- A 22-story office tower in San Francisco that was worth $300 million in 2019 is up for sale.
- It is expected to sell for around $60 million, real estate brokers told The Wall Street Journal.
- It’s the latest example of the commercial real estate crisis as cities grapple with the impact of remote working.
A 22-story office tower in San Francisco is expected to sell for around $60 million, down 80% from 2019, The Wall Street Journal reported.
The office tower, which sits at 350 California Street, was previously worth about $300 million when it was last sold, office brokers told the Journal. The street runs through San Francisco’s Financial District, home to some of its booming tech companies.
The expected decline in value of the building reflects the current crisis facing the real estate industry in the United States, and the heavy impact of remote work on office buildings in San Francisco, in particular. Almost 30% City office space is available for lease, according to a report by CBRE, a commercial real estate services firm. It is five times higher than before the pandemic, and almost twice as high than the number of vacancies across the country. More than a quarter of San Francisco office space is empty so, according to CBRE.
Last summer, for example, Salesforce had half of its offices in the Salesforce Tower subleased. The 43-story Salesforce Tower is the tower of San Francisco the tallest building. A spokesperson at the time told SFGate that Salesforce may use the owned space in the future and welcome employees into the office.
Earlier this month, an office building at 25 Taylor St in San Francisco, a building that was largely occupied by WeWork, saw its value drop by about two-thirds, according to commercial real estate data firm Trepp. . After WeWork left, the building was 97% vacant.
Tech companies accounted for 50% of office rental inquiries in San Francisco before the pandemic, but that number dropped to about 33% Last spring. In addition to the rise of remote work, the tech industry is facing a financial crisisforcing some of them to make cuts that include office closures or relocation to other areas.
At the World Economic Forum earlier this year, savvy real estate executives that unused office buildings should be converted or demolished.
“You’ll have a lot of outdated buildings at the end of the day that aren’t fit to be retrofitted, or it’s not financially viable,” said JLL CEO Christian Ulbrich. “So we have to repurpose these buildings somehow or else they will be empty and will be demolished at some point.”
Whatever the sale price of the 22-story tower will be telling for the San Francisco office building market, with the latest data likely indicating how far prices have fallen since the pandemic.