Harvest Properties and a Chicago money partner have acquired the 34,000 square-foot Pioneer Building in San Francisco’s Mission District with a plan to renovate and reposition the 1902 factory building.
The investors have their eye on capturing what they believe is a burgeoning business opportunity attached to the successful entrepreneurs and start-up enthusiasts moving to the neighborhood.
The Pioneer Trunk Building was converted to office use in the 1980s. It was originally built for the luggage company C.A. Malm in 1902.
“There is a group of highly influential entrepreneurs and technology executives that live or work South of Market or in the Mission, and they are part of a wave of people who love the entrepreneurial, start-up world,” said Nick Thomson, a vice president at Chicago’s Kinship Capital.
“To date, there haven’t been many office buildings with substantial amounts of space that caters to this crowd. They have had to go to SoMa and downtown,” he said.
The plan is to change that, banking on this group’s preference for a more “authentic” daily life, biking and walking to and from work and coffee, and supporting local artisans.
As part of its research, the real estate investment firm studied the private bus routes of companies such as Google Inc. and Apple Inc. to gain insight into where the tech workers live. “We found a plethora of stops in the Marina and the Mission District,” he said. Investing in the same neighborhood made sense. “It is indicative of where the movers and shakers in that [tech] world want to live.”
The re-do will be aimed at the technology companies, new media and philanthropic organizations that are crowding SoMa. The two leases signed at 680 Folsom St. by Macys.com and Riverbed Technology Inc., illustrate well what is happening there, he said.
Macys and Riverbed will substantially occupy that still-to-be-complete 522,000 square-foot renovation and expansion. Macys signed a 15-year lease; Riverbed a 10-year lease.
When complete, the makeover for 3180 18th St. will mean operable windows, exposed timber and lots of natural light, he said.
The Pioneer Building is approximately 50 percent vacant, and the new owners expect to have at least 20,000 square feet available to new tenants this year. It is three stories and wood-framed and was substantially renovated and seismically upgraded in 1986. He himself also lived in San Francisco for many years, Thomson said. “We are really, really excited about it.”
Kinship Capital manages direct real estate investments for the Searle family, which has owned and operated businesses in the Chicago area for more than 100 years. Kinship plans to pursue more than $100 million in equity investment in real estate nationwide in the next 24 months, Thomson said. Its investment horizon can extend decades. “We really look at what are the long-term trends in the city, where people will live and shop 20 years from now.”
The investors did not disclose a purchase price for their Mission District property.