By Jon Peterson
Mountain View-based Google has agreed to acquire a building and at the same time lease office space in downtown San Francisco, according to sources familiar with the transactions. The search engine company paid $65 million or $738 per square foot to buy the 88,000 square foot 188 The Embarcadero office building. It also has agreed to lease 250,000 square feet in the Spear Tower that is part of the One Market Plaza property.
Google did not return phone calls to discuss the acquisition of the property.
The seller of 188 The Embarcadero is a joint venture between San Antonio, Tex. -based USAA Real Estate Company and New York City-based Ares Management. USAA declined to comment when contacted for this story.
Google already had a presence in San Francisco previous to this week’s transaction. The search engine company had been at Hills Plaza located two blocks away from the 188 The Embarcadero building, which served as the company’s main office in San Francisco. The property that Google purchased at 188 The Embarcadero is approximately 66 percent vacant, according to sources familiar with the property.
The space in the Spear Tower where Google signed a 250,000 square foot lease for is part of the 1.6 million square foot One Market Plaza office building. This property is owned by two New York City-based real estate investment firms. A 51 percent interest is held by The Paramount Group, while Blackstone Real Estate Partners recently acquired the remaining 49 percent interest from Morgan Stanley Real Estate in a transaction reportedly worth $600 million, or $750 per square foot.
JLL’s Chris Roeder, who works out of the firm’s San Francisco office, represented Paramount in the lease transaction. JLL, through a representative, declined to comment.
Rents for San Francisco office space are still on the rise, making the Bay Area’s city one of the nation’s most desirable investment markets. According to data supplied by the San Francisco office of Colliers International, first quarter market wide weighted rents were $61.57 per square foot. This represented a 10.5 percent increase from the previous quarter.