Paramount Group’s $722M San Francisco Splurge

Market Center, San Francisco Image courtesy of Minesweeper via Wikimedia Commons  

Continuing a dramatic expansion of its San Francisco footprint, Paramount Group Inc. is under contract to pay $722 million for Market Center, a pair of buildings in the city’s South Financial District, the company said on Thursday afternoon.

The 753,000-square-foot asset is currently owned by The Blackstone Group’s EQ Office affiliate, which paid a reported $490 million for the property in 2016, according to The Registry, a Bay Area real estate news source. Paramount Group would be the property’s third owner in less than nine years. Manulife paid $265 million for the property in 2010.

Market Center consists of 575 Market St., a 473,000-square-foot, 40-story tower, and its 280,000-square-foot, 21-story neighbor at 555 Market St.. An elevated walkway and landscaped garden plaza link the two towers, which are near several major transit hubs, including the Transbay Transit Center, the Montgomery BART station and the San Francisco Bay Ferry. Paramount Group  plans to bring a joint-venture partner into the deal, which is expected to close during the fourth quarter.

The Market Center deal would be the third and largest acquisition of a San Francisco trophy tower by Paramount this year. All told, the company has completed or placed under contract deals valued at $1.3 billion in the city. In a separate deal announced on Wednesday, Paramount said that it had completed the $402 million purchase of 55 Second St. a 387,000-square-foot LEED Platinum-certified asset, in joint venture with an unnamed partner.

That agreement followed the $227 million purchase of 111 Sutter Street, a trophy tower in San Francisco’s North Financial District. Harbor Group International, the joint-venture partner procured by Paramount, holds a 51 percent stake in the asset. For its part, Paramount retained a 49 percent interest, and also provides leasing and management services.