By Meghan Hall
The E.M. O’Donnell Copper Works building in San Francisco’s South Financial District has evolved from a former copper foundry into a modern creative space now occupied by Walker Warner, a residential architectural firm. The building’s modernization has paralleled that of the city’s, and now, nearly 100 years after it was first built, the Copper Works building is up for sale.
According to public documents, the property was owned by a private owner who inherited the Copper Works building in 1991. After the death of the property owner in August of this year, the property was subsequently placed up for sale. Guidance pricing on the property was not immediately available. CBRE, who is acting as an exclusive advisor on the sale, did not immediately return The Registry’s request for comment.
Located at 353 Folsom Street, the property is in the heart of San Francisco. The two-story, 6,607 square foot building was originally constructed in 1921 and was built as a concrete and steel structure. The building features high ceilings, natural wood finishes as well as some of the original historic finishes put in place when the building was designed to operate as a copper foundry. The asset also comes with 10 spaces of below-grade parking. The property is 100 percent leased to Walker Warner, who has been a tenant since 2004. According to an offering document released by CBRE, Walker Warner is likely to want to remain at the site past its lease expiration in December 2022. Should Walker Warner move, CBRE states that the property has been well-maintained and could be re-tenanted with minimal investment required.
However, the Copper Works building also poses additional options for interested investors. A buyer may purchase the asset and occupy it as an owner-user, or the new investor can choose to redevelop the property. Zoned as Rincon Hill/Downtown Residential, new development on the site could accommodate a residential tower up to 110 feet in height, or roughly 48 units and 30,000 square feet.
No matter which route the new property owner takes, the building is likely to perform well. Venture capital investment in the United States over the past four quarters totaled $116 billion, of which the Bay Area start-ups received 56 percent of these funds, and four of the top six venture capital deals from the first quarter of the year went to Bay Area companies, continuing to drive local demand for creative, updated and well-located office space. So far, there have been 12 deals over 100,000 square feet signed and the year has posted a 13 percent increase year-over-year in asking rates that have increased to $86 per square foot per year. Properties like the Copper Works building that can lease to a single tenant have the potential to create full building premiums on rent. Many of the city’s renowned office towers, from Salesforce to Park Tower to 181 Fremont are nearby, as are major technology companies such as Slack, LinkedIn and Facebook.
Additionally, Proposition M is currently in effect in San Francisco, limiting the amount of new office supply to 950,000 square feet per year in a city that is already experiencing a severe shortage of commercial office space. Currently, it would take 4.6 years to cycle through the list of projects currently awaiting allocation in the city of San Francisco.
Residential development is also doing extremely well in San Francisco. Because of the property’s central location, which is within walking distance of the Financial District, more than 4,300 residential units have been delivered in the neighborhood surrounding the Copper Works building since 2010. Currently, there are another 1,900 units under construction and an additional 2,000 units working their way through the planning and approvals processes. Current completed developments in the vicinity of the property include The Avery, which opened this year and brought 548 units to market, Lumina, which includes 650 units and Solaire, which has 409 units.