Huge investors chase San Francisco’s $300 million Ferry Building

The 1889 building is drawing interest from some of the country’s biggest landlords.

Some of the country’s biggest real estate investors want to buy control of San Francisco’s iconic Ferry Building in a deal that could exceed $300 million.

Kilroy Realty Corp, Hudson Pacific Properties In.c, Invesco Plc, and Thor Equities, are all competing to acquire the building, according to five, sources. A buyer could be selected within a month, said the sources.

The pending deal is another sign of San Francisco’s enduring appeal for major office investors as rents have jumped and little supply is being added.

The 1889 Ferry Building at the eastern terminus of Market Street includes 175,000 square feet of office space and 65, 000 square feet of retail in a popular ground-floor marketplace. The building and its weekly farmer’s markets draw tens of thousands of visitors a week. Its office space with waterfront views also commands some of the highest rents in the city, up to $100 per square feet.

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San Francisco’s homeless crisis is driving tourists away

San Francisco’s hotels are facing a serious problem.

The city’s idyllic image of the Golden Gate bridge and grandiose views of the bay are being replaced by concerns about needles and feces littering the streets, homeless citizens sleeping on sidewalks or in Bay Area Rapid Transit stations and aggression toward visitors by people with untreated mental illness. Visitors are noticing and rethinking booking events and vacations at hotels around the city.

San Francisco’s homeless population was down by 0.5% in 2017 compared to 2015, but is about 17% higher compared to 2013, according to SFist. While homelessness is nothing new for the city, hoteliers and local business say street conditions have worsened.

Within 153 blocks in downtown, there were over 300 piles of feces, 100 drug needles and trash on every block, a recent report by NBCBayArea revealed. Complaints of poor street conditions to 311 have skyrocketed in recent years. In 2016, 311, a city agency where visitors and residents can report issues or seek information about the city, received 44,000 complaints of encampments, human waste and needles, up from 6,300 complaints in 2011, according to the San Francisco Chronicle.

“[Visitors] are noticing it and hearing about it and saying, ‘well, why would I bring my conference here?’” Hotel Council of San Francisco Executive Director Kevin Carroll said.

Visitors often have rave reviews for the local restaurants and hotel service, but say they will not come back or will not bring their families here, he said.

San Francisco is not the only major West Coast city dealing with issues of homelessness and street conditions impacting tourism and hospitality. Anaheim, home to Disneyland with its spotless, litter-free Main Street, U.S.A., has the stark contrast of homeless people who live just outside the park. The city has been looking into ways to help its homeless population, such as providing emergency shelter and employment opportunities. Honolulu also took action in recent years on cleaning up the streets, including around its popular Waikiki area.

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San Francisco’s largest office landlord to break ground on $265 million Oakland tower

Boston Properties, San Francisco’s largest office landlord, will break ground on May 2 on a 402-unit apartment tower next to Oakland’s MacArthur BART station.

The 260-foot project at 532 39th St. will be the tallest building in North Oakland and the company’s first residential project on the West Coast.

The project in the Temescal district will be among a half-dozen Oakland towers to start construction in the last two years, an unprecedented real estate boom that’s drawing some of the country’s biggest developers to the city. Other developers include Lennar Multifamily Communities, Shorenstein Properties and Carmel Partners.

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Facebook to move into big WeWork outpost as co-working company prepares to open largest-ever location

Talks between the two giants about WeWork’s new Mountain View location, its largest sublease to-date, have been ongoing for months. But this week the two finally struck a deal.

When WeWork this year opens its first Mountain View offices — its largest-ever lease — half of that space will be filled by Facebook.

Both companies told the Silicon Valley Business Journal about Facebook’s sublease which totals more than 200,000 square feet in one of two new office buildings at The Village at San Antonio Center. The deal comes after months of discussions between the two companies. The second WeWork office building on the site will be open to any company seeking co-working space.

Initially, the talks between the New York-based co-working company and the Menlo Park-based tech giant had been leading toward Facebook taking over both buildings at 391 and 401 San Antonio Road, which would total about 450,000 square feet, the Business Journal reported in February. But Facebook in recent months has rapidly snapped up huge swaths of office space in Silicon Valley — including about 1 million square feet in Sunnyvale — and its needs evolved quickly, two sources with knowledge of the discussions told the Business Journal.

Facebook will set up shop in the eight-story, approximately 225,000-square-foot office building at 401 San Antonio Rd., which is slated to be ready for move-in by early September, according to WeWork.

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WeWork signs biggest lease of Q1 in San Francisco

WeWork just added 251K SF to its San Francisco footprint.

The co-working provider inked the city’s largest lease of the first quarter at the Union Bank Building with landlords Kennedy Wilson and Takenaka Corp., the San Francisco Business Times reports. WeWork signed an 18-year lease for all 20 floors and plans to renovate the building.

The JV bought the building at 400/430 California St. in 2016 for $135M when it was fully leased to MFUB Union Bank, which plans to vacate the building.

The co-working company began occupying it newest location this year at Salesforce Tower, where it leases 75K SF. WeWork has rapidly expanded its Bay Area footprint in recent years and signed leases for over 1M SF in 2017. It also has expanded into Oakland, San Jose and Mountain View within the last two years.

