By Jon Peterson
A high-net worth real estate owner has paid $25 million or $528 per square foot to buy a small portfolio of office buildings located at 1340 to 1370 Mission Street in San Francisco totaling 47,294 square feet, according to sources familiar with the transaction.
The seller of the assets was Mercy Housing based in San Francisco. Public records indicated that this company had paid $22.75 million for the properties in May of this year. Mercy Housing is a tenant in 1360 Mission and still has a lease in the property. It declined to say how much longer it plans to be in this property.
[contextly_sidebar id=”Zuy9jaSe1fGAl38Z8t5NRyz0ojANaiwT”]The seller of the property was represented in the transaction by the San Francisco office of Newmark Cornish & Carey. The three listing agents were Michael Taquino and Kyle Kovac, both senior managing directors, and Daniel Cressman, executive managing director.
“The buyer plans to rehabilitate the buildings into desirable creative space. The properties have short-term leases, tremendous ceiling heights and close proximity to public transit. These three buildings represent true value-add investments that are few and far between in this market,” said Taquino.
There are no vacancies in the property at this time. “This property is fully occupied right now. The new owner will have a chance to add value with many of the leases in the property coming up for renewal in the near future,” said Kovac. He declined to state how far below market the current leases in the property are. The portfolio was purchased in an all-cash transaction.
The assets that were sold are in the Mid-Market section of San Francisco, which is part of the South of Market office district. This sub-market has a total vacancy rate of 3.3 percent, according to the third quarter report issued by Newmark Cornish & Carey. This represents a slight tightening since the second quarter when the vacancy was 3.5 percent. The total inventory in the sub-market is a little over 16 million square feet.
