By Jon Peterson
In today’s environment, even higher education is having its challenges and is rethinking where education will be taking place in the future. Golden Gate University in San Francisco is one of these institutions that is evaluating its options, and as a result, it has decided to place on the market for sale its main campus and one other building that it owns in the city. No pricing guidance was provided for the proposed sale. According to property tax documents, the buildings are valued at roughly $48 million.
The school’s main campus is a 210,000-square-foot building located at 536 Mission Street in San Francisco. The other property that is included in this sale is a 50,000-square-foot asset that is located at 40 Jessie Street, which is located next to its main campus.
The school has awarded the listing on the potential sale to the San Francisco office of Eastdil Secured, according to sources familiar with the situation. A company representative for Eastdil did not respond to a phone call seeking comment for this story.
The school sees this time as an opportunity to rethink its property holdings and configure a physical setting that meets its needs in the future. “As we emerge from the pandemic, we now have an opportunity to reimagine our Bay Area and global footprint in the post-pandemic world, including aligning our use of space with our needs,” said David Fike, president of Golden Gate University in a statement. “In thinking strategically about the future, we are considering all possible options for GGU’s real estate holdings, including marketing our buildings on Mission and Jesse Streets. If a sale makes sense, we would move to a more modern, size-appropriate campus in San Francisco. To be clear GGU is here to stay.”
The potential sale allows the school to retool for a new world and rethink its offerings in the future. “We believe this moment offers a unique opportunity to reimagine our university: how to address the changing preference of students and faculty for hybrid and remote learning; how our use of space can adapt to meet these evolving preferences and what our San Francisco and global footprint should be in a post-pandemic world,” said Fike.
The sale of the property may be a challenge in the present commercial real estate environment. Many capital sources have shied away from buying office buildings in San Francisco, especially those with any kind of vacancy. The main interest from investors has been in single-tenant or fully leased properties with strong credit tenants and long-term lease commitments. Plug-and-play features are also preferred since they seem to be leasing faster even as office space availability in San Francisco approaches 30 percent.
The assets held by Golden Gate University are zoned institutional. For any potential party interested in transforming this property, it would need to go through San Francisco’s Prop M allocation, according to sources that track the sale of office properties in the City. Prop M was a measure passed in 1986 that limits the amount of office space development in a given year to 950,000 square feet. Any project over 50,000 square feet has to go through this evaluation, and the allocations have been fully assigned for several years in the future. The likely near-term scenario for these assets is that they are leased to another educational institution.
Golden Gate University has occupied its main campus since 1964. The property at 40 Jessie Street was gifted to the school in the late 1990s.