PREMIER JACKSON SQUARE OFFICE BUILDING PACIFIC SAN FRANCISCO EXCLUSIVE ADVISOR INVESTMENT OPPORTUNITY

Transcription

1 PREMIER JACKSON SQUARE OFFICE BUILDING SAN FRANCISCO EXCLUSIVE ADVISOR INVESTMENT OPPORTUNITY

2 2 EXECUTIVE SUMMARY LOCATED AT THE CONFLUENCE OF JACKSON SQUARE, NORTH BEACH, AND THE FINANCIAL DISTRICT. THE OFFERING Newmark Cornish and Carey, as exclusive advisor, is pleased to present the opportunity to acquire Pacific ( the Property ), located in San Francisco, California. Consisting of a five-story office building encompassing 71,961 rentable square feet, and a four-level subterranean parking structure with direct access to the main lobby, Pacific is a highly desirable asset with attractive upside potential. Constructed in 1985, the Property has been kept in excellent condition and boasts large balconies on three sides of the building with skyline views of downtown San Francisco. Current in-place rents are approximately 42% below market, providing a new SOMA owner with the opportunity to convert the building to creative office standards and enjoy significantly higher market rents. The Property already enjoys stable operating cash flow from the diversity of in-place tenants and the 105-stall garage in one of the tightest parking markets in the country. Positioned at the prime intersection of Columbus and Pacific Avenues, the Property also benefits from its premier location at the confluence of Jackson FINANCIAL DISTRICT Square, the Financial District, and North Beach. With many of San Francisco s hippest restaurants and desirable boutiques surronding the Property, a new owner can create an exceptional ground floor retail presence to further bolster their cash flow. The combination of a strong in-place income along with immediate upside from the office, retail, and parking components of the asset, while being located in one of the most desirable settings in all of San Francisco, makes the purchase of Pacific a unique investment opportunity. PROPERTY PROFILE ADDRESS Columbus Avenue, San Francisco SAN FRANCISCO RENTABLE AREA ,961 RSF SITE AREA ,895 SF PACIFIC AVE JACKSON SQUARE CHINATOWN OCCUPANCY Percent FRONTAGES Columbus Avenue and Pacific Avenue STORIES Five Office Floors and Four Lower Parking Levels BROADWAY COLUMBUS AVE PARKING Parking Stalls TENANCY Revel Systems, Boost Media, Lynch, Galardi & Grummer SUBMARKET Jackson Square District NORTH BEACH

3 HIGH-QUALITY ASSET WITH STRONG CASH FLOW EXECUTIVE SUMMARY 5 u FULLY-OCCUPIED BY DIVERSE TENANT ROSTER: The Property is 95% occupied by a diversity of tenants in the technology, professional services, and healthcare industries that provide attractive cash flow with tremendous upside as leases roll to market. With strong existing cash flow, and approximately 49% of the rent roll expiring in the next 24 months at below market rates, the opportunity exists to immediately improve the Property s yield. u IRREPLACEABLE STRUCTURED PARKING GARAGE: The four-story subterranean 105-stall parking garage enjoys full occupancy seven days a week to tenants, businesses, tourism, and entertainment and provides the Property with stable cash flow in one of the tightest parking markets in the United States. The opportunity exists to substantially increase the amount of car parking by implementing a valet system. u UNIQUE AND WELL-MAINTAINED BUILDING: Built in 1985, Pacific offers many features attractive to tenants, including unique architecture, impressive views, and dedicated balconies. Over the years, the Property has been exceptionally well-maintained with minimal need for additional improvements. Current ownership upgraded the HVAC system with a new chiller in a rare feature among Jackson Square buildings. u REVEL SYSTEMS: Pacific is the headquarters of Revel Systems, a fast-growing startup that provides restaurants and retail with an innovative point-of-sale platform. Revel Systems first occupied 12,696 square feet of space in 2013 and has since more than doubled their footprint to 25,609 square feet, representing 36% of the office space. DESIRABLE AND UNIQUE LOCATION u BOUTIQUE & REVITALIZED JACKSON NEIGHBORHOOD: Recognized for its distinct architecture and quaint streetscapes, Jackson square is among the most original and charming neighborhoods in San Francisco. The neighborhood boasts gourmet restaurants, unique landscapes, access to well-maintained parks, desirable boutique shops, and luxury condominiums. Further, an influx of venture capitalists now have offices in Jackson Square which has recently been referred to as the New Sand Hill Road. u BORDERING HISTORIC NORTH BEACH AND CHINATOWN: Best known as San Francisco s Little Italy, North Beach is known for its welcoming cafes, old-world delicatessens, and top-notch restaurants / nightlife options. Historic Chinatown is one of San Francisco s most popular neighborhoods for visitors and locals alike and offers excellent dining options in a unique cultural setting. Columbus sits at the border of both neighborhoods and is within walking distance to all that they offer. u ADJACENT TO FINANCIAL DISTRICT: The Property is located just two blocks from the Transamerica Pyramid which is the gateway to the City s Financial District. Comprised of approximately 45 million square feet of high quality office space, the Financial District is widely considered the capital for business on the West Coast of the United States.

