By Jon Peterson
As activity for commercial asset sales across the Bay Area continues unabated, another owner thinks this is a good time to begin marketing an asset they’ve owned for a couple of years. Washington, D.C.-based PRP Real Estate Investment Management has placed on the market for sale the leasehold interest for 350 Rhode Island Street North office asset in San Francisco. The pricing guidance on this is $127 million, according to sources familiar with the property. There will be a separate buyer to acquire the land portion of the property, and according to sources, that will be a separate transaction from the leasehold sale.
The property owner has chosen the San Francisco office of JLL to be the listing agent on the sale. The lead person on this transaction is Adam Lasoff, a managing director. Other people involved in the marketing efforts include Rob Hielscher and Michael Leggett, both senior managing directors with the firm. JLL declined to comment when contacted for this story.
PRP has owned the property since November of 2019 when it acquired the fee simple interest in the property for $134.2 million. It had acquired the property from New York City-based Clarion Partners.
The office building up for sale totals 127,100 square feet, of which roughly 98 percent represents office and another two percent is retail. The asset currently has no vacancies, and the anchor tenant in the property is The City & County of San Francisco. Its lease as it stands today covers 78 percent of the property. This will be increased to 98 percent by the end of 2024 on a must-take basis with approximately 12 years of lease term remaining. Another tenant in the property currently is Freeman XP, an event solutions firm.
The City & County of San Francisco is making a major investment in the property. This totals over $20 million to create a state-of-the-art headquarters facility. The office building was first developed in 2002. It’s a four-story asset with access to 2.5 levels of parking below grade that is under separate ownership. The property has bicycle parking and lockers, an on-site emergency/backup generator and a Starbucks café.
The office building has solid mass public transportation access. It is located one mile from the 16th Street BART operation. Caltrain and San Francisco Muni operations are also in the vicinity of the property.
350 Rhode Island North is located within the Showplace North sub-market for office space in San Francisco. This area totals 3.1 million square feet of properties, according to data compiled by JLL through the second quarter of 2021. The total vacancy in the sub-market is 13.6 percent.