San Francisco’s Iconic Lion Building Sells for $67.25MM

By Vladimir Bosanac

The Lion Building, an iconic structure of an era past in San Francisco’s Mission District has new owners. A venture between Angus McCarthy and the Crankstart Foundation (founded by Sequoia venture capitalist Michael Moritz) paid $67,250,000, or just over $448 per square foot, for the 150,000 square-foot structure, according to public documents. Moritz’s wife, Harriet Heyman, who is also a trustee of the Maximus Trust, is involved with that entity in the transaction in form of a lender. Heyman and Maximus are providing a loan of nearly $61 million to the joint venture.

The joint venture is 30-percent owned by McCarthy and 70-percent owned by Moritz’s Crakstart.

The seller was an entity associated with Lion Enterprises, which owned the building since the 1970s. It was sold through a team led by Mark Geiseriter, senior vice president of CBRE in San Francisco.

Located at 2525 16th Street, the Lion Building today is comprised of just over 100,000 square feet of advanced manufacturing (production, distribution and repair, PDR) space and nearly 45,000 square feet of office space. Presently, the property, which sits on nearly an acre, is approximately three-quarters vacant. The building offers 40,000 square foot floor plates and ceiling heights between 14 and 17 feet. “It’s a phenomenal piece of real estate that features tall ceilings, big windows, interesting location on 16th Street, which is close to the primary east-west artery in the Mission District,” said Geisreiter in an interview with The Registry last November while the property was on the market.

The building was originally built in 1924 to house the manufacturing operations of a local syrup maker Lyons-Magnus, which continued on-site through the early 1970s. The former ownership purchased the building in 1974, converting the building to light industrial-related office, warehouse and manufacturing use, according to the offering document.

But the opportunity for this location is truly a value-add one. The new owners may be able to deliver up to 250,000 square feet of space. The building itself could be expanded by 20,000 to 30,000 feet by making penthouse or mezzanine additions.

Across the street, the parking lot could bring another 75,000 square feet of mixed-use development to the property. The parking component could alternatively deliver around 110 residences, as well. Today it is a nearly 20,000-square-foot parking surface lot with 60 stalls. The lot could offer interim cash flow while going through entitlements. The parking lot was not part of the sale, according to the public documents reviewed by The Registry, and according to sources is under contract for a separate transaction.

The redevelopment opportunity in one of the city’s most constrained submarkets, along with a prominent Mission District address and proximity to Showplace Square, Mission Bay and connectivity to public transportation had attracted a fair amount interest, said Geisreiter November. “There has been an interesting mix of people that have been through the building. Local developers, national, users; it’s been a full spectrum of buyers,” he said. “There’s very little on the market today. This is an opportunity that checks all of the boxes, it’s in the Mission, one of the healthiest sub-markets in San Francisco, good size and scale, plus parking lot … and the intrinsics of the real estate market are really excellent.”

The offering document states that direct vacancy rate in the Mission at 2.8 percent makes it the city’s second tightest submarket, behind only Mission Bay/China Basin. In addition, there are no blocks of creative office space over 40,000 square feet currently available in the Mission District.

West Coast Commercial Real Estate News