In an encouraging sign for the office real estate amidst the ‘everyone works forever from home’, the Mission Bay complex, four buildings known as the stock exchange, sold for $ 1.08 billion.
A who’s-who of the big SF technology companies has tried to download their office space and rent out a lot of their square footage during this COVID-19, and it’s fair to wonder if the commercial real estate market will ever again work as work – the policy from home becomes officially permanent at so many businesses. But even if companies reconsider whether they really want to pay the astronomical amounts on the leases they have signed, it would seem that the property is still very valuable. This is the conclusion we can draw because the Chronicle reports that the Dropbox headquarters buildings located in 1800 Owens Street (16th Street) were sold for just over $ 1 billion.
This is the second most expensive building sale ever in San Francisco, after the $ 1.2 billion sale of the Embarcadero in 1998. But that is far more than the Transamerica building achieved last year ($ 700 million), and at $ 1,440 per square foot, it is the highest price per square foot of any transaction in SF history.
The buyer was not disclosed in the announcement of Kilroy Realty, but the Chron reports that ” a source with knowledge of the transaction who was not authorized to speak in public said it was KKR, the private- equity giant. ‘
Dropbox was the sole tenant, but they are renting out the whole place in 2017, a move that, like most office space leases, is trying to wrap up a bit. They do manage to lease just under 135,000 square feet for Biotechnology, but that’s not even half the amount of space they’re trying to sublet.
And yes, the Prop I property tax measure passed in November does apply here, so the transfer tax on real estate is indeed double. (And as the Chronicle notes, Kilroy Realty did contribute $ 225,000 to oppose Prop I). This is only one transaction, but indicates that the property tax does not deter buyers, and that companies are still interested in buying commercial properties.
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Image: Kilroy Realty