Hines Global REIT has agreed to sell 550 Terry Francois, a six-story class A office building in San Francisco for approximately $342.5 million.
The buyer is Sobrato Organization, a Bay Area family-owned real estate investment and development firm.
The six-story, 283,000-square-foot property is located in San Francisco’s Mission Bay district and is fully leased to The Gap Inc., serving as the headquarters for its Old Navy brand.
Hines Global expects the closing of this sale to occur in January 2019.
There has been a noticeable increase in San Francisco transaction activity in 2018 compared with 2017, and investor interest remains very strong, according to Cushman & Wakefield. At the end of the third quarter, there were more than 10 office buildings either being put on the market for sale or rumored to be coming to market shortly. CIM Group was the most active seller with three office buildings on the market, including One Tehama, 274 Brannan and 260 Townsend. It is expected that new dollar per square foot benchmarks will be set in 2018.
And the new office construction pipeline in San Francisco will not provide supply relief until at least 2022, when not yet started projects could begin to deliver, according to CBRE. Of the 3.2 million square feet under construction with delivery dates prior to 2022, 92 percent is pre-leased.
