Posted on 04/27/2023 2:36:54 PM PDT by rxsid
Fire Sale: $300 Million San Francisco Office Tower, Mostly Empty. Open to Offers.
350 California Street was worth $300 million four years ago. It might sell for 80% less now, brokers say, in a market where office vacancy rates have soared.
Before the pandemic, San Francisco’s California Street was home to some of the world’s most valuable commercial real estate. The corridor runs through the heart of the city’s financial district and is lined with offices for banks and other companies that help fuel the global tech economy.
One building, a 22-story glass and stone tower at 350 California Street, was worth around $300 million in 2019, according to office broker estimates.
That building now is for sale, with bids due soon. They are expected to come in at about $60 million, commercial real-estate brokers say. That’s an 80% decline in value in just four years.
This is how dire things have become in San Francisco, an extreme form of a challenge nationwide. Nearly every large U.S. city is struggling, to some degree, with reduced office-worker turnout since the pandemic spurred remote work. No market was hit harder than San Francisco, for reasons including its high costs, reliance on a tech industry quick to embrace hybrid work, and quality-of-life issues such as crime and homelessness.
Many of the city’s most prominent corporate tenants, from Salesforce Inc. to Facebook parent Meta Platforms Inc., are flooding the office market with space for sublet rather than waiting for their leases to expire. The lack of office workers is rippling throughout the financial district, leading restaurants, retailers and other small businesses to lay off employees or close.
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(Excerpt) Read more at wsj.com ...
“The stat released was 6% vacancy which I think is total BS.”
A lot of space is under long-term leases.
That would explain it. So the retailer has left but is still required to pay the lease?
They will take all the commercial office buildings and turn them into housing.
Easy to say, hard to do. This particular building is even less suitable to convert than many newer buildings. It has a side core (blocking the view), and a 45 foot leasable depth. No good ways to cut that up into apartment units, and the side core further complicates getting a corridor to any units that could be shoehorned in. There's no obvious re-use for most of these downtown office buildings.
going forward
will the rent cover the property tax?
..............
reality
this building is not worth anything unless you have friends
on the zoning board and the tax board
A microcosm of the United States. "What happens in Kalifornia....."
San FranSicko and New York City are doomed.
Others will follow but those two will be hit first and they will collapse. They’re not only dirty, crime-ridden, chitholes but they’re really expensive too. Who on earth would live in that if they had any choice at all?
Its commercial real estate now but residential real estate will follow. First its work from home. Then its move your home to somewhere decent.
retail real estate is on fire. It’s a very tight market in that sector across the nation. The only possible exception would be blue, crime ridden cities.
And that means requests for property tax re-assessments across the board... big decline in revenues for the county tax collector from office tower owners.
Ummm... doesn’t the city have safety engineers?
San Francisco Los Angeles New York Chicago St Louis ..... the Titanic has sailed.
Can I pay in Fentanyl?
You're exactly $1 too high.
Warehouses and distribution centers are doing well.
I thought that urban office real estate prices/rents would collapse after the first terrorist nuke was exploded in a major city. Looks like that’s already happened without the nuke.
big time. I’m in the business (CRE) and I’ve never seen both retail and industrial as tight and active as it is now. Smaller warehouse is going for office rates which has been quite frustrating for brokers and users alike.
Imagine shopping there. One of the first things you'd have to do is go find an employee (with a key) to walk around the store with you to open whatever cases you might want to get something from, or even browse.You don't need a cart (the homeless have them all anyway) they take the item(s) you want up to the register.
That shit started with spray paint, then razor blades. Today I was in Home depot, their dimmer light switches were in wire cages under lock and key.
How many homeless would fit in that building? The city should buy it for $10 and fill it up. Revolving door only goes in.
Just curious - where is the market like that?
I've been casually watching, and I see empty office buildings and empty mall stores everywhere I look (I've done no national research).
I thought occupancy was down long before before COVID.
Are you bidding on the SF office building?
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