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A New Era of San Francisco Commercial Real Estate Begins in 2024

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A New Era of San Francisco Commercial Real Estate Begins in 2024


Between significant tech layoffs and continuing economic headwinds, it was fitting that one of the last major commercial real estate moves of the year in San Francisco was an office building being listed for sale at a massive discount. 

The 20-story office tower at 33 New Montgomery St. is being listed at $80 million, a 46% haircut from the $146 million it traded hands for in 2014. 

That big drop in valuation—first reported by the San Francisco Chronicle— mirrors larger trends at office properties across San Francisco and the Bay Area, where high vacancy rates and the rising cost of lending have put many owners in a bind and spurred some to cut their losses and offload troubled properties.

An increasing number of those who made investments before the pandemic are now coming out on the losing end heading into 2024. It’s not all bad news. Investors did get a little reprieve heading into the holiday break, with the Federal Reserve signaling it was finally prepared to start lowering interest rates after the new year, thus making money easier to borrow. 

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But interest rates and office occupancy rates won’t flip overnight. What’s more likely is that 2024 will represent a turning-of-the-page moment in San Francisco, a real estate reset where past expectations are no longer palatable, and well-positioned players enter the game buying low.  

An office building with brown and gray marble with 33 New Montgomery in letters.
The exterior of the office tower at 33 New Montgomery St. in San Francisco. | Source: Gina Castro/The Standard

End of an Era

Similar to 33 New Montgomery, a 210,000-square-foot office building at 600 Townsend West was listed for sale last month by real estate services firm JLL. The building has been owned by Japanese investor Toda Corp. for over 30 years, and the firm is seeking roughly $74 million for the property roughly a mile southwest of Oracle Park.

While Toda does not appear to be under significant pressure from lenders or facing a lack of cash flow because of low occupancy (JLL’s listing says it is 92% leased)—its price guidance of roughly $350 per square foot does fall in line with a neighboring building recently sold back to one of its original owners at a major discount. 

A source with knowledge of the deal said the initial round of bids for the property topped out around $67 million. 

Less than two blocks away from Toda Corp.’s property, a different story with a similar outcome is playing out at 410 Townsend St. 

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There, the building’s previous owner, Clarion Partners, fell behind on a roughly $40 million loan it took out in 2019, the same year it purchased the 76,000 square-foot office for $86 million. For a point of comparison to current market values, that works out to roughly $1,130 per square foot. 

According to public records, Clarion handed the property back to its lender this month. Before its value plummeted, the building was home to the likes of TechCrunch, Eventbrite, Zendesk and Adobe. A recent online listing showed that three out of the four floors are available for lease. 

A person walks in front of a dark green building with a row of city bikes. A person walks in front of a dark green building with a row of city bikes.
The Mission Bay Office Property at 410 Townsend St. has been handed back to lenders, public records show. | Source: Gina Castro/The Standard

Vacancies have also crippled the owners of a historic 16-story building at 995 Market St., just down the street from San Francisco’s new Ikea. According to public records, Bridgeton Holdings has defaulted on a $45 million loan. The departure of WeWork in 2021 left the 90,000-square-foot building more than 80% vacant. 

The Next Chapter

Rock-bottom pricing and increasing distress mean that property owners are finally starting to pull the trigger on deals, in a sign of activity likely to ramp up in the year ahead.  

For example, at 55 New Montgomery St., the property’s lender actually purchased the building, which had similarly slipped into default in a foreclosure auction. CrossHarbor Capital Partners secured the 100,000-square-foot building for just $15 million, according to public records— a fraction of the $71.4 million loan it issued to the previous owners in 2018.

Falling property values have prompted other parties just last week to settle with lenders for a reduced price instead of the costly and time-consuming foreclosure process. 

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At the three-building North Park office complex at 560 Davis St., the property’s previous owner, Gaw Capital, swooped in and purchased the existing debt on the building for half-off. Additionally, the new owners saved on transfer tax because the property was handed over in a process known as a “deed in lieu of foreclosure,” according to public records. 

Then, there is the interesting case of 115 Sansome St., where the Vanbarton Group won a competitive bid on a building it already owned. The owners reportedly closed an all-cash deal for around $35 million, which is less than the $54 million loan it took from Bank of America in 2016, according to public records. 

In doing so, Vanbarton paid off its debt at a price more reflective of the building’s current value. 

A sign reading space avaliable on Market StreetA sign reading space avaliable on Market Street
A sign hangs from the window of an empty retail space on Market Street in San Francisco on May 3. | Source: Justin Katigbak for The Standard

Local buyers and prospective tenants see the writing on the wall—and to some it spells opportunity.

“Right now, we know we have the best value in town,” said Roger Fields, principal of Peninsula Land & Capital. 

In September, Fields purchased his first building in San Francisco, an entirely vacant office tower at 550 California St. At $40.5 million, the property went for less than half the price the previous owner paid 18 years ago. 

