By Jon Peterson
New York City-based Thor Equities is bringing to market for sale the 46,752 square foot 634 Second Street office building in San Francisco after only owning the asset less than a year, according to sources familiar with the property.
The seller had acquired the property for $40 million or $849 per square foot in February of this year. The sale of the property is projected to produce core pricing, as stated by industry sources.
Thor is selling the property through its listing agent, the San Francisco office of Newmark Knight Frank. One of the people involved in the sale is Kyle Kovac, executive managing director. He declined to comment when contacted for this story.
The current state of the property provides strong current income and the chance to add some value to the property in the future. The property is now anchored by Okta, a leading identity-management technology company, which debuted a successful IPO in April 2017.
The in-place rents in the property are approximately 15 percent below prevailing market rents in the SoMa sub-market. The property also has future development potential. There could be a fourth and fifth floor added to the property in the future, which would increase the square footage of the property by an additional 16,000 square feet. This potential additional will not require Prop M allocation as it falls under the 25,000 square foot threshold. The seller has engaged San Francisco-based Huntsman Architecture Group to design the vertical addition.
The San Francisco office of Newmark Night Frank is bringing another property up for sale. This is the 15,923 square foot 401 Washington Street office building in San Francisco. The potential sales price of this building could be $15 million or $942 per square foot, according to sources familiar with the property.
This property has currently no vacancies. Bringing the existing rents up to a market level could be a value-add play for the buyer in the future. Rental rates in the property now are 30 percent below market rates. Around 64 percent of the leases in the property will be expiring over the next couple of years.
This property has tenants that have been in their spaces for a long period of time. Approximately 50 percent of the tenants currently in the property have occupied their space for more than two decades. The asset was first developed in 1983.