By Jon Peterson
San Francisco-based Swift Real Estate Partners has been awarded a contract to acquire the 1390 Market office building in San Francisco for $110 million, according to sources familiar with the sale of the property. The transaction has not yet closed, and it is not final.
Swift declined to comment about the purchase of the property at this time when contacted for the story.
The seller of the property is Palo Alto-based Broadreach Capital Partners. The listing agent on the sale is the San Francisco office of HFF, which declined to comment when contacted for this story.
Broadreach has owned the property since 2007 when it paid $42.7 million to acquire the property, according to public records. The asset is a 13-story office complex. The building has a current occupancy of 89 percent, as stated by sources that are familiar with the property. One of the larger tenants in the property taking 70,000 square feet is the San Francisco City Attorney office.
The purchase of this property would be a good fit for Swift, since 1390 Market has some value-add components, which is the type of properties that the manager is known for buying.
Sources that have seen the property believe that 1390 Market is in need of some seismic retrofits to the tune of around $10 million. There also is the fact that some of the current leases in the property are below market levels, and additional value could be added to the property once the leases come up for renewal.
1390 Market is an asset that has two property types. The office part of the complex is for 13 floors. The other 16 floors of the complex are a 443-unit apartment complex. The residential portfolio of the property is owned by Palo Alto-based Essex Properties Trust. The public REIT paid $135 million for the property in February 2013, as stated in public records.
1390 Market is located with the Civic Center/Mid-Market sub-market for office buildings in San Francisco. This region of the city has a total of 44 buildings covering 6.3 million square feet of space. The current vacancy in the sub-market is 2.8 percent, through the end of 2017.