San Francisco Office Building Bought for $64 Million Sells for $15 Million

Undated Google Street View image of an office building at 55 New Montgomery Street in San Francisco. Google Maps/Screenshot via The Epoch Times

Another San Francisco office building recently sold on auction for a fraction of the original purchase price, a 100,000 square foot office building bought in 2018 for $64.25 million and sold for just $15 million.

Located at 55 New Montgomery Street, according to public records, the historic 8-story building dropped its valuation from over $640 per square foot to $150 per square foot.

The property was sold by Swift Real Estate Partners on Oct. 6 to Massachusetts-based CrossHarbor Capital Partners—an American investment firm—which originally lent $71.4 million to Swift back when they purchased the property, according to the records available online.

A 22-story office tower located in the San Francisco financial district, at 350 California Street, also sold for less than a quarter of its 2020 asking price of $250 million earlier this year. Real estate developers SKS Partners and the Swig Company purchased the 300,000 square-foot building for $61 million, or $200 per-square-foot, in recent months according to an October report by Coldwell Banker Richard Ellis, an American commercial estate services and investment firm.

Other major sales reported by the firm include a 13-story tower, also in the financial district, at 550 California Street which sold to Peninsula Land & Capital—a private equity commercial real estate firm—for $40.8 million. Wells Fargo had first listed the 355,000 square-foot office building for sale in 2022 for $160 million.

The most recent figures from September show San Francisco’s office vacancy was around 31 percent, compared to 5 percent in 2019, according to the city’s website.

A shopper leaves the Westfield San Francisco Centre in San Francisco on April 13, 2022. Justin Sullivan/Getty Images

In June, Westfield announced its plans to stop operating its 1.5 million square-foot mall in downtown San Francisco, following Nordstrom’s planned closure announced in May.

According to a report by the San Francisco Chronicle, the Westfield Corporation stopped making payments on their $558 million loan for the mall, and in October a San Francisco Superior Court Judge appointed Gregg Williams of Trident Pacific Real Estate Group as the receiver of the property. The group has handled 152 “receivership assignments” since 2008 according to their website, and as a court appointed receiver, they specialize in finding resolutions for distressed commercial real estate assets.

Westfield officials said in the same announcement, “For more than 20 years, Westfield has proudly and successfully operated San Francisco Centre, investing significantly over that time in the vitality of the property. Given the challenging operating conditions in downtown San Francisco, which have led to declines in sales, occupancy, and foot traffic, we have made the difficult decision to begin the process to transfer management of the shopping center to our lender to allow them to appoint a receiver to operate the property going forward.”

Nordstrom officially vacated its 312,000 square-foot office in August.

Nordstrom's flagship store at the San Francisco Centre in San Francisco on Aug. 26, 2023. Justin Sullivan/Getty Images

Closures of nearby stores in recent months, including Nordstrom Rack and the once iconic Old Navy store on Market Street, have led some pointing toward an increase in crime and safety concerns as potential indicators of why business is down.

Westfield’s parent company EU-based Unibail-Rodamco-Westfield also announced in June that the closure of their San Francisco location may be related to the city’s unsafe conditions.

“The planned closure of Nordstrom underscores the deteriorating situation in downtown San Francisco,” a spokesperson said. “A growing number of retailers and businesses are leaving the area due to the unsafe conditions for customers, retailers, and employees, coupled with the fact that these significant issues are preventing an economic recovery of the area.”

But according to San Francisco Mayor London Breed, the company has plans to pull out of the U.S. market entirely.

“This has been something that has been coming for some time. We’ve had numerous conversations with Westfield about the future of this site, and it’s been clear that they did not have a long-term commitment to San Francisco as they look to withdraw entirely from the United States market,” Ms. Breed said in a June statement.

Lear Zhou contributed to this report.