Redco Development and GCI General Contractors have swooped in to buy a 119,000-square-foot office building in San Francisco for a discounted $28 million.
The locally based developer and the Mountain View-based contractor purchased the eight-story building at 300 California Street, in the Financial District, the San Francisco Business Times reported, citing an unidentified source. The seller was LeFrak, based in New York.
The price for the half-vacant building works out to $240 per square foot.
LeFrak bought the Class B office building in 2014 for $58.25 million, or $485 per square foot. So the most current sale represents a 51 percent markdown from the 2014 price.
The sale marks the latest discounted transaction in San Francisco, where a shift to remote work has left 36.6 percent of the city’s offices empty. Rents have slid. Valuations have plummeted. Refinancing has become tougher in a clouded market impacted by higher interest rates.
Property owners have worked to renegotiate maturing loans, or have handed keys back to their lenders in a market of reset prices.
The deal for 300 California is expected to close next month, according to the Business Journal. The pending office sale is the latest in Downtown San Francisco, where local and national investor interest in discounted properties has grown.
The building is next door to where local investors SKS Real Estate Partners and The Swig Company bought a 22-story office building last summer for $61 million — 76 percent less than its asking price in 2020. The 297,600-square-foot building was among the first office buildings to sell after the pandemic, resetting prices at around $200 per square foot.
Across the street, a 177,000-square-foot office building at 255 California is listed for an undisclosed price.
This week, New York Life Real Estate Investors and New York-based Bridgeton bought a 76,000-square-foot office building at 410 Townsend Street in South of Market for $22 million, or $290 per square foot — 75 percent less than it traded for in 2019.
New York Life and Bridgeton are among the first recent out-of-town investors to buy offices in San Francisco.
It’s not clear what Redco and GCI have in mind for the boxy granite building at 300 California, built in 1946 at California and Battery streets. Redco declined to comment to the Business Times.
Around 62,000 square feet of its office and retail space is available for lease, including a ground-floor storefront vacated last year by Amazon Go, according to online listings.
At the end of last year, Redco and Tonic Nightlife Group, a group of investors and members of the Harrington family reopened Harrington’s, the beloved Irish bar in the Financial District.
In March of last year, Redco and AEW Capital Management walked away from a vacant First National Bank building at 1 Montgomery Street after failing to make their mortgage payments.
Redco and AEW bought the 100,000-square-foot office building in 2019 for $84 million. The price for the 115-year-old landmark came out to $840 per square foot.
— Dana Bartholomew
