- San Francisco offices are being sold at steep discounts, with some going for as little as 25% of their pre-pandemic values.
- A mix of wealthy local investors and new entrants to the market are taking advantage of this downturn, paying all cash for debt-free positions.
- Investors are targeting smaller, fully leased office buildings in favorable locations, betting on a moderate office recovery with solid returns.
As San Francisco’s commercial real estate market continues to grapple with high vacancy rates, low office utilization, and rising interest rates, opportunistic office investors are seizing the moment, as reported in The San Francisco Standard.
Office buildings that once commanded top dollar are now selling for a fraction of their pre-pandemic prices, drawing in buyers with cash and patience who see potential in the city’s eventual recovery.
Who’s Buying What?
Among those capitalizing on the downturn are wealthy San Francisco locals and out-of-town investors. Many of these buyers are acquiring properties outright with cash, taking on zero debt and positioning themselves for future gains.
Greg Flynn, a local billionaire, recently partnered with Ellis Partners to purchase a 5-story office building at 631 Howard Street for $36.4M, a significant discount from its $62M sale price in 2014.
Flynn believes in the city’s long-term resilience and sees this as a once-in-a-lifetime opportunity to invest at the bottom of the market.
Fire Sale Deals
These fire-sale prices aren’t limited to one or two buildings, either. Properties like 989 Market Street, which last sold for $61.3M, recently traded hands for just $13.5M.
The buyers, often local syndicates or firms like BH Properties, are betting that smaller, well-leased, and well-located buildings—especially those requiring few renovations and ready for immediate occupancy—will bounce back faster than larger, vacant properties.
By avoiding high-risk, large-scale properties, they are positioning themselves for potential returns even if the market only recovers modestly.
For example, BH Properties (BH) plans to lease 989 Market Street’s existing office space without significant renovations, aiming to attract tenants in a tight financial market.
Why It Matters
Although the timing of a full market recovery remains uncertain, investors like Flynn and Ellis are confident that San Francisco will bounce back in the coming years.
They’re prepared to wait out the downturn, knowing that those who invest early will likely reap the rewards when the city’s office market turns around.
