By Jon Peterson
New York City-based Nuveen Real Estate will be coming out in the market for sale with the 379,330 square foot 55 Second Street office building in San Francisco. The potential sales price on this property would be $425 million, or around $1,100 per square foot, according to sources that are familiar with the sale of asset.
Company representatives of Nuveen did no respond in time for a comment for this story. The real estate investment firm has hired the San Francisco office of Eastdil Secured to be the listing agent on the sale.
Nuveen has been the owner of this property since May of 2014. It paid $274 million, or roughly $722 per square foot, for the office asset at that time, as stated in public records. The expectation is that the property will attract a great deal of interest from major institutional capital sources. A property with a price tag as high as 55 Second Street doesn’t happen a great deal in San Francisco, which is a market in which many large investors are looking for long-term deals.
The lead tenant in 55 Second Street is KPMG. The auditor firm has a lease covering 124,221 square feet, according to industry sources. Some of the other major tenants in the property include Intercom and Buchalter. The office building was first developed in 2002.
The Bay Area investment market closed the fourth quarter of 2018 with over $7.2 billion in total sales, according to a recent Bay Area fourth quarter of 2018 Marketbeat report by Cushman & Wakefield. This figure was well above the $5.9 billion three-year quarterly average with total sales in 2018 reaching $21.6 billion across 406 properties. The average cap rate shifted down 150 basis points year-over-year to 4.5 percent, according to the same report.
Record low vacancies across all property types will continue to elevate pricing, Cushman & Wakefield reports, which continues to be driven by the region’s robust economy. The unemployment rate has dropped to 2.6 percent at the end of 2018, with continued strong job growth momentum. Throughout the region, employers added 93,200 non-farm jobs from the end of 2017 and 890,000 jobs since the recovery began in 2009.