By Jon Peterson
New York City-based Zurich Alternative Asset Management has now entered the San Francisco Bay Area market with the purchase of two office buildings in downtown San Francisco and would like to find more assets in the future.
“San Francisco is a very strong market now and one in which we would like to definitely look to buy more assets in the future,” says Sean Bannon, Managing Director and Head of US real estate for Zurich Alternative Asset Management.
The life company is taking a fairly conservative approach to its real estate investments. “We are looking for core assets that have shown a steady and reliable stream of income. The two properties that we acquired are good examples of this strategy, “ said Bannon.
The two office buildings it bought were the 75,162 square foot 410 Townsend and the 55,616 square foot 539 Bryant. 410 Townsend was purchased for approximately $49.2 million or $655 per square foot and 539 Bryant for $34.2 million or $619 per square foot, according to sources familiar with the transaction.
The seller of the two office assets was Los Angeles-based PMI Properties. Zurich was represented in the deal by the San Francisco office of Cushman & Wakefield through its capital markets team. The main person working on the deal was Senior Director Seth Siegel. Other people on the capital markets team are Grant Lammersen, George Eckard and Adam Lasoff.
Both of the office buildings are located in the South of Market sub-market in San Francisco. This region continues to see improving market fundamentals. According to the Research & Forecast Report for San Francisco office buildings for the third quarter of 2103 prepared by Colliers International, rents in SOMA for all office buildings increased by 4.6 percent. The weighted average rent went from $50.36 per square in the second quarter to $52.68 per square foot in the third quarter.
Going forward, Zurich is planning on to be a player looking for a combination of property types in which to invest. “Transactions for the future could include buying a mixture of office, industrial, retail and apartments,” said Bannon.
Zurich is looking for properties in a total of 13 markets around the country. Some of these include San Francisco, Los Angeles, San Diego, Boston, New York City, Chicago and Washington, D.C.