June 24th, 2008
San Francisco Office Update: Sequoia Capital Headed for 555 Mission
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.
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Menlo Park-based Sequoia Capital, one of Silicon Valley’s most successful venture capital firms, has agreed to lease the top floor of the office tower Tishman Speyer is building at 555 Mission St., a significant coup for San Francisco’s first speculative office tower built in six years.
Under the pending agreement, Sequoia would pay approximately $80 a square foot for the 34th floor of the structure, about 15,000 square feet. Neither Tishman Speyer nor Sequoia Capital returned calls seeking comment.
If completed, the deal would be the third major tenant Tishman has landed at 555 Mission St. at a time when the city’s commercial real estate market has cooled considerably. In January, the Business Times reported that DLA Piper had agreed to take 82,000 square feet in the building, nabbing floors 22 to 26. In March, the law firm Gibson Dunn & Crutcher LLP agreed to a 60,000-square-foot lease. About half of the building has now been leased, with several more deals in the works, according to brokers.
Sequoia, which is headquartered at 3000 Sand Hill Road, looked at a number of downtown San Francisco’s most desirable vacant spaces, including the 24th and 25th floors of One Maritime Plaza, which are being offered at $95 a square foot, and floors 40-42 of the Spear Street Tower of One Market Plaza, which is listed at $100 a square foot. In the end, 555 Mission prevailed not because it was cheaper but because it is an environmentally friendly building, according to brokers familiar with Sequoia’s search. Tishman Speyer has submitted the building for Leadership in Energy and Environmental Design certification from the U.S. Green Building Council.
Sequoia would be the latest in a growing list of Sand Hill Road venture capital firms establishing presences in San Francisco or moving here altogether. In 2007, investor Sandy Robertson moved his $5 billion private equity group Francisco Partnersto the Letterman Digital Arts Center in the Presidio. At 1650 Owens St. in Mission Bay, developer Alexandria Real Estate Equitieshas signed deals with four VCs, including Versant Ventures, Novo Ventures and Arch Venture Partners.
“I think it’s a reflection of the strength of the startups and entrepreneurs we’re attracting in biotech, in digital media, in social networking, in cleantech,” said Dennis Conaghan, executive director of the Center for Economic Development. “People with money want to be close to the opportunities.”
Sequoia has been an investor in various tech superstars, including Apple, Yahoo, Cisco Systems, Oracle and Google. Last year, the VC received approximately $442 million in Google shares when the search engine giant bought YouTube for $1.6 billion.
The greenish glass-curtain tower at 555 Mission St., designed by Kohn Pedersen Fox and Heller Manus Architects, is San Francisco’s first speculative office tower built since 2002, when Myers Development completed 101 Second St. Since Tishman Speyer quietly began construction on the $357 million tower in spring of 2006, a number of other developers have gambled on speculative offices. No fewer than three spec projects are going up in Mission Bay: 500 Terry Francois Blvd., 1500 Owens St. and a 175,000-square-foot addition at 185 Berry St. Beacon Capital Partners is set to start excavation this month on a 300,000-square-foot office tower at 535 Mission St.
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If there is anything I can do to help you as a Tenant Representative in the commercial real estate world, please do not hesitate to get in touch with me.
Thanks for visiting,
Tom Poser, Jones Lang LaSalle, San Francisco
www.sanfranciscotenantrep.com
