San Francisco Office Trades for $183M

350 Rhode Island St.

A joint venture of Lincoln Property Co. and Korea Asset Investment Management has acquired a building occupied by the San Francisco District Attorney’s Office for $118 million, from PRP Real Estate Investment Management. In a simultaneous, separate deal, PRP sold the fee simple ownership to Safehold Inc. for $64.6 million.

Located at 350 Rhode Island St. in the Potrero Hill submarket, the building offers 127,100 square feet of office space across its four floors. Floor plates average 35,638 square feet and tenants have access to a parking ratio of two spaces per 1,000 square feet.

In 2018, the office underwent a renovation to suit the City’s needs. In a budget and finance report, the proposed lease terms included occupying 84,695 square feet in July 2018 for the District Attorney’s Office and up to 40,427 square feet in April 2020 for the Police Department. The lease term is for 15 years, through June 2033.

Adam Lasoff, Rob Hielscher, Michael Leggett, Miyeon Lee and Erik Hanson of JLL Capital Markets represented PRP in the building transaction. PRP represented itself in the deal with Safehold Inc., which is a publicly traded REIT founded by iStar in 2017, focused on ground lease investments. According to CommercialEdge, PRP acquired the property in 2019 for $134.2 million from Lexington Realty Trust, or $1,073 per square foot.

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Nearby amenities include shopping and dining destinations within walking distance, public transit via BART and CalTrain, as well as access to major thoroughfares within a 2-mile radius. A variety of tech firms are located nearby, including Airbnb, Uber and PayPal.

Office vacancy in San Francisco’s urban areas struggled last year, with some improvements here and there. In the SoMa submarket, the figure reached 18.3 percent in December, down 70 basis points month-over-month, CommercialEdge data shows. Overall, the San Francisco-Peninsula market’s vacancy rates were at 14.8 percent in November 2021, up 410 basis points year-over-year.

SKS Partners originally developed the Rhode Island Street property in 2002, a project which included an adjacent, 138,393-square-foot office building. That asset was also owned by Lincoln Property Co. and was sold in 2019 for $120 million, to California Public Employees’ Retirement System.

Lincoln Property Co. was also recently involved in the highest single-building industrial sale in Arizona’s history—the $186 million sale of Park 303’s first phase to BentallGreenOak.