By Jon Peterson
New York City-based Nuveen Real Estate and Oakland-based Harvest Properties have placed on the market for sale the 86,000 square foot office building located at 400 Montgomery Street in San Francisco. The sale of this property could reach a sales price of $75 million, or roughly $872 per square foot, as stated by sources familiar with the property.
Nuveen did not respond to an email seeking comment for this story. The real estate investment firm has hired the San Francisco office of JLL to market the property for sale. Among those involved on the JLL team include Rob Hielscher, Michel Seifer and Erik Hanson. JLL declined to comment on the sale.
Nuveen, formerly known as TH Real Estate, has owned 400 Montgomery since October of 2016. The investor had acquired the property for $49.8 million, as stated in public records. It had invested over $12 million into the property since then. The capital was used for a renovation and tenant improvements. The work included an upgrade that converted approximately 55 percent of the space to creative office. The rest of the property is made up of a mixture of traditional office space and either retail or storage.
The property as it stands now is considered to be a core plus asset, according to sources who are tracking the sale of the property. The buyer interest in the property will come from a mixture of both domestic and foreign institutional capital.
The new owner of the building will have the opportunity to add some value to the asset in the near term. Rents in the property are below market, according to some estimates, and there will be three full floors in the property that will come up for renewal in 2020, which could lead to higher rents in the property.
400 Montgomery is located in the North Financial District of San Francisco. The current vacancy for office buildings in this sub market in the city is in the range of 5 percent, as stated by sources that track occupancy for office buildings in San Francisco.