Strada Purchases 201 Spear Street Office Tower in San Francisco

Strada is set to purchase the 18-story office tower at 201 Spear Street in San Francisco’s Financial District. The reported price is just 57% of what KBS Realty Advisors paid for in 2013. The price per square foot puts the deal within the existing range of sales in the region’s struggling post-pandemic office market.

PGIM, the lender, has selected Strada Investment Group and an unnamed equity partner as the developer, according to Sarah Klearman for the San Francisco Business Times. KBS purchased the building in 2013 for $121 million, around $465 per square foot. Over the last decade, one of their anchor tenants has been WeWork. The most recent transaction averages around $270 per square foot. Eastdil Secured is handling the sale.

201 Spear Street, image by Lucas Fladzinski courtesy KBS Realty Advisors

San Francisco has been enduring a steady pace of office vacancies since the beginning of the pandemic. The worst period for the city was the fourth quarter of 2020 when nearly seven million square feet of office space became vacant. Over the last five quarters, the city has lost between one to two million square feet of office occupancy. Now, the city has a 34% vacancy rate for offices as of Q3 2023, according to CBRE. With the sublease market in consideration, around 37.4% is available.

While vacancy rates remain exceptionally high, CBRE has noted that San Francisco tenant demand and tours of office space have reached their highest level since the first quarter of 2020. In their market analysis, CBRE expects to see vacancy rates increase into the year, but “the sharp increase in tenant demand over the last three quarters indicates that leasing activity will rebound in 2024.”

201 Spear Street aerial view next to One Steuart, image courtesy KBS Realty Advisors

The 18-story tower contains roughly 260,000 square feet of leasable office space. The structure was built in 1986 with design by De Quesada Architects. The property overlooks Howard and Spear Street, next to the recently opened One Steuart Lane apartment complex that overlooks the Embarcadero.

Strada Investment Group is a San Francisco-based developer responsible for several significant projects across the Bay Area, including the Chase Center, Brady Block, 555 Bryant Street, and the Samuel Merritt University campus expansion. Strada has also proposed the redevelopment of Pier 30-32, 395 3rd Street, Lake Merritt BART, New Plaza East, and the San Bruno Tanforan Mall.

Subscribe to YIMBY’s daily e-mail

Follow YIMBYgram for real-time photo updates
Like YIMBY on Facebook
Follow YIMBY’s Twitter for the latest in YIMBYnews