By Jon Peterson
A private buyer has acquired the 30,087 square foot office/retail property located at 244 Jackson Street in San Francisco for $33 million, or $1,100 per square foot, according to sources that track the sale of office assets in San Francisco.
The seller of the property was William B. Baner of Parkfront Investment LLC. This entity was represented in the transaction by the San Francisco office of Colliers International. The sales effort was led by a team from the Colliers office, which included Tim Maas, Tony Crossley, Frank Wheeler, Darren Kuiper and Will Cliff. Colliers declined to comment when contacted for this story.
The cap rate on this transaction was sub five percent, according to sources. This yield is based on the property’s current net operating income. Yet, the new ownership may be able to create some additional income to the property in the future, as well. The existing leases with the office tenants are now between 10 percent and 15 percent below market, according to an estimate. Once the leases begin expiring in 2019 and 2021, rents would likely be brought up to market levels.
244 Jackson has no vacancies at this time. The ground floor of the property is leased to a restaurant business, 5A5 Steakhouse. The rest of the asset’s two floors of office space above the ground floor retail component are fully leased to Primer and If Only. The leasing efforts on the property are also overseen by Colliers International, and the team of brokers leading those efforts include James Sobel and Brendon Kane.
244 Jackson is located within the Jackson Square office sub-market in San Francisco, a relatively small, but high-end neighborhood with and walkable and pedestrian friendly feel. As stated by industry sources, this region is continuing to attract technology and venture capital firms into the area. These types of tenants are a major reason why rents have moved up 10 percent to 15 percent over the past 12 months.