San Francisco SoMa Building Listed for Sale

By Sharon Simonson

A private, Denver-based real estate company with business interests in the transportation and energy sectors has listed for sale a 93,000 square-foot office building in San Francisco’s bustling South of Market district.

The property, 250 Brannan St., has been owned since 2007 by The Broe Group, said Erik Hanson, a Colliers International listing agent for the property. When Broe bought the three-story, brick-and-timber building, it had been targeted for residential occupancy, Hanson said. Broe instead leased it.

The three-story building is 75 percent occupied by San Jose software company Adobe Systems Inc. and Splunk Inc., another software maker, both of which Broe signed.

Colliers has distributed more than 6,000 marketing packages to investors locally, nationally and globally, Hanson said.

Technology companies have led the Bay Area leasing market in 2010. Apple Inc., Google Inc., SalesForce.com, Zynga Game Network Inc. and Facebook Inc. all have leased or bought large tracts from Cupertino to San Francisco in the last 12 months. In the city, the district south of Market Street known as SoMa has emerged as tech tenants’ preferred locale, with good public-transit access, proximity to AT&T Park and lots of restaurants.

In the third quarter, Zynga signed for 270,000 square feet at 699 Eighth St. in the Showplace Square neighborhood of SoMa. Also in the third quarter, Salesforce.com leased 71,000 square feet at 123 Mission St. before announcing in the fourth quarter that it had acquired 14 acres in Mission Bay to build a nearly 2 million square-foot headquarters. “This new home for Salesforce.com will provide an innovative, dynamic environment for our future growth,” Salesforce.com Chairman and Chief Executive Marc Benioff said in a prepared statement about the acquisition.

Thirty-one transactions were completed South of Market from July through September, according to Colliers. They represented more than 601,000 square feet.

Other SoMa tenants include Google Inc. and Twitter Inc., which is in the market to increase its square footage by 300 percent, according to Studley Inc., a tenant advisory brokerage firm, in its third quarter report. At nearly $32 a square foot a year, SoMa office rents were the most expensive in San Francisco in the third quarter, Studley said. “Twenty percent of the total demand in the market is focused in the South of Market area, which represents less than 10 percent of the [central business district’s] supply,” Studley said in its third-quarter report.

Also for sale in SoMa is 340 Brannan, a 38,000 square-foot building acquired by San Francisco’s ATC Partners in mid-2006. An ATC executive referred questions about the listing to Michael Leggett, a senior managing director for Holliday Fenoglio Fowler LP in San Francisco. Leggett declined comment.

Vacancy fell slightly in the San Francisco office market in the third quarter to 14.9 percent, according to Colliers. That was down from 15.2 percent at mid-year. Of the 83.2 million square feet of office buildings in San Francisco, SoMa has 7 million square feet.