Redco Development and GCI General Contractors have purchased a 11,000 square foot office building in San Francisco for a discounted price of $28 million.
The local developer and the Mountain View-based builder bought the eight-story building at 300 California Street in the financial district, the San Francisco Business Times reported, citing an unnamed source. The seller was LeFrak of New York.
The price for the half-vacant building is $240 per square foot.
LeFrak purchased the Class B office building in 2014 for $58.25 million, or $485 per square foot, so the latest sale represents a 51 percent discount from the 2014 price.
The sale is the latest low-priced transaction in San Francisco, where the shift to remote work has left 36.6 percent of the city's offices vacant. Rents have plummeted. Valuations have plummeted. Refinancing has become more difficult in a clouded market affected by higher interest rates.
Property owners attempted to renegotiate expiring loans or returned the keys to their lenders in a market with newly set prices.
The deal for 300 California is expected to close next month, according to the Business Journal. The upcoming office sale is the latest in Downtown San Francisco, where interest in affordable real estate has increased among local and national investors.
The building is right next to the one 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 the asking price in 2020. The 297,600-square-foot building was one of the first office buildings to sell after the pandemic, and the price was set at about $200 per square foot.
Across the street, a 16,500-square-foot office building at California 255 is for sale 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 the sale price in 2019.
New York Life and Bridgeton are among the first foreign investors to purchase offices in San Francisco recently.
It is not clear what Redco and GCI plan to do with the boxy granite building at California 300, which was built in 1946 at the corner of California and Battery streets. Redco declined to comment to the Business Times.
According to online advertisements, around 5,700 square meters of office and retail space are available for rent, including a ground-floor store that was vacated by Amazon Go last year.
Late last year, Redco and Tonic Nightlife Group, a group of investors and members of the Harrington family, reopened Harrington's, the popular Irish bar in the financial district.
In March of last year, Redco and AEW Capital Management vacated a vacant First National Bank building at 1 Montgomery Street after defaulting on their mortgage payments.
Redco and AEW purchased the 9,200-square-foot office building in 2019 for $84 million. The price for the 115-year-old landmark was $840 per square foot.
— Dana Bartholomew
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