By Jon Peterson
PG&E has officially placed on the market for sale its 1.5 million square feet of headquarter assets in downtown San Francisco. The potential price point on the sale is around $800 million, according to sources that track the sale of major office assets in San Francisco.
PG&E last year hired the CBRE office in San Francisco to be the listing agent on the sale. Among those working on the sale are executive vice presidents Mike Taquino and Kyle Kovac. CBRE declined to comment when contacted for this story.
The potential price point on the transaction would come in at approximately $525 per square foot. The projection is that the renovations cost would be an additional $400 to $500 per square foot, as stated by sources familiar with what is needed for the project in the future.
The asset will be a major re-development play for the new ownership. Those interested in the property could include a mixture of both domestic and foreign capital sources. It will likely take the new owner two years to complete all of the renovation work on the assets, giving them some time before they have to worry about securing leases in the property.
The assets up for sale are two adjacent office buildings. These are 245 Market Street, totaling over 450,000 square feet across 17 stories, and the other property is at 77 Beale Street. This second building is 34 stories, covering more than 940,000 square feet. The campus also includes over 400 covered parking spaces within the 50 Main Street parking structure and underground parking at 77 Beale.
The asset covers an entire city block over a total of 3.5 acres. The new owner will also have the ability to add more space to the campus in the future. There is development potential down the road to construct another building of around 350,000 square feet. The campus does have a strong transportation location. It is located above the Embarcadero BART/Muni station and within two blocks of the Salesforce Transit Center.
The plan for PG&E is that once it sells the San Francisco campus, it would relocate its headquarters to Oakland at some point next year. Its new headquarters would be located at 300 Lakeside Drive, according to previously published reports.