New York Private Investor Pays $22MM for Mixed-Use Asset on Geary Street in San Francisco

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By Jon Peterson

A New York-based private investor has paid $22 million or $1,130 per square foot to acquire the 19,327 square foot 45 Maiden Lane office and retail property located at 46-52 Geary Street in San Francisco, according to sources that are aware of the transaction.

The buyer of the property was represented by Kazuko Morgan, a vice chairman with Cushman & Wakefield, who works in the company’s San Francisco office. “This is a property with good tenants located in Union Square, which is not always easy to find, “ says Morgan.

The seller of the property was a partnership that includes three local families. They sold the property through its listing agent, Anton Qiu, a principal/executive managing director in the San Francisco office of TRI Commercial. He declined to comment when contacted for this story.

The sellers had owned the property since 2006, when they paid $8 million for the asset. At the time they bought it the asset was vacant. The sale of the property was done as an off-market transaction, and the cap rate on this deal was around 4.5 percent, based on the asset’s current net operating income.

46-52 Geary has attributes that make this a core plus kind of asset. It has very strong current income. The anchor tenant is Paul Smith, an international brand name retailor based in the United Kingdom. This location is their flagship store on the West Coast. This tenant made a significant investment into the property with a reported $2 million investment in 2009. Paul Smith occupies the ground floor of the property, and the company had renewed its lease in December 2014 for another 10 years on a triple-net basis.

There will be a chance to add some value to the asset in the future. LendUp is a technology startup company that is also in the building. Its lease is for around 4,000 square feet on the third floor of the property, which is up at the end of July and they will be moving to another unknown location where they are planning to occupy roughly 12,000 square feet. The expectation is that this floor should be able to attract rental rates close to $60 per square foot. This compares to the high $30s per square foot that LendUp is paying now.

The second floor of the property now has two tenants. One is TapFWD, a technology company and Therapydia that offers personal training and platies to its clients. The leases for these tenants will expire soon. They have rental rates that are no less than 25 percent to 30 percent below market.

There is another tenant in the property located in the basement. This is F/X Entertainment that uses the space for a club/ultra-lounge.