WeWork Managing Director for U.S. and Canada West Jon Slavet told the San Francisco Business Times that the company cannot keep up with demand in the Bay Area, where its community is now over 13,000 members. Its members range from startups to enterprise businesses.

WeWork plans to open its first phase at 430 California during Q1 2019.

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Central SoMa Plan Could Add 11 Stories To Pinterest’s HQ

If the city moves forward with an ambitious plan to guide office and housing development in Central SoMa, Pinterest hopes to add a vertical 11-story addition to its headquarters at 505 Brannan St.

A proposal filed by TMG Partners, one of the original six-story building developers, includes an 11-story addition that would add 165,000 square feet to the site and bring its height to 240 feet.

The current building offers 129,450 square feet in office space and is 85 feet tall, but the site is permitted for a structure 250 feet tall, according to SF Planning documents.

The addition is anticipated to cost $38 million.

Read the full article from Hoodline

Why WeWork is giving away free office space in S.F. and 10 other cities

After more than tripling its Bay Area footprint last year, WeWork is now ramping up its philanthropic efforts.

The co-working startup is providing free office space for 10 entrepreneurs who are military veterans for six months in San Francisco and 10 other cities. The program, Veterans in Residence, is a partnership with BUnker Labs, a Chicago-based nonprofit incubator for veterans. It’s the first time WeWork has provided free space in multiple cities through a national program.

In WeWork’s 25 Taylor St. office in the Tenderloin, a 10-seat office that is normally priced at $5,800 per month is now operated by Bunker Labs. In the country’s most expensive office market, it’s a rare offering of new, free space.

Finding affordable office space is “incredibly expensive. It’s time-consuming. It’s difficult,” said Mike Nemke, a former member of the U.S. Army Special Forces who served in the Middle East and joined the veterans program. Nemke is co-founder of a data science startup, Datamyne.ai, and MKTR.ai, which provides marketing and consulting to other startups.

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Small tech companies finding niche in San Francisco office

Large blocks of space are in high demand among Bay Area tech companies expanding into and within San Francisco.

However, startups and small tech companies from outside of the Bay Area are carving a niche within the city as well. Some are taking advantage of leasing smaller office blocks or moving into co-working space as an entry into the city’s office industry.

“San Francisco continues to attract startups that are in hyper-growth mode,” Kilroy Realty Senior Vice President, Asset Management Rick Buziak said in a press release.

Tel Aviv-based AppsFlyer opened an 11K SF U.S. headquarters in mid-February at Kilroy Realty’s 100 First St., where Okta signed a 207K SF lease in December. The South of Market office offers capacity for further growth. The mobile attribution and marketing analytics company recently secured $56M in Series C financing. The office on the 25th floor offers an open-office plan.

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San Francisco may ease up on allowing retail space to be converted to offices

As San Francisco landlords struggle to fill vacant retail space, city officials may allow conversions to office space.

San Francisco’s Planning Commission will discuss a plan tomorrow to ease up on retail-to-office conversions in downtown San Francisco. The idea is for the city to become more flexible as the national retail market grapples with huge shifts.

The move would help fill empty space and address the city’s huge office crunch, which has sent commercial rents skyrocketing, disproportionately hurting small businesses and nonprofits. The planning department currently has four applications on file — including the huge, vacant 6×6 retail center in Mid-Market — to shift existing upper-level retail space to office use.

The proposal came after planners rejected a proposal to convert the third floor of the former Loehmann’s department store at 222 Sutter St. to office space. Planners wanted to avoid losing sales tax that retailers generate for the city, but critics pointed out that vacant space doesn’t generate sales tax.

The importance of retailers for the city’s budget is clear: Union Square merchants generate more than 37 percent of the sales tax that the city gets from consumer goods. Those same retailers generate more than 15 percent of the city’s total sales tax funds, according to a new retail report from the Office of Economic and Workforce Development.

As part of a revised downtown plan, planning commissioners are considering loosening restrictions on retail-to-office conversions above a property’s third floor. Changes the planning department is recommending would still prohibit non-retail sales from occupying a building’s first through third floors. Above the third floor, however, offices would be allowed if the leases encompass 5,000 square feet or less. For offices that want to lease more than 5,000 square feet, the deal would require a conditional use permit.

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Exclusive: Developer associated with Soho House closes on S.F. Armory building for $65M

A developer associated with private club and hotel operator Soho House has officially purchased a storied San Francisco building for a whopping $65 million.

SF Armory LLC, an entity affiliated with Chicago developer Benjamin Weprin, who previously developed Soho House’s Chicago facility, closed on the Mission’s former National Guard Armory, according to a deed filed with the city Jan. 26. Transfer taxes for the building were nearly $2 million.

The San Francisco Business Times originally reported in November that the upscale social club had been scouting for a place to land in San Francisco and was slated to take over the 200,000-square-foot building at 1800 Mission St., a site which has been used as an S&M porn studio and headquarters for the building’s owner, Kink.com — an arm of Armory LLC, which bought the building for $14.5 million in 2006.

However, in a statement after the article published, Soho House denied that it was attempting to move into the Armory building, and told multiple other news outlets that the story “was not true.”

“We love San Francisco, however, we don’t have a space confirmed as of now,” a Soho House spokesperson told SFGATE.

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