Harvest Sells 115 Sansome Ahead of Plan

harvest properties_115_sansome_San Francisco The Registry real estate

By Jon Peterson

Boston-based TA Associates Realty has acquired 115 Sansome St., an historic office building constructed in 1912 in San Francisco’s North Financial District.

The purchase price was $52 million, or $406 a square foot, according to data from CBRE Inc.

[contextly_sidebar id=”df00f89df4b9c34cde022d6476fda1e2″]The seller was Emeryville-based Harvest Properties, which bought the 128,000-square-foot property in mid-2011. The sale came well ahead of schedule, said Awais Mughal, a Harvest partner. “Our original business plan was to hold onto the property for somewhere between three to five years. But with the improvements to the market in the past couple of years we felt now might be a good time to sell,” he said.

The 14-story building, one of two original headquarters buildings for Standard Oil Co., has now been sold three times in seven years. San Francisco-based The Swig Company acquired it for $30 million in 2006, according to CBRE. In 2007 Swig brought in New York City-based Angelo Gordon & Co. as an equity partner. Harvest bought the property in 2011 for $27.5 million. These acquisition prices do not include capital improvements. Harvest acquired the property along with its equity partner, Hartford, Conn., -based health insurer Cigna.

From the beginning Harvest said it intended to position the building, which has 9,200-square-foot floor plates, as tech-creative space akin to that which tenants were finding so attractive south of Market Street. In October 2011, Harvest leased one floor to Creative Lift, a marketing company. It did not disclose lease terms. A year ago, Credit Karma leased another floor.

The current occupancy at 115 Sansome is somewhat more than 80 percent, Mughal said. That is about the same as the San Francisco market overall, according to first-quarter results produced by CBRE. Within the North Financial District, a 26.2 million-square-foot submarket, the vacancy rate was 8.6 percent at the quarter’s close, up slightly. The San Francisco office market overall was flat in the first quarter, with less than 81,000 square feet of net new occupancy and a quarter-end vacancy rate of 8.7 percent.

Neither the buyer nor seller would confirm the building’s purchase price.

TA Associates is a real estate investment manager. Much of its capital comes from pension funds. The company overall owns three million square feet in the greater San Francisco Bay Area. These assets are office and research and development properties in San Francisco and Silicon Valley including Sunnyvale and Santa Clara. The company also owns apartments and retail properties on a nationwide basis.

“We have a good presence in the San Francisco office market,” said Scott Amling, a regional director for TA Associates in its regional office in Newport Beach. “There are four buildings that we own now in the downtown area, and we are a believer in the future of the office market there.” He declined to identify the other buildings’ locations.

For 115 Sansome, he said, “We are looking at attracting technology, creative and financial services firms. We will have more open ceilings and an open kitchen for those tenants to work with. There will be a chance to add some value to the property as the existing tenants on average have rents that are below market.”

Harvest retained Jones Lang LaSalle in January to market the property for sale. Rob Hielscher and Mike Seifer, managing directors, and Vice President Aaron Herter managed the process. They all work in JLL’s San Francisco office.

Harvest buys office, research and development and retail properties in the San Francisco Bay Area. Its portfolio totals about eight million square feet.

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