O FFERING MEMORANDUM A n E x c e p t i o n a l S o u t h o f M a r k e t R e d e v e l o p m e n t O p p o r t u n i t y o r O w n e r / U s e r B u i l d i n g 3 4 H A R R I E T S T R E E T S A N F R A N C I S C O, C A
Exclusively Marketed By: Dave Noravian Lic. 01419471 415.772.0178 david.noravian@cbre.com Sherman Chan Lic. 01046769 408.453.7488 Sherman.chan@cbre.com DISCLAIMER WE OBTAINED THIS INFORMATION FROM SOURCES WE BELIEVE TO BE RELIABLE. HOWEVER, WE HAVE NOT VERIFIED ITS ACCURACY AND MAKE NO GUARANTEE, WARRANTY OR REPRESENTATION ABOUT IT. IT IS SUBMITTED SUBJECT TO THE POSSIBILITY OF ERRORS, OMISSIONS, CHANGE OF PRICE, RENTAL OR OTHER CONDITIONS, PRIOR SALE, LEASE OR FINANCING OR WITHDRAWAL WITHOUT NOTICE. WE INCLUDE PROJECTIONS, OPINIONS, ASSUMPTIONS OR ESTIMATES FOR EXAMPLE ONLY, AND THEY MAY NOT REPRESENT CURRENT OR FUTURE PERFORMANCE OF THE PROPERTY. YOU AND YOUR TAX AND LEGAL ADVISORS SHOULD CONDUCT YOUR OWN INVESTIGATION OF THE PROPERTY AND TRANSACTION.
AREA OVERVIEW San Francisco Bay The Marina Pacific Heights Russian Hill North Beach Union Square Financial District Civic Center Market Street 34 Harriet St Mission Street Mid-Market Mint Plaza Metreon Intercontinental 5M Project Mosso Victoria Manolo Draves Park Harrison Street Moscone Center West 5th Street Howard Street Folsom Street St. Regis Hotel Westfield Centre Yerba Buena Lofts City Mews SOMA SF MOMA Yerba Buena Gardens Moscone Center South Museum Parc Avalon Yerba Buena Peet s Coffee Whole Foods Bay Bridge 34 Harriet Street Offering Memorandum Page 3
EXECUTIVE SUMMARY
E X E C U T I V E S U M M A R Y 34 HARRIET STREET CBRE as exclusive advisor is pleased to offer for sale 34 Harriet Street, a 7,333 sf commercial building located in the heart of San Francisco s vibrant SOMA district. Built in 1925, the building is a two-story structure with ground floor commercial and parking. The second floor has one residential unit, which is approximately 1,300 SF. The Property offers an outstanding opportunity for developers, owner/users or investors. The Property is zoned Mixed Use (MUG) which allows for housing over ground floor commercial. The property zoning permits a Floor Area Ratio (FAR) of 3 to 1 which could allow for 11,067 sf of new product. INVESTMENT SUMARY Address Price Entitlement Status Tenancy 34 Harriet Street, San Francisco, CA (between Howard and Folsom) Best Offer Unentitled One residential tenant paying $3,000 per month Harriet Street 34 Harriet Street Offering Memorandum Page 5
E X E C U T I V E S U M M A R Y Project Overview Address Land Square Footage Building Square Footage (Per Public Records) Number of Floors 34 Harriet Street 3,689 sf (0.89 acres) 7,333 sf Two Parcel Number 3731-099 Development Overview Zoning Zoning Description Height Limit MUG Mixed Use General: Allows for housing over ground floor commercial 45 feet Current Floor Area Ratio 3 to 1 INVESTMENT HIGHLIGHTS Prime Urban Infill Redevelopment Site: Located on a quiet street in the heart of SOMA, the Property benefits from favorable zoning which would allow for residential or mixeduse development. Central Location: The property has immediate access to both I-280 and US-101. In addition, it is located just blocks from the proposed Central Subway underground stop at Fourth and Folsom which will allow immediate access to the North Financial District as well as Mission Bay to the south. Strong Residential Demand: The San Francisco residential market is perennially supply-constrained. New units are currently selling in excess of $1,100 per square foot. Numerous Nearby Amenities: The property is within walking distance of several nearby amenities including Westfield Shopping Center, world-renowned Union Square, the Metreon, and museums such as SFMOMA, the Contemporary Jewish Museum, and the future Mexican Museum. Potential Developable Square Footage 11,067 sf Potential Owner/User Building: At 7,333 sf and with on-site parking, the Property could be ideal for an owner/user seeking full-building identity. 34 Harriet Street Offering Memorandum Page 6
E X E C U T I V E S U M M A R Y PARCEL 3731-099 34 Harriet Street Offering Memorandum Page 7
E X E C U T I V E S U M M A R Y ZONING MAP MUG MIXED USE GENERAL DISTRICT* The Mixed Use-General (MUG) District is largely comprised of the low-scale, production, distribution, and repair uses mixed with housing and small-scale retail. The MUG is designed to maintain and facilitate the growth and expansion of small-scale light industrial, wholesale distribution, arts production and performance/exhibition activities, general commercial and neighborhood-serving retail and personal service activities while protecting existing housing and encouraging the development of housing at a scale and density compatible with the existing neighborhood. Housing is encouraged over ground floor commercial and production, distribution, and repair uses. New residential or mixed use developments are encouraged to provide as much mixed-income family housing as possible. Existing group housing and dwelling units would be protected from demolition or conversion to nonresidential use by requiring conditional use review. Hotels, nighttime entertainment, movie theaters, adult entertainment and heavy industrial uses are not permitted. Office is restricted to the upper floors of multiple story buildings. * Source: Section 840 of the San Francisco Planning Code 34 Harriet Street Offering Memorandum Page 8
