American Realty Puts Pioneer Building in San Francisco on the Market, Seeks Pricing of $45MM

American Realty Advisors, Pioneer Building, San Francisco, CBRE, OpenAI, BART

By Jon Peterson

Los Angeles-based American Realty Advisors has placed on market for sale the 37,141 square foot Pioneer Building office property in San Francisco located at 3180 18th Street. The company is looking for a pricing guidance on the sale around $45 million, or just over $1,200 per square foot, according to sources familiar with the sale.

The current property owner has hired the San Francisco office of CBRE to be the listing agent on the sale. Those working on marketing the property include Michael Taquino and Kyle Kovac, both senior vice presidents for CBRE.

A successful sale of the building would represent the third time that the property has traded hands in the past six years. The last sale took place in 2017 when American Realty acquired the asset from Bridgeton Holdings for $34 million, or just over $900 per square foot. Just three years earlier, in 2014, Bridgeton had purchased the asset for $17.5 million.

The Pioneer Building is the type of office property that has continued to attract capital in the San Francisco Bay Area market even during COVID-19, according to sources that track property sales. Assets leased to a single tenant with solid or strong credit are the ones that have garnered attention from investors, and in this case, the size of the asset is significant, as well. Conversely, properties with multiple tenants and some vacancy had not has as much success in attracting capital.

The proposed sale would produce an approximate cap rate of 6.25 percent, according to industry sources. This return would be based on the property’s current net operating income.

The Pioneer Building is fully leased to OpenAI, an artificial research venture that is backed by Elon Musk and Sam Altman. The lease in the building runs through the end of August 2026. The property has been renovated since 2013. The work included modernizing interiors with state-of-the art finishes, upgraded MEP and fire & light safety systems, ADA improvements, roof replacement in 2019 and landscape upgrades. Current ownership is also in the process of completing a façade restoration and major window work.

The property has good access to public transportation. It is located an eight-minute walk to the 16th Street BART station. The property also has access to a secure private parking lot with 22 spaces, which is a rare amenity for office assets in San Francisco.

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