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Encouraging sign for office real estate amid the ‘everyone works from home forever’ craze, the four-building Mission Bay complex, known as the Exchange, sold for $ 1 , 08 billion dollars.
A who’s-who of big SF tech companies have tried to offload their office space and sublet a lot of their square footage during these COVID-19 times, and it’s fair to wonder if the Commercial real estate will one day rebound as work-home policies are becoming unofficially permanent in many businesses. But even as companies rethink whether they really want to pay the astronomical sums of money on the leases they’ve signed, it looks like the property itself is still very valuable. This is the conclusion we can draw as the Chronicle reports that the Dropbox headquarters buildings centered at 1800 Owens Street (at 16th Street) have sold for just over $ 1 billion.
This is the second most expensive building sale ever in San Francisco, following the sale of the Embarcadero in 1998 for $ 1.2 billion. But that’s way beyond what the Transamerica building grossed last year ($ 700 million), and at $ 1,440 per square foot, it’s the highest price per square foot of any. SF story transaction.
The buyer was not disclosed in the Kilroy Realty ad, but the Chron reports that “a source familiar with the deal who was not authorized to speak publicly said it was KKR , the private equity giant. ”
Dropbox had been the only tenant, but they rented the whole place in 2017, a move that, like most office rental companies, are trying to unravel a bit. They’ve managed to sublet just under 135,000 square feet of Vir Biotechnology, but that’s not even half the space they’re trying to sublet.
And yes, the Prop I property tax measure that was passed in November applies here, so the property transfer tax is effectively double that. (And as the Chronicle points out, Kilroy Realty contributed $ 225,000 to oppose Proposal I). This is only one transaction, but it does indicate that property tax does not scare off buyers and that businesses are still interested in purchasing commercial properties.
Related: Amazon buys Recology site in SF for $ 200 million, plans to make it home [SFist]
Image: Kilroy Realty
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