In an encouraging sign for office real estate amid the “everyone working from home forever” craze, the four-building Mission Bay complex known as the Exchange was sold for $ 1.08 billion.
A who’s who of big science fiction technology companies has been trying to offload their office space and sublease much of their square footage during those times in COVID-19, and it’s fair to wonder if the commercial real estate market is really going to recover as work – internal policies are officially becoming permanent in many companies. But even when companies rethink whether they really want to pay the astronomical amounts of the leases they signed, it seems that the property itself still has great value. That’s the conclusion we can draw when the Chronicle reports that the Dropbox headquarters buildings centered at 1800 Owens Street (on 16th Street) were sold for just over $ 1 billion.
This is the second most expensive building sale ever in San Francisco, after the 1998 sale of Embarcadero for $ 1.2 billion. But it is well above what the Transamerica building achieved last year ($ 700 million) and, at $ 1,440 per square foot, it is the highest price per square meter of any transaction in SF’s history.
The buyer was not disclosed in the Kilroy Realty ad, but Chron reports that “a source with knowledge of the business who was not authorized to speak publicly said it was KKR, the private equity giant.”
Dropbox was the only tenant, but it rented the entire place in 2017, a change that, like most office rental companies, are trying to dodge a little. They managed to sublease a little less than 135,000 square feet from Vir Biotechnology, but that’s not even half the space they tried to sublease.
And yes, the Prop I property tax measure passed in November applies here, so the property transfer tax is actually double that. (And as the Chronicle points out, Kilroy Realty contributed $ 225,000 to oppose Proposition I). This is just a transaction, but it indicates that the property tax is not scaring off buyers and that companies are still interested in buying commercial property.
Related: Amazon buys Recology site in SF for $ 200 million, Scuttles plan to make it a home [SFist]
Image: Kilroy Realty