Investors Flocking To Union Square
Last quarter, four transactions in Union Square totaled over $330M, making Union Square one of the hottest neighborhoods in San Francisco. The area has some of the oldest stock and most iconic buildings in the city. Union Square also has one of the nation's highest retail rents at $650/SF, according to data from Llenrock Group.
Bisnow talked with Cushman & Wakefield vice chairman Kazuko Morgan (above right inside a Union Square store during a tour), who recently repped the seller of the Tiffany Building, to find out why Union Square is getting so much attention lately.
Recent sales were the result of prospective buyers chasing the buildings with unsolicited offers, Kazuko says. Although the timing of the September deals was purely coincidental, "never before has this amount of buildings in Union Square traded hands. It’s really difficult to get someone to sell," she says.
She says the San Francisco market is one of the cities where investors are trying to acquire more assets with high rents and it’s not spread out like New York. Kazuko says there are a lot of international brands here, and Union Square is “one of the strongest global retail markets.”
Union Square is in high demand because there’s a finite amount of space and the area has “the lowest vacancy of my career,” Kazuko says. She says a lot of brands want to have more impactful stores in key markets, such as Union Square. What also helps is the strong local economy in San Francisco’s Mid-Market neighborhood.
Kazuko expects a few more transactions will happen later this year and early next year.
Check out the latest Union Square deals below.
Sold for: $135M
Seller: Greenstone Realty Advisors and 360 Post LP
Buyer: European investor
Repped By: Cushman & Wakefield’s Kazuko and executive managing director Seth Siegel (seller)
The 11-story Tiffany Building, with 96k SF of luxury high-street retail and office and 75 feet of retail frontage, is one of the tallest buildings in Union Square. It houses Tiffany's flagship store and Cathay Pacific’s US headquarters.
240 STOCKTON ST
The 40k SF, 10-story building offers retail and office space and is fully occupied. It was built in 1908 and is a Category 1 historic building. Gucci anchors the ground and second floors while the building is topped with a 30-by-50-foot billboard leased to Apple. Grosvenor also owns buildings at 180, 185 and 251 Post St.
220 POST ST
Sold for: $73M
Seller: A Taiwanese investor
Buyer: Angelo, Gordon & Co and City Center Realty Partners
Repped By: Colliers International EVP Julie Taylor along with EVPs Tony Crossley, Tim Mass, Frank Wheeler; VP Darren Kuiper and broker Yang Chen (seller); Newmark Cornish & Carey’s Kyle Kovac, Dan Cressman, Mike Taquino, Jake Randolph and Jay Luchs (buyer)
This five-story, 37,500 SF building offers 50 feet of street frontage and was previously occupied by Sak’s Fifth Avenue men’s store. The now vacant building will allow the new owners to reinvent the space to appeal to luxury retailers.
420 TAYLOR ST
Sold for: $45M
Seller: 420 Taylor Street Partners (Optimum Asset Management, Institutional Real Estate Fund, PRES Real Estate and Seal Rock Investments)
Buyer: Seven Equity
Repped by: Starboard TCN’s Yoav Ben-Shushan and Richard Gumbiner (buyer)
The 420 Taylor Street Partners JV nearly doubled its original investment when it sold the 78k SF office building. It originally bought the building for $27M. The building features a large sheltered rooftop deck and used to be the headquarters for NBC radio affiliate KNBR. Reddit signed a lease earlier this year to occupy the space.