| With positive employment growth and absorption, it’s no wonder San Francisco remains one of the top US investment targets. Yesterdaywe spoke with Cushman & Wakefield’s George Eckard to get the latest readings. |
| George tells us the markets are doing better than his beloved Cal Bears—activity’s been up all year and continues to be strong. Even North of Market, vacancy’s down and rents are rising, though not by as great a percentage as in South of Market. Since January through the end of September, SOMA’s rents have gone up 19%. George and his colleagues have sold buildings down there with current rents at a high $20/SF range, where the buyers are underwriting at the high $40/SF range. What’s more, he says that for space which won’t be immediately available, the buyers have a solid basis for making this projection. And that’s being conservative. “If you did a five-year deal three years ago, you’re well below current market.” |
| In a non-SOMA sales success, George, Grant Lammersen, andSeth Siegel repped both seller Helios AMC and buyer Belrad in the August sale of 500 Sansome for about $260/SF. It was 55% leased at the time. George points out 500 Sansome is a SOMA-type building that happens to be in North of Market—a neat old building (50-plus years old) that boasts many of the elements attractive to the social media and gaming companies that dominate the market right now. Observers expect the new owners might put as much as $100/SF into the building to attract those types of tenants. |
| George and his partners also closed this summer on 795 Folsom in the heart of SOMA for $375/SF, repping both seller Westcore and buyer Cornerstone Advisers. It was 100% leased but has Twitter in 35% of the building, and Twitter’s moving in another year to its new HQ at 1355 Market. However, every prospective buyer agreed it was plug-and-play space, and just the cachet of taking Twitter’s former space would make tenants tweet for joy. The typical deal they’ve done this year in SOMA has drawn well over 100 offering memoranda and generated spirited bidding wars, resulting in attractive pricing for sellers. But despite the frothiness, George says there’s little indication that deals are trading above replacement cost, and there’s no spec development. |
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