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Fields, alongside a handful of other opportunistic investors, have acquired various buildings in the city at heavily discounted prices over the past year. Since these buyers are not encumbered with the same debt of the previous owners, landlords like Fields can offer lower rents or invest the dollars they saved back into upgrading their properties. 

The 13-story building that he bought was once owned and fully occupied by Wells Fargo. Fields wasted no time listing the floors for lease after closing on the purchase. 

As of December, he said that his firm is already finalizing a lease with a new tenant, but declined to name them, although he noted the building lends itself to a broad variety of uses. 

“To pay that price for a building in great shape, in a location like that, is just unheard of,” Fields said.

But that advantage still runs up against the reality of hybrid office work being here to stay. According to Raise Commercial Real Estate, which brokered the 476,000 square-feet OpenAI lease in October, office leasing activity fell by 33% in 2023 compared to the year prior. 

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Yet Fields is undeterred. 

He said based on conversations with prospective tenants, he believes the work-from-home pendulum will swing back the other way. 

“San Francisco has its problems, but it is too beautiful and valuable for those not to be solved eventually,” Fields said. “The Financial District is often lumped in with the other areas of the city with severe issues when it really shouldn’t.” 

Questions, comments or concerns about this article may be sent to info@sfstandard.com



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San Francisco Giants Trade Off Two Starters in Separate Trades

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San Francisco Giants Trade Off Two Starters in Separate Trades


The San Francisco Giants made two separate deals, trading away pitchers with starting experience after designating both for assignment.

The Giants traded right-hander Mitch White to the Milwaukee Brewers for cash considerations. They also shipped right-handed pitcher Daulton Jefferies to the Pittsburgh Pirates in exchange for outfielder Rodolfo Nolasco per the MLB transactions wire.

White joined San Francisco a few weeks ago when the Toronto Blue Jays dealt him for cash. The 29-year-old White, a former starter with the Los Angeles Dodgers and the Blue Jays in 2022, made three relief appearances for the Giants with an 11.81 ERA. He struck out one, walked five and gave up seven earned runs in 5.1 innings.

The Brewers designated Corbin Martin for assignment to make room for White. Milwaukee is hoping he can reclaim the stuff that made him a Top 20 prospect in the Dodgers’ organization in the minors.

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Jefferies joined San Francisco on a minor-league deal before the season and he was promoted shortly after Opening Day. The Giants DFA’d him when they called up rookie Mason Black.

The 28-year-old appeared in two games and made one start, as he went 0-2 with a 17.36 ERA. He struck out four and walked two, allowing 13 runs (nine earned) in 4.2 innings.

Jefferies pitched for the Oakland Athletics from 2020-22, including eight starts in 2022, where he went 1-7 with a 5.72 ERA. He missed all of the 2023 season due to injury.

The Pirates signed Nolasco as an international free agent in 2019, and the 22-year-old was only batting .173 with two home runs and 12 RBI in 21 games at High-A Greensboro.

San Francisco should view Nolasco as a long-term prospect with power, as he belted 20 home runs and drove in 72 runs with Bradenton in the Florida State League in 2023.  

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“Bhangra and Beats” event brings 2nd night market to downtown San Francisco

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“Bhangra and Beats” event brings 2nd night market to downtown San Francisco


San Francisco streets will be filled with Friday evenings with another night market event bringing people together with local vendors to enjoy food, music, and nighttime fun.

Bhangra and Beats Night Market returns Friday for the first of four events in 2024 to help bring people into the city’s downtown. The South Asian-themed event will honor other cultures around the world throughout the year with a focus on other Asian communities this week in honor of AAPI Heritage Month.

“This isn’t just an Indian night market, it is a Bay Area experience,” said Vicki Virk, the co-founder of Non Stop Bhangra, which in partnership with Into The Streets SF and the city are organizing the event. “We are working with all kinds of artists, we have so many food vendors, it’s just basically a celebration of the diversity of the San Francisco Bay Area and so we’re excited to see it come to life again.”

Virk says that in 2023 the event brought in 30,000 people over three different nights. They will add an extra night in 2024 to give people four chances to experience Bhangra and Beats with each bimonthly gathering having a unique focus beyond South Asian culture, highlighting other Bay Area communities. The night market on Friday along with the scheduled dates in July and September will fall on the same evening as the BeChinatown Night Market along Grant Street.

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“I think there’s space for all of it and I think it’s amazing to see arts and music being celebrated and then just you know bringing people back into the city of San Francisco to remember that this is a very vibrant, beautiful city that we all live in,” Virk told KPIX.

The city’s Office of Economic and Workforce Development echoed that message, as one of the partners for the night market with Mayor London Breed’s office. Both events are successful at bringing people to downtown and offer a distinct feel, according to a statement sent to KPIX. City leaders hope that the synergy between the two night markets gives people the chance to celebrate a range of AAPI cultures within walking distance.

“This is a beautiful city and yeah it’s had its downtime and obviously every city goes through that but San Francisco is truly a remarkable city,” Virk said. “It’s full of community and culture and music and arts and I think if there’s anything that can bring life back to something, it’s the arts.”

