In the first quarter of 2021, the commercial real estate market in San Francisco was characterized by increased negative absorption and relatively quiet investment sales activity. Two sales of note occurred during that time, and one of them was a billion dollar sale of The Exchange on 16th between Kilroy Realty and KKR. The other investment transaction, according to a first quarter 2021 report by brokerage firm Newmark, was the $37 million sale of a SoMa property located at 99 Rhode Island Street. The 63,780-square-foot property sold at $580 per square foot.
According to public documents, the buyer on the property was an entity associated with Conshohocken, PA-based Exeter Property Group. The seller was Oelsner Commercial Properties, a company affiliated with the Oelsner family.
The property was built in 1948, and it has three stories. It is a converted property that in the past attracted such tech enterprises as Okta, AirBnB and Jawbone. According to the building’s listing on 42 Floors, the property features onsite parking, a cafeteria and data center, showers, a kitchen, conference rooms and training rooms. Office space comprises of a combination of private offices, which are glass-fronted, and conference room space. One of the main features of the building is its roof deck, which offers a great outdoor amenity for its tenants.
The Newmark report stated that in the first quarter of 2021, San Francisco experienced a large drop in absorption of negative 2.2 million square feet. The report outlines that sublease and recaptured coworking space was the main driver behind that. Available space increased in the first quarter to 23.7 percent, according to the report. Sublease space comprises just over 44 percent of that total availability, which sits at around 9 million square feet.
Based on one estimate, the 99 Rhode Island Street transaction was likely and off-market one. Exeter is no stranger to San Francisco, and it is not surprising that the company made an investment in a unique asset in a market where it already has other investments. At this time, it is not clear what the Exeter’s business plan for the building may be.
Exeter Property Group is among the largest real estate investment managers in the world, focused on acquiring, developing and managing logistics/industrial, office, life science and multifamily properties, according to the company’s web site. The company invests in markets such as Philadelphia, Chicago, Atlanta, Inland Empire, San Francisco and Seattle. Abroad, the company has investments in Europe, Asia and South America.