4 SIGNIFICANT UPSIDE POTENTIAL EXECUTIVE SUMMARY 7 u BELOW MARKET CONTRACT RENTS: Pacific provides investors the opportunity for significant upside as below market contract rents roll to market. An investor will have the opportunity to capitalize on almost 50% of the space, which is currently $27 per square foot below market, within the first 24 months of the hold period. u RETAIL POTENTIAL: Approximately 3,500 square feet of ground floor retail will be available for an investor to reposition in one San Francisco s most sought-after restaurant and high-end boutique neighborhoods. u NEW LOBBY EXPERIENCE & CONVERSION POTENTIAL: The opportunity exists to reconfigure the existing lobby so the entrance experience is accessed off of Pacific Avenue, and a new owner has the option to rebrand the building 595 Pacific Avenue. The 4th and 5th floors of the Property enjoy expansive balconies with skyline views of downtown San Francisco and the Bay. Combined with the dedicated building parking and acceptable zoning, the upper floors could be converted to residential condominiums. u DISCOUNT TO REPLACEMENT COST: With construction costs continuing to escalate as high as $1,000 per square foot, and City Planning development restrictions limiting new supply, quality existing product has never been more valuable in San Francisco. The opportunity exists to acquire Columbus Avenue at a substantial discount to replacement cost. MARKET SNAPSHOT CITY San Francisco MARKET SIZE ,253,390 SF VACANCY RATE % ASKING RATES $70.86 PSF TENANT DEMAND Million + SF IN-PLACE VS. MARKET RENTS EXCELLENT MARKET FUNDAMENTALS 25,000 $71.09 SF Expiring In-Place Rents Market Rents $75.42 $73.22 $80.00 $75.00 u STRONG TENANT DEMAND: Tenant demand in San Francisco is currently totals 6.4 million square feet and vacancy levels are sub-five percent. SF EXPIRING 20,000 15,000 10,000 5,000 0 $67.71 $69.25 $62.98 $57.53 $49.56 $46.17 $ ,695 18,682 1,647 22,254 8, $70.00 $65.00 $60.00 $55.00 $50.00 $45.00 $40.00 $35.00 $30.00 $/SF/YR u STILL ROOM FOR GROWTH: Rental rates are still 30 percent below the peak levels achieved in 2000, leaving plenty of room to continue their upward trajectory. u PROPOSITION M CONSTRAINS SUPPLY: With Proposition M in effect, the City only allocates 950,000 square feet of office development annually. As a result, it is extremely difficult to build new office projects, further constraining supply, and there is already a long list of projects awaiting allocation that will take years to get approval for.

5 SAN FRANCISCO INVESTMENT ADVISORS KYLE KOVAC MICHAEL TAQUINO DANIEL CRESSMAN MANDY LEE CA License # CA License # Executive Managing Director CA License # Associate Director CA License # LEASING ADVISOR DEBT & EQUITY ADVISOR BART O CONNOR JORDAN ROESCHLAUB boconnor@newmarkccarey.com CA RE License # jroeschlaub@ngkf.com NY License #