By Jon Peterson
There is strong value-add/redevelopment opportunity coming to the market in San Francisco with the planned sale of the 333 Valencia Street. The property has two main components with 51,299 square feet of office space and 11,000 square feet of retail space, according to the property’s offering documents.
The San Francisco office of Newmark Cornish & Carey is the listing agent for an entity associated with the Prado Group. Michael Taquino, a senior managing director for Cornish, declined to comment when contacted for this story.
The entire asset is built over four stories. On the first floor is where the retail space is located, which today carries around 9,400 square feet of vacant space. A portion of the retail space includes 100 feet of frontage on Valencia Street. The expectation is that the empty retail area would be leased to a single tenant.
The new owner of the property will have a chance to add some real value to the office part of the property. The property is now 40 percent occupied. The remaining leases on the third and fourth floors are expiring at the end of September. The majority of in-place leases on the second floor will expire by the end of January 2017, enabling the new ownership to lease up the building to new tenants at market rates in the near term.
Rental rates for office space overall in San Francisco still have a way to go before they reach the previous highs, according to the property’s offering document. It stated that rental rates are still 30 percent below the peak levels achieves in 2000, leaving room to continue their upward trajectory.
The new owner of the property could also look at a re-development for 333 Valencia. The opportunity exists for the new owner to convert the site into a residential building, which is permissible for this building under the Zoning Code. The site is located within the Mission District, which has rental rates in adjacent projects of $6 per square foot and newly constructed condos selling in excess of $1,300 per square foot city-wide.
The property also has strong public transportation access. It stands one and ½ blocks from the 16th Street Mission BART station. The property also has a 4,000 square foot dedicated parking lot with 16 spaces on-site.