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REA
October 26, 2016  

New Lease in Place, SF Tower Hits the Block

CIM Group is putting a San Francisco office building on the market after signing the sole tenant to a new lease.

The 420,000-square-foot building, at 211 Main Street, is 97% occupied by Charles Schwab as its headquarters. The investment bank signed a multi-year renewal on Friday, clearing the way for CIM to proceed with its plan to market the property, called Charles Schwab Plaza, via HFF.

Bids are expected to come in around $400 million, or $952/sf. The 17-story building is in the South Financial District, two blocks from the Embarcadero along San Francisco Bay. It was developed in 1973.

The lease renewal ended recent uncertainty about the building’s status. Charles Schwab had considered moving out upon expiration of its lease in May 2018. CIM appeared to be pursuing a multi-track strategy: negotiating for the renewal while also inviting leasing brokers from CBRE to conduct property tours for potential replacement tenants. If Charles Schwab had chosen to vacate, the building likely would have appealed to one or more of the technology companies that are gobbling up space in San Francisco.

Meanwhile, CIM had already lined up HFF to run a marketing campaign. The estimated pricing is well more than triple the $112 million that the Los Angeles fund operator paid to acquire the building from the Booth family in 2010.

The San Francisco office market’s remarkable increases in transaction volume since the beginning of the economic recovery in 2010 may be slowing, but deal flow is still strong. Nine buildings with a combined value of $1.7 billion traded in the first six months of this year, according to Real Estate Alert’s Deal Database, which tracks sales of $25 million and up. That was up from $1.4 billion a year earlier (see “Market Spotlight” on Page 11).