TIAA-CREF Puts 888 Brannan Under Contract at Around $700 Per Square Foot

888 Brannan, San Francisco, Beacon Capital Partners, California State Teachers Retirement System, CalSTRS, commercial real estate, AirBnB

888 Brannan, San Francisco, Beacon Capital Partners, California State Teachers Retirement System, CalSTRS, commercial real estate, AirBnB
By Jon Peterson

New York City-based TIAA-CREF has put under contract for purchase the 888 Brannan Street office building in San Francisco for around $700 per square foot or almost $312 million, according to sources familiar with the transaction.

[contextly_sidebar id=”LkO6VxUDUrCamXC2UUDN97B4gXwS4cPF”]A company spokesperson for TIAA-CREF did not respond to e-mails or phone calls seeking comment for this story.

The sale of the property is further evidence that certain office buildings in San Francisco continue to see big spikes in value over a relatively short period of time. This property changed hands in April of 2014 when Boston-based Beacon Capital Partners paid $190 million or $427 per square foot to purchase the asset.

TIAA-CREF has been an active player in San Francisco, and its 888 Brannan is not the first acquisition the company had done in the region. One of its purchases from last year was the $276 million acquisition of the 379,330 square foot 55 2nd Street office building.

Beacon had first placed 888 Brannan on the market for sale in April of this year. When the real estate investment manager acquired the property it did have some vacancy issues. One of the new tenants that it managed to bring into the property was AirBnB, which took a 169,000 square foot lease. The overall square footage of the property is 445,395 square feet.

Beacon had acquired the office building for its commingled fund, Beacon Capital Strategic Partners VI. This information was stated by the real estate manager on its Website. The proceeds for the sale of this property will be returned to the investors in this commingled fund. One of these investors is the California State Teachers Retirement System. The pension fund had made a $300 million commitment into Partners VI.

888 Brannan is located within the SoMa West sub-market in San Francisco. This part of San Francisco office market had a drop in vacancy in the first quarter, according to data from the San Francisco office of Colliers International. The vacancy fell from 5.3 percent to 4.1 percent. There are a total of 41 buildings in the sub-market amounting to 3.4 million square feet.

Photo courtesy of Gensler