PCCP Buys Fully Leased SF Asset for $120M

350 Rhode Island St.

PCCP LLC has acquired a Class A, 138,393-square-foot office building in San Francisco for $120 million. Lexington Realty Trust sold the asset, which was 100 percent occupied at the time of sale.

Located at 350 Rhode Island St., the four-story office property is situated within the Potrero Hill neighborhood and the Showplace Square office submarket. The building is situated between Highway 101 and Interstate 280 along the 16th Street Corridor and is close to the Mission District, SOMA and the Mission Bay neighborhood.

“The property has several key features that are appealing to today’s office tenants and projected to be relevant in the long-term,” Dorian Farhang, PCCP’s vice president, told Commercial Property Executive. “A modern design, 2001-vintage building of a higher quality than a lot of the older and functionally less efficient office product in San Francisco’s non-financial district submarkets and 35,000-square-foot floor plates allowing for a large, uninterrupted open-plan that reduces companies’ space requirements.”

Additionally, the property offers on-site secure car parking and immediate neighborhood amenities including a Whole Foods Market, bars, restaurants and coffee shops.

Substantial submarket growth

Dorian Farhang, Vice President, PCCP

The Showplace Square submarket has consistently seen increases in development over the last 10 years and is an area that many businesses want to be a part of. Once known for its industrial and showroom space, the market is now home to numerous tech firms.

“Even with the San Francisco office market posting new records, the asset presented good relative value within the market, and provides strong initial cash flow, a discount to replacement cost and is positioned within a growing area of San Francisco,” Farhang said.

Residential developers also continue to see the upside in the market, with plenty of new housing in the area. The building was originally built in 2001 as two interconnected, four-story office buildings over three levels of subterranean parking and boasts a modern architectural design and 35,000-square-foot floor plates. However, ownership of the two buildings was split between two owners.

According to Farhang, the parking structure component of the deal will result in a further opportunity for cash flow for the investment, as it serves both buildings and additional office tenants in the area.  

In November, a joint venture between PCCP LLC and SteelWave acquired Canyon Park Business Center, a 17-building, 632,591-square-foot property in the Seattle suburb of Bothell.

Images courtesy of PCCP