Virk will perform a dance on Friday that she choreographed, combining different styles from northern India. Bhangra is a popular folk dance from Punjab, India with origins in the farming community, a harvest dance that celebrates communities coming together. Her piece has elements of Bhangra and other Punjabi dances for an all-women group taking the stage.

“I love it because it’s really beautiful, it is very graceful, it’s colorful,” she said while performing a part of the dance in Golden Gate Park for KPIX.

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After 20 years of working in dance, she is still excited to share her culture with new audiences and hopes more people will come out to Bhangra and Beats in 2024. The additional night in November will give her and the collaborators for the event the chance to host a first-of-its-kind Diwali celebration in the city.

“Being in the Bay Area is a privilege and a blessing you know, living in San Francisco is a privilege and a blessing,” Virk said.

The night market will close off three blocks of downtown around Battery and Clay and is open from 5:00 p.m. to 10:00 p.m. on Friday.

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San Francisco 49ers 2024 NFL Draft picks, analysis and rookie spotlight | NFL Draft | PFF

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San Francisco 49ers 2024 NFL Draft picks, analysis and rookie spotlight | NFL Draft | PFF


The 2024 NFL Draft is now in the rearview mirror. After a flurry of selections from April 25 to April 27, 257 players were selected to join the NFL.

With that, we give you our full recap of the San Francisco 49ers‘ draft, with analysis on every selection the team made during the weekend and an in-depth look at their top pick.

For more information on the players your favorite team drafted, it’s not too late to get the 2024 NFL Draft Guide, which includes expanded scouting reports, draft grades, offseason reports, unique advanced data, PFF grades and much more.


Click here for more draft tools:

2024 Mock Draft Simulator | 2024 Big Board | 2024 Draft Guide
2024 Player Profiles | 2024 Mock Drafts | NCAA Premium Stats

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2024 Draft Picks

Pearsall — The 49ers take Pearsall, a slot receiver from Florida who excelled during the pre-draft process. Pearsall was productive and reliable, and his measurables are up to NFL standards. He only dropped five passes since the beginning of 2020, which is tied for the fewest among Power Five receivers with at least 200 targets in that span. This pick could also add intrigue to trade rumors swirling around Brandon Aiyuk and Deebo Samuel.

Green — Green, PFF’s 89th-ranked player in the class, had a spectacular season at Florida State. He posted a 90.0 PFF coverage grade in 2023. The strange part about the fit with the 49ers is that they are generally a zone-heavy defense. They do run a high rate of press coverage, though, so they may have a plan in place for Green’s role in their defense.

Puni — A powerful mauler in the run game, Puni started 27 games at left tackle over the past four seasons at Kansas but likely projects inside due to his desire to win in a phone booth as well as a lack of flexibility and inconsistent hand usage in his pass sets. He can help out at tackle in a pinch, offering the 49ers a nice depth piece with positional versatility in the third round.

Mustapha — Mustapha is coming off his best season in 2023, earning a 79.6 PFF grade. He was particularly impressive against the run, earning an 87.5 PFF run-defense grade, fifth among Power Five safeties.

Guerendo — Guerendo makes fast people look… not so fast. His 4.33-second 40-yard dash ranked first among running backs at the NFL scouting combine. He has the ability to make people miss once he reaches the second level of the defense. Guerendo is also a capable receiving threat out of the backfield, earning an 84.1 receiving grade in 2023.

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Cowing — This is a strong fit for Cowing and his skill set. He’s a very solid route runner and a lethal weapon in the red zone. He racked up nine receiving touchdowns in 2023, tied for second among FBS receivers, in large part due to his ability to win quickly. In the Shanahan-style offense, Cowing will not only be a tremendous threat in the passing game, but also a decoy defensive coordinators have to worry about in unique formations/motion concepts.

Kingston — Kingston was a solid pass blocker in college, at Washington State and then USC. He earned a 74.0-plus PFF pass-blocking grade in every season and allowed 17 quarterback pressures, including one sack, from 464 pass-blocking snaps this past season.

Bethune — Bethune flashes solid ability in coverage. He recorded two forced incompletions and an interception with the Seminoles in 2023. Bethune’s 76.0 PFF grade ranked 50th at the position in 2023.


Rookie Spotlight: WR Ricky Pearsall, Florida

Strengths:

• Nuanced and savvy route runner — always uses head/shoulder fake to create a little bit more separation.
• Quick off the line with good releases.
• Tough receiver who has some great receptions through contact.

Click here to see Ricky Pearsall’s 2024 NFL Draft profile!
Weaknesses:

• Agility is a bit stiff for a player of his size with his projected role.
• Was a decent vertical threat at the college level but likely won’t be based on straight-line speed in the NFL. Certain schemes could help him.

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The bottom line

Ultimately, Pearsall won’t intimidate defenders on the line of scrimmage, but he will once the ball is snapped. He is a ready-made slot receiver who can contribute early in his NFL career.



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