By Jon Peterson
The private family ownership of The Sharon Building located at 55 New Montgomery Street in San Francisco has made the decision to put the 92,483 square foot office building up for sale. The potential price on the asset could come in at the low $60 million range, according to sources that track the sale of office buildings in San Francisco. At that level, the per square foot pricing could reach around $650.
The seller is conducting the sale with the CBRE office in San Francisco. This brokerage firm has declined to comment on what the possible sales price on the asset will be.
“This property has been under the current ownership since the early 1960’s. They have decided to sell for estate planning reasons,” says Mark Geisreiter, executive vice president with CBRE in its San Francisco office. He is involved in the sale along with Jon Hunt, an associate with CBRE.
The Sharon Building has a long tradition of having very strong occupancy. This is reflected in that the asset has a current occupancy of 91.7 percent. The asset now has a total of 76 tenants, which includes a number of diverse companies in finance, insurance, real estate, law, non-profit and technology.
The new owner of the property will have two options for the future with the asset. It can keep all of the current tenants and add value by brining the rents up to market once the leases roll. Average in-place rents are now at 40 percent below market with the average in-place office lease term at 1.2 years with 91 percent of the leases expiring by December 2019.
The other possibility is to let the leases run out, renovate the building and assemble a block of space of up to six contiguous full floors or about 63,500 square feet.
The types of buyers interested in the asset would likely be value-added capital or family office operations. The seller of the building is hoping to conclude the sale prior to the end of 2018.
The eight-story Sharon Building was built in 1912, and it was designed by George Kelham. Educated at Harvard and L’Ecole des Beaux Arts, Kelham came to San Francisco to supervise the rebuilding efforts at the Palace Hotel, but the architect left a deeper mark in the city. His significant work includes the Russ, Shell, Main Library and Old Federal Reserve Buildings.