By Jon Peterson
The 117,939 square foot office building located at 600 Battery Street is no on the market for sale, and the price point this asset could deliver may be in the range of $125 million, according to sources that track the sale of office buildings in San Francisco.
The seller of the property is a venture comprised of Chicago-based M & J Wilkow and the Washington, D.C.-based National Real Estate Advisors. These firms have hired CBRE Capital Markets in San Francisco to be the listing agent on the property. Those involved in the sale are Kyle Kovac and Michael Taquino, both executive Vice Presidents at the company. CBRE declined to comment when contacted for this story.
According to some estimates, there could be two types of capital sources that would be interested in buying 600 Battery. One would be managers that have capital earmarked for core plus real estate investments. The asset fits into this category since the property is now fully leased to Interpublic Group for the next two years at a rate of close to $50 per square foot. This puts the property at a much lower rate than the going market rents in the sub-market today. 600 Battery is part of the Jackson Square/North Waterfront sub-market in San Francisco. At the end of the second quarter, average rents in this sub-market were at around $71 per square foot.
600 Battery could also attract some value-add investors. This is because the property is zoned C-2 with a height limit of 84 feet. This gives the property the potential to add up to 93,000 square feet the building on a vertical basis, nearly doubling the size of the property.
The San Francisco office market is one that is characterized by more demand than there is space available for large tenant users. As stated by industry sources, there are 24 tenants in the market seeking space above 100,000 square feet for a total combined requirement of 3.2 million square feet. This compares to 1.5 million square feet of contiguous space over 100,000 square feet that is currently available on the market.