https://www.bizjournals.com/sanfrancisco/news/2024/05/21/redco-300-california-sale.html
Redco closed its acquisition of 300 California St., the second downtown San Francisco asset the developer has snapped up in recent months with an eye to long-term ownership.
The deal closed Tuesday, Redco Managing Partner Chris Freise confirmed.
The Business Times has learned Redco and partner GCI General Contractors paid $28.5 million, or around $240 per square foot, to acquire the 120,000-square-foot 300 California from New York-based seller LeFrak. LeFrak acquired the building for $58.25 million, or around $485 per square foot, in 2014.
John Walsh of real estate services firm Cushman and Wakefield represented Redco in the deal.
GCI will move its headquarters from 875 Battery St. to the fifth floor of 300 California in conjunction with the transaction. That deal, alongside one other completed lease for half a floor and a third deal of the same size nearing the finish line, will bring the building’s occupancy rate to roughly 75%, Freise said, up from less than 50% when Redco went under contract for the building earlier this spring.
Freise declined to identify the tenants behind the two smaller lease deals at 300 California, and details of their leases were not available Tuesday.
The deal cements 300 California as the latest downtown office property to trade hands for between $200 and $300 per square foot — postpandemic pricing that has solidified in San Francisco over the last year, luring investors back to the city in the process. Redco, which joins the ranks of local investors betting on the recovery of downtown San Francisco’s office market, is acquiring 300 California with plans to commit to the building for the long haul, Freise said.
“We’re open for business, and we’ll be here for a long time," he said.
The group took the same stance as part of an investor group that acquired Harrington’s, a beloved Irish bar in San Francisco’s Financial District that shuttered in the fall of 2020. Redco, together with members of the Harrington family and a consortium of investors including some of the bar’s long-time patrons, formed an investment group that signed a lease for the Harrington’s space and reopened the bar in March. You can read more about the Harrington’s reopening in this March article from my colleague Alex Barreira.
Redco plans to market the vacant top two floors of the eight-story 300 California for lease, Freise said. Investors acquiring office buildings in postpandemic San Francisco more or less fall into two camps: those who are buying at postpandemic pricing and then simply placing their buildings back up for lease at lower rental rates, and those who are investing their savings back into the buildings themselves, adding amenities to lure tenants. Redco largely falls into the second camp, per Freise, who said the firm’s vision for the building is hospitality-forward.
The building is up to date seismically, the elevators are new and most available office space in the building has been built out, Freise said, adding that minimal need for capital up front is one of the things that drew Redco to 300 California.
Among the building’s other interesting qualities: It was designed and approved for an additional three stories above the existing eight, Freise said, meaning Redco could could pull permits from the city and expand the building at will. The site itself — just more than a third of an acre at the northwest corner of California and Battery streets — is also zoned for “quite a bit more density" than eight stories, Freise said. That could open the door for a large-scale redevelopment of the property if such a play becomes viable in the future.
The building is one of several along the California Street corridor that has sold or is expected to sell in coming months. LBA Realty is said to be moving to acquire 255 California, a 182,528-square-foot office property diagonally opposite 300 California, for around $290 per square foot; the roughly 300,000-square-foot 350 California directly next door was one of the first office buildings to trade hands in postpandemic San Francisco when SKS Partners and the Swig Co. snapped it up last year for around $200 per square foot.