NY Investor Picks Up Mid-Market Office Where WeWork Is Major Tenant
Reflecting the demand for San Francisco's Mid-Market area, Bridgeton Holdings beat out several investors to buy 995 Market for $62M from Long Market Property Partners and Columbia Pacific Advisors, according to NGKF Capital Markets.
We chatted about the sale and the lure of Mid-Market properties with Newmark Cornish & Carey senior managing director Kyle Kovac, who repped the sellers along with executive managing director Daniel Cressman and senior managing director Michael Taquino.
There was really strong domestic and foreign interest in the property, Kyle tells us. While Mid-Market properties weren't as attractive a short three or four years ago, it's now one of the city's most desirable submarkets, he says. (How desirable? Bisnow is hosting an event in April focused on The Future of Mid-Market.)
Mid-Market has had more than $1B in commercial redevelopment in the past four years and around 5,000 residential units are planned or under construction, Kyle says. That will help establish the area as a live-work neighborhood.
The 15-story building was Bridgeton's third major San Francisco acquisition, and the company plans to further grow its portfolio in the city, says Bridgeton CEO Atit Jariwala. The company plans to open a San Francisco office in the spring to focus on the West Coast.
What made 995 Market stand out was the extensive renovation the owners had done to stabilize the property, and the opportunity for a buyer to acquire the asset at a relative discount to replacement cost, Kyle says. Long Market Property and Columbia Pacific bought the building in 2013 and redeveloped the property with around $100 per SF in base building upgrades, a seismic retrofit, exterior improvements and new tenant finishes.
The bonus is just who is doing the leasing. WeWork holds the majority of the space in the building, and the co-working company has been growing at a whirlwind pace, signing its sixth lease in San Francisco while growing in major markets from Chicago to DC. Kyle tells us WeWork is a very high-profile tenant that brings a lot of energy and vibrancy to the building.