In the curious life cycle of a physical piece of property, the Lion Building, an iconic structure of an era past in San Francisco’s Mission District is ready for a new life. And so are its owners, it seems. The group that has owned the building since 1970s is putting on the market the nearly 150,000 square foot property and 20,000 square foot adjacent parking lot. Asking price was not disclosed, but the interest in the property has been strong, according to Mark Geiseriter, senior vice president of CBRE in San Francisco, who is leading the investment sales efforts for the owners.
Located at 2525 16th Street, the Lion Building today is comprised of just over 100,000 square feet of advanced manufacturing (production, distribution and repair, PDR) space and nearly 45,000 square feet of office space. Presently, the property, which sits on nearly an acre, is approximately three-quarters vacant. The building offers 40,000 square foot floor plates and ceiling heights between 14 and 17 feet. “It’s a phenomenal piece of real estate that features tall ceilings, big windows, interesting location on 16th Street, which is close to the primary east-west artery in the Mission District,” said Geisreiter.
The building was originally built in 1924 to house the manufacturing operations of a local syrup maker Lyons-Magnus, which continued on-site through the early 1970s. Current ownership purchased the building in 1974, converting the building to light industrial-related office, warehouse and manufacturing use, according to the offering document.
But the opportunity for this location is truly a value-add one. The new owners may be able to deliver up to 250,000 square feet of space. The building itself could be expanded by 20,000 to 30,000 feet by making penthouse or mezzanine additions. Across the street, the parking lot could bring another 75,000 square feet of mixed-use development to the property.
The parking component, which could be sold separately, could alternatively deliver around 110 residences, as well. Today it is a 19,998-square-foot parking surface lot with 60 stalls. To a new buyer, the lot could offer interim cash flow while going through entitlements.
The redevelopment opportunity in one of the city’s most constrained submarkets, along with a prominent Mission District address and proximity to Showplace Square, Mission Bay and connectivity to public transportation has attracted a fair amount interest, said Geisreiter. “There has been an interesting mix of people that have been through the building. Local developers, national, users; it’s been a full spectrum of buyers,” he said. “There’s very little on the market today. This is an opportunity that checks all of the boxes, it’s in the Mission, one of the healthiest sub-markets in San Francisco, good size and scale, plus parking lot … and the intrinsics of the real estate market are really excellent.”
The offering document states that direct vacancy rate in the Mission at 2.8 percent makes it the city’s second tightest submarket, behind only Mission Bay/China Basin. In addition, there are no blocks of creative office space over 40,000 square feet currently available in the Mission District. On the leasing side, multiple leases have been signed over the past 12 months with annual rental rates over $70 PSF Industrial Gross.
Call for offers will be made in early December, and Geisreiter is hoping the sale would close in early 2018. Along with him, other CBRE team members are Josh Peterson, first vice president, and Gary Arabian, executive vice president; they are leading the investment sales opportunity. Matt Kroger and Jefrey Henderson, both executive vice presidents, are the multifamily/residential contacts, while Brad Zampa, executive vice president, and Michael Walker, senior vice president, are leading the debt and structured finance initiative.