Embarcadero Square on block
Blackstone in contract to purchase S.F. office complex for $245 million
America’s largest private landlord is poised to buy office buildings that span three San Francisco blocks.
The Blackstone Group is in contract to buy Embarcadero Square, a 293,877-square-foot office complex in the north Financial District, for $245 million, according to a market report from brokerage JLL. The seller is Gaw Capital of Hong Kong. Neither company responded to requests for comment.
The pending deal — potentially one of the largest of the year — is another sign of investor interest in the northern Embarcadero and Jackson Square area. The historic district has smaller buildings and little new construction, in contrast to the crane-filled South of Market neighborhood.
“There is a lot of tenant activity in Jackson Square,” said Kyle Kovac, a broker with CBRE who is tracking the Blackstone deal but not involved. “You’re starting to see rents in excess of South of Market.”
Asking rents in the north Financial District exceed $80 per square foot, Kovac said.
Tenants are attracted to the area’s quieter streets, access to the Embarcadero BART Station and new restaurants.
“When you get there, your
blood pressure goes down,” said Kovac, who is marketing an office building at 600 Battery St. for sale.
Embarcadero Square is bounded by Broadway and Jackson Street, as well as Front Street and the Embarcadero. The buildings, constructed in the 1980s, include upper level condos that aren’t part of the Blackstone deal.
Tenants in Embarcadero Square, formerly branded as Golden Gateway Commons, include insurance company Esurance, a U.S. Army recruiting center, advertising firm Bonfire Labs and CBF Electric & Data.
“We have a lot of foot traffic, a lot of office workers,” said Geri Koeppel, a freelance journalist and resident of the neighboring Gateway apartments.
Koeppel said groundfloor retailers have been mostly replaced in the past few years by office tenants. For example, a cafe called Coffee Roaster at 536 Davis St. closed, she said.
“That was really hard on a lot of the residents. That was a gathering spot,” Koeppel said. “There’s been a lot of turnover in the last few years. There’s very few neighborhood-serving businesses in the ground floors.”
Koeppel mostly shops at the nearby Embarcadero Center office and retail complex.
Blackstone also owns 211 Main St., the headquarters of Charles Schwab, and has a 49 percent ownership stake in One Market Plaza, whose tenants include Google. Blackstone is also reportedly selling control of the Ferry Building, for which it has a lease with the Port of San Francisco.
“Tenant activity drives investor confidence,” said Kovac. “We’re seeing waves of capital coming into San Francisco and specifically looking for deals in Jackson Square.”