By Jon Peterson
Los Angeles-based CIM Group has acquired the 70,000 square foot 246 1st Street office building in downtown San Francisco. The sales price was in the range of $34 million or $485 per square foot, according to sources familiar with the transaction.
CIM declined to comment when contacted for this story.
The seller of the property was a partnership with two San Francisco-based companies. These were Stockbridge Capital Group and New Castle Partners. Both of these firms did not respond when contacted for this story.
The real estate brokerage community sees this investment as a value-added investment opportunity. “The property is now 100 percent leased to Novogradac & Co. for the next two years. The rental rate for this tenant is very low. This will give the new owner a chance to add some value to the property by re-leasing the property at a higher rental rate with the existing tenant or to bring in some new tenants to the property,” said Erik Hanson, a vice president with Colliers International in its San Francisco office.
Novogradac uses this space for its corporate headquarters. The firm is a nationally certified public accounting and consulting company.
This deal represents the second purchase that CIM has made over the past several months in San Francisco. According to Colliers Research & Forecast Report for office buildings in San Francisco for the fourth quarter of 2013, CIM bought the 137,327 square foot 703 Market Street office building in December of last year. The purchase price was $48.3 million or $352 per square foot. The seller was the Issackson Family.
CIM has ownership of an office and hotel portfolio in the San Francisco Bay Area totaling around 2.8 million square feet. These assets include 330 Townsend, Central Tower, 260 Townsend and 211 Main Street. The investor is known in the industry as a value-add real estate company. The firm has a regional office in Oakland located at One Kaiser Plaza, according to its Web site.
246 1st Street is located in the South Financial District submarket in San Francisco. This area had a vacancy rate of 7.5 percent for the fourth quarter of last year, according to the Colliers report. The vacancy has been 7.3 percent for the third quarter. This region has a total of 97 buildings amounting to 24.2 million square feet.