The historical David Hewes Building in San Francisco’s hot tech-centric Mid-Market neighborhood could fetch nearly quadruple the amount that it went for just two years ago.
The 15-story, 91,000-square-foot building at 995 Market St. has just hit the open market. The seller is a joint venture between Seattle-based investment firm Columbia Pacific Advisors and San Francisco-based real estate company Long Market Property Partners. Commercial brokerage firm Newmark Cornish & Carey is representing the seller.[contextly_sidebar id=”R0HWEEB8UGwmRvlOgJ4TQfgcFbmouqJm”]The building is expected to trade in the range of $650 a square foot – or about $60 million, according to an industry source. The joint venture acquired the property in 2013 in the neighborhood of $180 a square foot – or more than $16 million, according to another source. In San Francisco, the venture also owns 939 Ellis St., a 116,000-square-foot office building in the Van Ness corridor.
995 Market is fully occupied with the biggest tenant being the New York-based co-working firm WeWork, which earlier this year leased about 65,000 square feet. In a marketing brochure for the building, Newmark Cornish & Carey described WeWork as one of the fastest growing companies in the world with 40 office locations in the U.S. and more than $1 billion of venture capital funding.
Other tenants at 995 Market include the Rhode Island-based pharmacy company CVS, which anchors the ground floor, and the local homeless advocacy organization Compass Family Services.
The fact that the building, which was originally built in 1908, has gone through a major renovation should appeal to a prospective buyer. “Everything has already been done,” a source said.
In its brochure, Newmark Cornish & Carey said the building has undergone a substantial recent redevelopment including significant base building upgrades, a seismic retrofit and state-of-the-art tenant finishes.
The renovation coupled “with an attractive and consistent income stream” in one of the most dynamic and sought-after submarkets in the country should make the building “a unique investment opportunity,” Newmark Cornish & Carey said.
The brokerage noted that Mid-Market – home to leading technology companies such as Twitter, Uber and Square – has a vacancy rate of 1.6 percent after experiencing “a radical transformation” over the past three years, including over $1 billion of commercial redevelopment investment.
During that span, Newmark Cornish & Carey said, Mid-Market has also seen more than 3 million square feet of leasing activity and rental rates increase by 40 percent. Currently, the average asking rate is $66.50 per square foot annually.
But rental rates are still 30 percent below the peak reached in 2000, the brokerage said, so there remains “plenty of room to continue their upward trajectory.”
Newmark Cornish & Carey’s Kyle Kovac, Daniel Cressman, Michael Taquino and Jordan Roeschlaub are listed as brokers working on the 995 Market transaction.