By Jon Peterson
New York City-based Bridgeton Holdings has paid $62 million to acquire the office building in San Francisco located at 995 Market Street. The price per square foot for the 91,308 square foot property comes in at $681.[contextly_sidebar id=”sCEPpFtOqiNIrfA0cQy2blcIUvIVOlVH”]“We are extremely pleased to have acquired this high quality asset in downtown San Francisco’s Mid-Market District. 995 Market represents our third major San Francisco acquisition, and we look forward to growing our portfolio in this vibrant city,” says Atit Jariwala, chief executive officer for Bridgeton Holdings in a prepared statement.
The investor is now planning to open a new regional office in San Francisco this spring; the exact location hasn’t been established yet. This office will focus on the sourcing and executing investment opportunities on the West Coast. Akash Sharma, a managing director with the company, will head up the office.
The seller of 995 Market was Long Market Property Partners and Columbia Pacific Advisors. The sale of the asset was done with the assistance of NGKF Capital Markets, part of Newmark Cornish & Carey.
“The sale attracted both domestic and international capital sources looking for a stabilized asset to own in San Francisco,” says Kyle Kovac, senior managing director for Newmark Cornish & Carey in its San Francisco office. He marketed the property for sale along with Daniel Cressman, executive managing director, and Michael Taquino, senior managing director.
“From day one we believed that with the right capital plan and vision, 995 Market had the potential to be one of the premier office assets in its neighborhood,” said Justin Shapiro, principal of Long Market Property Partners in a statement.
The property is now 100 percent occupied. The main tenant in the property is WeWork, which signed a 70,000 square foot lease in 2014 that runs for 12 years. Another major tenant is CVS Healthcare. According to the offering document for the property, average rents in the property are $15 below current market rents, and around 12,000 square feet of the space is significantly below market rates.
995 Market is located with the Mid-Market sub-market in San Francisco. This part of the city has seen a strong amount of leasing activity over past few years. During the last 36 months, over three million square feet of leases have been completed in the sub-market and rental rates have increased by 40 percent. The rental rate growth is not over. Rental rates in Mid-Market are still 30 percent below the peak levels reached in 2000, leaving room for additional growth.
The sub-market has also seen a great deal of re-development capital come into the area. “995 Market is a prime example of the radical transformation that has taken place in the Mid-Market neighborhood over the past few years. Since 2012, more than $1 billion of commercial redevelopment has been invested in the area, creating the most dynamic sub-market in San Francisco,” said Kovac.
Bridgeton Holdings now owns three assets in San Francisco. The other two are 3180 18th Street and 300 Third Street.