By Meghan Hall
An Amazon-leased asset in San Francisco’s Dogpatch neighborhood has traded hands, highlighting continued investor demand for well-leased and well-located properties. In the deal, public records indicate that American Realty Advisors acquired an Amazon-leased asset for $35.155 million, or about $908 per square foot. The deal closed in November but more recently just recorded, and the seller is an entity affiliated with S. Hekemian Group.
Currently, the 38,520 square foot property is used as one of Amazon’s “Ultra Fresh Fast” delivery locations. The building, located at 888 Tennessee, on the site rises two stories and was originally constructed in 1953.
At one point, S. Hekemian Group planned to redevelop the property into a mixed-use project. According to the seller’s website, plans had included 110 multifamily units and 6,000 square feet of street-level retail.
“We were drawn to the neighborhood by its eclectic combination of unique retailers, restaurants, wine bars, designers, and light industrial creative manufacturers – in addition to its immediate adjacency to the waterfront, Potrero Hill, and Mission neighborhoods,” states the firm on its website. The company also estimated the property was worth about $50 million.
The building is in a more commercialized area of the Dogpatch but is not far from homes off of Pennsylvania Ave. or communities such as Avalon Dogpatch. Companies such as MBC BioLabs, Muni, JUUL and Gusto are also in the area.
San Francisco industrial market activity was fairly muted during the second half of the year, according to a report by brokerage firm JLL. The market recorded less than 40,000 square feet of positive net absorption, while vacancy remained flat at 5.1 percent. Direct asking rents also remained stable, at $20.47 per square foot.
However, while retailers in the market continue to struggle, industrial product is in high demand amongst growing high-tech businesses because of proximity to venture capital funding. Charm Industrial and Photonics, for example, completed Series A rounds in the last year. Bothhave leased 32,000 square feet in San Francisco in an effort to be close to investors–a trend that is likely to continue.