends.

Commercial centers of the city remain relatively lackluster compared to the pre-pandemic boom in terms of foot traffic. Many of the social media companies that drove rents and sale prices up have become chief adopters of work-from-home policies, cutting demand sharply. Office vacancy in the city stands at a record high 37 percent, according to CBRE.

Adding to the downbeat outlook on a sale of 351 California Street is the building’s 53 percent occupancy rate — a level that likely requires a significantly lower cost basis and a patient outlook from a prospective landlord.

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A source described by the Business Times as “familiar” with the sale said an asking price in the “upper $200 per square foot range”— less than a third of the current owners’ purchase price — is expected.

Neither Tidewater, Goldman nor JLL offered comment on the sale.

Any buyer will have some handy comparisons from three recent sales of nearby office buildings on a two-block stretch of California Street from Montgomery to Battery. Those separate deals for buildings at 255, 300 and 350 California Street ranged from $205 to $300 per square foot.

There could be some close competition on the next sale in the area, where a court-appointed receiver overseeing 600 California Street is currently considering a distress sale.

Tidewater and Goldman secured an $84 million loan from Bank of America when they bought the building in 2019, according to property records. The Business Times said it remains unclear whether Bank of America is pushing Goldman and Tidewater Capital for a distress sale of 351 California. 

Tidewater is working both sides of the current market downturn — the investor recently handed an 83,000-square-foot office building in downtown Oakland back to a lender but later raised a $200 million fund to seek opportunities in the Bay Area real estate market.

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