By Jon Peterson
Paceline Investors and Rialto Capital Management has placed on the market for sale the 32,421 square foot laboratory building in San Francisco located at 1155 Bryant Street. The seller declined to state a pricing guidance on the sale at this time, however this sale will be a good litmus test for the San Francisco makret since this is a property with a number of unique features.
The current ownership has selected the San Francisco office of Newmark to be the listing agent on the sale. Those working on the transaction include Mark Geisreiter, executive managing director, Seth McKinnon, senior managing director, and Steven Golubchik, executive vice chairman. Newmark declined to comment when contacted for this story.
Paceline and Rialto Capital have been the owners of the property since October of 2020. These firms paid $18.3 million, or roughly $564 per squre foot, for the property, according to sources that track the sale of properties in San Francisco.
When this assset traded hands the last time it was an empty building. The property is now fully leased to Mission Barns, which occupies it as its corporate headquarters. This company is a food technology firm, which creates meat and related products by growing cells from animals.
This tenant had been located in the East Bay before conducting a region-wide search in the San Francisco Bay Area and picking 1155 Bryant as its new home. It signed a lease that has 9.5 years left to run before it expires. This lease is currently at market rates, although industry sources indicated that the shifting leasing environment across San Francisco over the next year or so may swing in either direction still.
The positive aspect of this property, however, is that currently there is no vacancy for lab space in San Francisco. Demand for this kind of real estate in the market is very strong, and brokers are tracking significant space requirements and inquiries for lab space in the market.
Current ownership has made some major changes to the property over the past two years. When it was acquired, the property was known deemed as a Production, Design and Repair (PDR) building. Paceline and Rialto have transformed the asset, however, into a three-story lab building seeing higher potential in the market for a biotech property than alternate uses. Together with Mission Barns, the owners have spent a total of $4.9 million to retrofit the building with state-of-the-art lab equipment, upgraded HVAC, electrical, clean rooms and a new lab services area.
1155 Bryant is part of the SOMA/Design District Laboratory cluster. The neighborhood surrounding the property has become one of the largest laboratory clusters in San Francisco outside of Mission Bay. There is nearly one million square feet of new lab developments or lab conversions either under construction or in planning.