Redco Development and Bridges Capital have bought a historic 12-story office building in San Francisco’s Financial District for $25.75 million.
The locally based investors bought the 85,600-square-foot Kohl Building at 400 Montgomery Street, the San Francisco Business Times reported. The sellers were Boston-based Intercontinental Real Estate and Harvest Properties, based in Oakland.
The deal works out to $301 per square foot. The building was marketed in April when market experts said it could fetch nearly $30 million, or nearly $350 per square foot, with Redco in talks this summer to pay around $26 million.
Intercontinental and Harvest bought the building in 2019 for $77.5 million, or $906 per square foot, 55 percent more than it sold for three years earlier. The building was then 91 percent leased, but its occupancy has fallen.
The landmark building, built in 1901 on Montgomery and California streets, survived the 1906 San Francisco earthquake. It was renovated in 2018.
Redco has made plays for commercial properties in San Francisco, which have plunged since a pandemic shift to remote work. Office vacancy now stands at 37.3 percent, resetting office values.
Late last year, the firm partnered with an investor group and members of the Harrington family to acquire Harrington’s Bar & Grill, a popular Irish bar in the Financial District, for an undisclosed price.
Last spring, Redco and GCI bought a 119,000-square-foot office at 300 California Street for $28 million, or $240 a square foot.
“We’re an active investor in San Francisco office,” Chris Freise, managing partner of Redco, told the Business Times. “We’re looking at new deals and writing offers, and trying to find more.”
Its plans for the historic Kohl Building include moving its lobby south toward California Street. Redco and Bridges also want to lease the fifth and ninth floors as 3,000-square-foot furnished office suites, to rent in the low $50- per-square- foot range.
Such “half-floor, high-identity suites” aren’t available in San Francisco, and fill a niche in the market, Freise said.
Redco has already signed three letters of intent for a combined 16,000 square feet in lease deals, Freise said, though he declined to identify the tenants. The firm employed a similar leasing strategy at 300 California Street by signing prospective tenants before the sale closed.
The pending deals should bring the building’s occupancy to 65 percent.
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Redco Development, founded in 1956 as a masonry firm, was relaunched in 2019 by Chris and Jason Friese, grandsons of its founder, according to its website. The firm focuses on adaptive re-use and repositioning commercial properties.
Bridges Capital, a family office founded this fall in San Francisco, is led by Brandon Boze, a director at CBRE Group and a former partner at ValueAct Capital, according to state business records.
— Dana Bartholomew