With the assistance of JLL Capital Markets, the creative office asset at 1098 Harrison St. in San Francisco’s SOMA District has changed hands in an off-market transaction. Embarcadero Capital Partners sold the fully leased building to communications corporation Hearst for an undisclosed price in an all-cash transaction.
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The change in ownership of 1098 Harrison comes three years after Hearst purchased the property on behalf of its fifth value-add real estate investment fund for approximately $25.3 million, according to the San Francisco Planning Department. Located in San Francisco’s SOMA District, 1098 Harrison St. first opened in 1924 as an industrial facility. The two-story building has undergone significant renovations three times since 1999, with the most recent upgrade taking place in 2018.
Today, 1098 Harrison is leased in its entirety to fintech company Plaid Inc. under an agreement that expires in 2029. JLL Capital Markets’ Gerry Rohm and Erik Hanson represented Hearst in the transaction, which was structured during the COVID-19 pandemic.
The trade of 1098 Harrison is notable for being among the few San Francisco office transactions that have taken place since commercial real estate investment sales activity in the U.S. took a sharp downturn in the second quarter of 2020, as a result of the global pandemic. Pricing in the second quarter, however, was more of a mixed bag, “Despite historic challenges to commercial real estate deal activity in 2020, prices in most leading North American metros continued to move higher in the second quarter of the year,” according to a report by Real Capital Analytics. But San Francisco was not part of the group of leading cities that saw prices continue their upswing, as “prices for metro area office, retail and industrial properties fell 1.7 percent from a year prior.”
Still, real estate prices in San Francisco are up 171 percent over the past decade. In July, news emerged that a fund sponsored by CBRE Global Investors had acquired the approximately 137,600-square-foot historic office building at 123 Townsend St. for $140 million, or just over $1,000 per square foot.