CBRE has announced the sale of One Montgomery Street to a joint venture between REDCO Development and AEW Capital Management, L.P. The historic mixed-use property is strategically positioned in the North Financial District of downtown San Francisco.
Mike Taquino, Kyle Kovac, Russell Ingrum, Giancarlo Sangiacomo and Mandy Lee of CBRE’s San Francisco office represented the seller, 601W Companies, in the transaction.
CBRE’s Mike Walker, Brad Zampa and Megan Woodring secured the $76.6 million acquisition financing from Square Mile Capital, originated by Eric Cohen and Jeff Fastov, on behalf of the new owner. The loan, a five-year, non-recourse floating rate financing with full-term, interest-only payments at a competitive spread, priced over 30-day LIBOR, will finance a portion of the acquisition and provide funding for future capital expenditures and re-leasing costs.
“One Montgomery represents a truly unique repositioning opportunity that rarely comes along in San Francisco,” said Taquino. “The property is ideally positioned to capitalize on San Francisco’s frenzied leasing market with the ability to immediately deliver a large block of space in the prime location adjacent to the Montgomery Street BART entrance.”
“One Montgomery is a prime example of what every institutional lender across the country is looking for today—transit oriented, irreplaceable real estate in the heart of one of the best performing office markets in the world with a top-tier institutional sponsor. The lender interest was exceptional, and we are thrilled with the execution,” said Walker.
Located on the intersection of Montgomery Street and Post Street, the property has been 100% occupied since 1984 by Wells Fargo. One Montgomery provides the opportunity for a full-building user to capitalize on an asset with no market comparables, in a region with tremendously limited, large block, single-tenant opportunities. The property also offers an exceptional future development opportunity with a 250-foot height limit and a high-density zoning designation.
“Many have visited the ground floor bank branch but the buildings other spaces once we peel back the 1980’s tenant improvements are really going to surprise folks” said Chris Freise, managing partner with REDCO Development. “Hidden are clear heights on lower and second floor in excess of 15 feet, beautiful board form concrete shell, operable windows on second floor and an expansive roof deck ready for best in class office user to call home.”
One Montgomery is a landmark, historical asset with 29 ft. clearance heights on the ground floor, elegant columns, premier commercial space and a rooftop garden. Being in the heart of the Financial District provides unparalleled access to San Francisco’s best restaurants, cafes and retailers, as well as immediate access to BART and MUNI stations less than one block away. Union Square, an adjacent neighborhood, is one of the world’s most recognized tourist and shopping destinations, home to dozens of hotels and hundreds of luxury retailers.
As of Q1 2019, office tenant demand in San Francisco rose to 7.1 million sq. ft., surpassing the level of existing available supply by nearly 300,000 sq. ft. Vacancy as of Q1 is at 3.6%, and the market’s overall average asking lease rate reached a new record-high of $82.88 per sq. ft.
CBRE Group, Inc. (NYSE: CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2020 revenue). The company has more than 100,000 employees serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
