San Francisco Office Update: Sequoia Capital Headed for 555 Mission
June 24th, 2008 Filed Under Development Updates, Financial District, South of Market, Tenant Activity
Tishman Speyer has landed another big name for their soon-to-be completed building located at 555 Mission Street in San Francisco. Sequoia Capital, the well respected venture capital firm currently located on Sand Hill Road, has apparently committed to the property and plans to take the top floor. As we have covered over the past three months on this blog, that makes three major tenants (Sequoia, Gibson Dunn, DLA Piper) to choose the future LEED Certified building, and all three have mentioned sustainability as one of the top reasons for the choice.
In my opinion Sequoia is a perfect tenant for this building, as it is important they retain a high-class appeal to their offices to continue to attract big investment dollars, but it is important also to be able to relate to the technology companies they fund, most of which are located South of Market.
Major changes are underway for this small corner of the City. The financial district has to grow, and it will grow, and the path of this growth continues to be towards Yerba Buena and the Moscone Center. 535 Mission will be built, the fourth building at Foundry Square will be built, 680 Folsom will be redeveloped, and 370 Third is already in the process of signing tenants (so we hear).
Although several years away still, I am looking forward to the time when the developers will look to the neighborhood that sits between the ballpark and showplace square, along Townsend and Brannan Streets. Until it is formally decided that the City will go vertical with its zoning, it seems the next logical place to buy and build.
Enjoy the well written and well researched article below featured in the San Francisco Business Times. As is customary for this blog, I have tried to take recent tenant news and give it some context in the bigger picture of the San Francisco commercial real estate market. [More...]
San Francisco Building Update: $370M One Sansome Sale Closing in August
June 24th, 2008 Filed Under Financial District
In what is becoming a rarity of sorts lately, a downtown San Francisco high rise is set to change hands in the very near future. One Sansome, located where Sansome St., Market St., and Sutter St. come together across Market St. from the Market Center, is tied up by a Korean investment firm. The property, as detailed in the GlobeSt.com story attached below, is part of a portfolio of San Francisco properties, three of which are either publicly or privately being marketed for sale today.
There has been a dearth of skyscrapers sold recently, and it will be interesting to discover after closing what rents are being anticipated at One Sansome to justify the predicted purchase price. As we have discussed previously, rents in the financial district appear to be flattening or headed South, while Landlords that bought into the real estate market at its height last year are expecting and needing rents to increase.
The article below also addresses some greater economic indicators affecting values, most notably the weak dollar in comparison to foreign monies. I anticipate that more San Francisco properties will be sold to oversees investors over the next two years as our downturn, and the weak U.S. dollar are of benefit to those with cash reserves looking for undervalued assets here in the United States. [More...]
San Francisco Building Update: 500 Terry Francois Blvd. Trades for $149M
June 13th, 2008 Filed Under Development Updates, Mission Bay, South of Market
The ownership shuffle continues in Mission Bay as 500 Terry Francois changes hands after the completion of construction. This transaction gives an insight into the different business models development and real estate investment groups use to create a return on the dollar.
Some firms specialize in land banking and will wait for area growth patterns to shift their way before selling. Some firms specialize in early stage development consisting of getting the proper entitlements and architectural work done before selling. Some firms specialize in completing construction while marketing a property for “pre-lease” and then selling at the completion of construction. Some firms specialize in buying a built asset and taking responsibility for the lease-up of the property. Some firms only buy assets with existing tenants with a long-term hold in mind.
This property is clearly set for continued value growth over a long period, but may struggle in the very near future in my opinion. Threats of a nationwide recession, ongoing difficulties in the biotech field, and a potential softening of the San Francisco office market all lead me to believe that potential tenants may sit on the sidelines for short while to see what direction rents are headed.
In the bigger picture however, eventually 4th Street will be a shopping district starting South of King St, the current parking lot for the Giants will be developed into a likely mixed-use concept, and the rest of Mission Bay will be completed. All of these factors make 500 Terry Francois an excellent lease and hold opportunity at this time.
The following is an article pulled from Globest.com, an industry website that puts out informative, daily information for people in my industry.
