More proof that San Fran is collapsing. Numerous office buildings are being sold at a major discount—more than 50% of purchase price just a few years ago.
“An office building in the heart of San Francisco’s Financial District is poised to sell at less than half of what it was worth 18 years ago.
A buyer has been selected for 550 California St., a 13-story tower owned by Wells Fargo, with a price of around $42.6 million, or $120 per square foot, according to commercial real estate sources.
The news was first reported by the San Francisco Business Times. The bank paid about $108 million for the property in 2005. The current assessed value of the building is around $155 million.
A building valued for property taxes at $155 million, is being sold for $2 million—less than 30% of value. The bigger issue is that as these buildings are sold at a major discount, the city/county receive significantly less in property taxes and the deficit increase. Imagine how much the city is going to loss when the , 2,000 bed Hilton is closed and the 1,000 bed 55 Parc is closed.
Another Downtown San Francisco Office Tower To Sell at Deep Discount
Written by Annie Gaus, Kevin Truong, SF Standard, 6/6/23 https://sfstandard.com/business/downtown-san-francisco-office-tower-to-sell-at-deep-discount/
An office building in the heart of San Francisco’s Financial District is poised to sell at less than half of what it was worth 18 years ago.
A buyer has been selected for 550 California St., a 13-story tower owned by Wells Fargo, with a price of around $42.6 million, or $120 per square foot, according to commercial real estate sources.
The news was first reported by the San Francisco Business Times. The bank paid about $108 million for the property in 2005. The current assessed value of the building is around $155 million.
The buyer’s identity isn’t yet known, although one source described them as a “high-net-worth local operator.” A spokesperson for Wells Fargo declined to comment.
The building at 550 California St. originally came to market in 2022 at a price of $160 million, or around $450 per square foot.
But after receiving what it believed were unsatisfactory offers, Wells Fargo pulled the building from the market a few months later, only to put it back on the market at a lower asking price.
550 California St. is one of a number of properties along a stretch of California Street—once home to some of the priciest commercial real estate in the country—that is either slated to sell at a discount or under financial duress.
Nearby 350 California St., which was valued at around $200 million in 2019, is expected to sell in the ballpark of $58 million to $65 million.
Earlier this year, 555 California St., which is co-owned by Vornado Realty Trust and the Trump Organization, was placed on a special servicing watchlist, indicating that loan holders are keeping an eye on the office complex.
Real estate observers have been closely watching the pricing of Downtown office buildings as a benchmark for commercial real estate values in the post-pandemic era.
San Francisco offices have been hit harder than most, with vacancy rates hovering at close to 30% as Downtown workers opt to work from home.
Other properties, such as hotels, haven’t been spared from the impacts of remote work.
Park Hotels and Resorts, a Virginia-based real estate investment firm, said Monday that it had stopped payments on a $725 million loan on the Hilton San Francisco Union Square and Parc 55 San Francisco—two of the city’s major hotels.
“Now, more than ever, we believe San Francisco’s path to recovery remains clouded and elongated by major challenges—both old and new,” said Park Hotels CEO Thomas J. Baltimore Jr. in a statement.
