By Jon Peterson
One of the latest properties to hit the market in San Francisco is a rare Jackson Square building at 170 Columbus Avenue at the intersection with Pacific Avenue. The five-story, 71,961 square foot office structure was constructed in the mid ’80s and today houses a number of local businesses.
“Opportunities to acquire premium office assets in Jackson Square are very rare. Further, no new office construction is planned in the area making it the highest barrier-to-entry submarket in the City,” says Kyle Kovac, a senior managing director in the San Francisco office of Newmark Cornish & Carey. Kovac is working on the sale along with his colleagues Michael Taquino, Dan Cressman and Mandy Lee.[contextly_sidebar id=”2JOhmWIgwNbtqs8iSrn0kccgJoA2B3qa”]There is a good chance that the sales price on the property could reach the mid $600 per square foot range, according to sources that track the sale of office buildings in San Francisco. That pricing could bring the sale figure over $45 million. This level of pricing would be well below replacement costs, which are continuing to escalate as high as $1,000 per square foot in San Francisco.
The rental rate makeup of the property should give the new owner a chance to add some value to the property in the near future. There is approximately 49 percent of the rent roll expiring in the next 24 months with the current in-place rents are around 42 percent below market. One of the main tenants in the property is Revel Systems, which uses this location for its headquarters location. This is a startup company that provides restaurants and retail with an innovative point-of-sale platform. The firm first occupied 12,696 space in 2013 and has since more than doubled their space to 25,609 square feet. The tenant now covers 36 percent of the office space in the property.
There are some unique features of this property. One is that it has four levels of subterranean parking in the property, which has room for 105 vehicles. This will give employees a direct access to the main lobby. There is an opportunity to increase the amount of car parking by adding a valet system. The asset also has 3,500 square feet of ground-floor retail that could be re-positioned by the new owner to add event more value.
The property was first developed in 1985. The occupancy at this time is at 95 percent. This level of occupancy puts it right in line with the Jackson Square sub-market office vacancy of five percent.