Miami-based Market Street Real Estate Partners has reportedly sold two office buildings in San Francisco for a combined price of $40 million after owning them for two years. A private investor is a reported buyer of 143 Second St. for $16.1 million and a San Diego-based fund the buyer of 580 Market St. for $24.1 million.
Market Street had purchased the 20,000-square-foot 143 Second St. about two years ago and after having spent around $9 million for the purchase and renovations the company was able to sell it on for almost double the price. Similarly, 580 Market St. was reportedly purchased in September 2013 and after renovations, the 33,000-square foot building also almost doubled the investment for Market Street in this short period. Both buildings are fully leased to a variety of tech, insurance and investment companies as tenants included Dotloop, Originate, Showpad and others.
Demand for office space in San Francisco is at an all time high, and the development pipeline in the city has recently reached nearly 10 million square feet for an allotted annual amount of roughly 875,000 square feet. According to a recent CBRE report, demand from the booming high-tech industry has dramatically reduced the amount of vacant space in the city. Of the largest office markets in the US, downtown San Francisco has the lowest vacant rate and second highest average rent at 6.6 percent and $66 per square foot, respectively.
In March of this year, Market Street Real Estate Partners has earned a four percent cap rate on its $29.45 million acquisition of the 58,000 square foot 755 Sansome Street office building acquisition. This specific location is has a value-add opportunity. “There are some tenants in the property that are as much as 30 percent to 40 percent below market,” said Tim Maas, an executive vice president with Colliers International. He was the lead broker on the sale.
Market Street Partners is a privately held real estate investment and management company. According to its Web site it owns several other properties in San Francisco. This includes 604 Mission, 989 and 944 Market and 140 Second Street.