Wells Fargo, one of San Francisco’s most notable financial institutions, has been evaluating its footprint across the region, recently. The bank just decided to extend a 620,000 square foot lease in the city, yet at the same time, it placed on the market for sale its property located at 550 California Street seeking $160 million, or roughly $450 per square foot, for the 355,000 square foot building.
According to familiar with the details of the sale, Wells Fargo has engaged the San Francisco office of JLL to market the asset. The team working with Wells Fargo is led by Rob Hielscher, Erik Hanson, David Dokko, Adam Lasoff and Nick Deaver.
The property, located in the Financial District of San Francisco, is thirteen stories high, and it was constructed in 1960. Wells Fargo acquired the asset in 2005 for $108 million. Its sale marks the bank’s strategy to reduce real estate holdings across its portfolio in the region and also across the country. In an earnings call earlier this year, Wells Fargo’s Chief Financial Officer Mike Santomassimo stated that the bank would be looking to reduce its real estate portfolio by around 7 percent. This is following the reduction in force across the bank of around 6 percent since early 2021.
The bank announced earlier this month that it will be renewing its 620,000 square foot lease at 333 Market Street in San Francisco, which was followed by an exit from 45 Fremont, where the bank occupied 146,000 square feet of space.
According to a recent, first quarter of 2022 market analysis by Newmark, San Francisco is seeing vacancy and availability continue to increase. Availability, which sits around 22.2 million square feet, is around 25.3 percent. Vacancy also went up around 120 basis points from the fourth quarter of 2021 to 17.2 percent spurred by another quarter of negative absorption, which came in at 483,363 square feet.
These conditions will likely cause some headwinds for the planned sale of 550 California, however, the relatively low per square foot pricing may attract a number of value add investors interested in the long-term potential of San Francisco.