M A RKET OV ERVIEW
M A R K E T O V E R V I E W - R E S I D E N T I A L San Francisco Monthly Effective Rent As of Q1 2014, average monthly effective rent for the San Francisco MSA was $2,631. This represents a 6.9% increase over the trailing 12 months, among the best rent growth rates in the U.S. San Francisco apartment rents continue as expansion that began with the post-recession recovery in Q1 2010 and have posted positive gains the vast majority of the trailing 18 quarters, leading all markets nationally over that period. During the expansion nominal rents eclipsed the prior cycle peak in 2011. Rent growth during this period has significantly outpaced inflation, leading to valuable gains in real rent levels. Asking rents and effective rents for the latest period were indistinguishable, reflecting the negligible level of concessions in the market currently. 34 Harriet Street Offering Memorandum Page 10
M A R K E T O V E R V I E W - R E S I D E N T I A L 34 Harriet Street Offering Memorandum Page 11
M A R K E T O V E R V I E W - R E S I D E N T I A L San Francisco Occupancy As of Q1 2014, occupancy was 95.8% which was 10 bps higher than a year earlier. This occupancy is in line with the 15 year historical average. During that last downturn the lowest mark for San Francisco occupancy was 94.95% in Q3 2009. Overall, San Francisco is an exceptionally tight and stable apartment market that fluctuates very slightly around the full occupancy level. 34 Harriet Street Offering Memorandum Page 12
R E S I D E N T I A L L E A S E C O M PA R A B L E S SoMa Submarket In the SoMa submarket, rents have grown 45% since Q4 2009 and current market vacancy registers only 2.5% (Source: Axiometrics). As a result, all new development delivered in SoMa this cycle has been absorbed immediately. 34 Harriet Street Offering Memorandum Page 13
R E S I D E N T I A L L E A S E C O M PA R A B L E S AVA 55 Apartments 34 Harriet Street Offering Memorandum Page 14
M A R K E T O V E R V I E W - O F F I C E SAN FRANCISCO S BOOMING OFFICE MARKET COMPANY DEMAND TOPS SPACE SUPPLY FUELING SIZABLE OFFICE RENT GROWTH Tenant demand exceeds vacant office space supply for the first time since 2000. The shortage is acute for large blocks of 100,000+ sq. ft., which have dropped from 22 to 8 in the past three years. Eleven tenants are currently seeking large blocks. 34 Harriet Street Offering Memorandum Page 15
M A R K E T O V E R V I E W - O F F I C E SOMA +87% Rent Growth Since Q4 2009 YERBA BUENA +95% Rent Growth Since Q4 2009 SOMA WEST +84% Rent Growth Since Q4 2009 34 Harriet Street Offering Memorandum Page 16
A REA OV ERVIEW
A R E A O V E R V I E W 38 HARRIET Located immediately adjacent to the Property, 38 Harriet is a SMARTPSACE residential building developed by Panoramic Interests and manufactured by Zeta. The development contains twenty-three energy and space efficient studio apartments, each measuring 295 sf. The project has also added decorative pavement and exterior landscaping along Harriet Street. The units have several innovative design features and high quality finishes, including transforming furniture, bay windows, Plyboo sustainable hardwood floors, and 300+ cubic feet of storage. For transportation, the building offers secure bike storage an on-site City Carshare. 38 Harriet has several green features, including LEED Platinum certification, solar-thermal water heating, EcoBatt insulation, Energy Star appliances, low-flow plumbing, and rain water harvesting. Source: www.panoramic.com, www.lifeedited.com, and www.curbedsf.com 34 Harriet Street Offering Memorandum Page 18
A R E A A M E N I T I E S 34 Harriet Street Offering Memorandum Page 19
CBRE Broker Lic. 00409987 101 California St, 44 th Flr San Francisco CA 94111 Dave Noravian Lic. 01419471 415.772.0178 david.noravian@cbre.com Sherman Chan Lic. 01046769 408.453.7488 sherman.chan@cbre.com 2014 CBRE, Inc. The information contained in this document has been obtained from sources believed reliable. While CBRE, Inc. does not doubt its accuracy, CBRE, Inc. has not verified it and makes no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. The value of this transaction to you depends on tax and other factors which should be evaluated by your tax, financial and legal advisors. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs. CBRE and the CBRE logo are service marks of CBRE, Inc. and/or its affiliated or related companies in the United States and other countries. All other marks displayed on this document are the property of their respective owners.