A historic office building at 800 Market St. across from the struggling San Francisco Centre mall has sold for less than half of its prepandemic sales price.

Alaska-based investor Fountainhead Development purchased the building last week for $17.2M, more than a 60% drop in value from when Atlanta-based Invesco acquired the property in 2011.

A representative for Fountainhead Development said the company is planning an extensive repositioning of the property, which WeWork and fashion retailer Diesel exited in the last five years.

Despite the bargain, Fountainhead is jumping into an office market on the upswing. The artificial intelligence boom has juiced an otherwise stagnant tech industry, and with return-to-office successes and a public perception improvement campaign, office leasing in the city vastly outstripped the rest of the country in the first half of 2025.

This isn't the first property in the city to see a steep drop in valuation this year. The former Zendesk headquarters at 1019 Market St. in downtown San Francisco headed to a foreclosure sale after losing nearly 80% of its value.

The building’s owner, 1019 Market St. LP, an investment fund managed by Deutsche Bank, paid $48M for the property in 2014 but defaulted on its mortgage in April.

The Jackson Group lost the last of its San Francisco holdings after defaulting on two Union Square properties in August. In June, Hudson Pacific Properties offloaded 625 Second St. for $28M, with Frontline Realty Capital and Triyar Realty Group spending half of the 2011 purchase price for the 138K SF building.

New York Life Real Estate Investors and Dallas-based Lincoln Property Co. purchased a distressed loan tied to 353 Sacramento St. in June.

The San Francisco office market closed the second quarter with an overall vacancy rate of 34.8% and net absorption of 779K SF. The overall average asking rate was $68.73 per SF, according to CBRE.