By Jon Peterson
San Francisco-based Prologis has acquired the 135,116 square foot Potrero Business Center industrial/office asset in San Francisco for $62.5 million, or just over $462 per square foot, according to sources familiar with the property.
The asset had been owned by an un-named institutional owned based it Switzerland. The property was marketed for sale through CBRE. Among the people involved in the sale were Darla Longo, vice chairman, and Rebecca Perlmutter, senior vice president. CBRE declined to comment when contacted for this story.
The previous owner of the property had purchased the buildings in December 2013. The cost of the acquisition was $24.6 million, according to public records.
The Potrero Center had no vacancies when the property was put up for sale in October 2018. It was leased to a total of 19 tenants that included businesses in the field of food services, technical services, education, government, distribution, engineering, construction and retail trade. The leases in the property vary from 1,960 to 24,000 square feet.
The property totals three buildings that are located at 1740, 1750 and 1760 Cesar Chavez Street. All of the buildings were developed in 1985.
There will likely be some room for Prologis to add value to the property in the future. According to estimates, the current rents in the property are around 18 percent below market, and the tenants have an average lease time remaining of 2.8 years.
The San Francisco industrial market remains tight with 1.2 percent overall vacancy and 0.9 percent for warehouse product. There has been a trend in recent years in converting existing industrial assets to either residential or a variety of office, research or life science space. As a result, the industrial base in the region has dropped to 23 million square feet, down 15 percent over the last 10 years.