By Jon Peterson
After announcing in May of this year that it would take up an exploratory initiative to sell its headquarters property in San Francisco located at 180 Howard Street, the State Bar of California has made the decision to put up for sale its property, as confirmed by the property owner in an email. No pricing guidance was available on the property at this time even as the building enters the market at a turbulent moment.
There are two possible outcomes that would result in the sale of this building. The asset could be sold directly to another investor with the State Bar of California vacating the building, and another transaction could also be worked out where the State Bar of California could agree to sell the property and lease back a portion of the space in a sale/leaseback transaction.
As the State Bar of California announced earlier, it will be retaining the services of Cushman & Wakefield to explore the sale of the building. “The State Bar has retained Cushman & Wakefield to oversee the sale or a sale with an option to lease back a portion of the building. Cushman & Wakefield is also authorized to find alternative space to lease in the Bay Area for the State Bar’s consideration. All recommendations would require the approval of the State Bar Board of Trustees,” says Mayte Diaz, director of general services who oversees the real estate operations of the State Bar.
The San Francisco office of Cushman & Wakefield did not respond to emails seeking comment for this story.
The State Bar has been the owner of 180 Howard Street since 1995, when it purchased the nearly 200,000 square-foot building for $22.5 million, according to published reports.
The motivation behind the sale, according to published reports, comes from the organization’s evolving circumstances associated with the consequence of the global COVID-19 pandemic. The employees are now working in a hybrid model, which allows the workers to operate from their homes part of the time during the week. This has changed the way the space is utilized and reduced the need for offices that the agency needed prior to the pandemic. At the same time, the cost of operating the property has placed a burden on the agency along with available space in the building, which has proven difficult to lease during its ownership of the asset.
The State Bar has been considering the sale of its office building for a while. “The sale of the San Francisco State Bar building in 2022 is a multifaceted proposal that the State Bar has been considering for some time, including most recently to meet our goals and responsibilities in a new hybrid-remote work environment. Though the real estate market has changed significantly since the onset of the pandemic, the State Bar will also be able to take advantage of favorable terms when leasing back or leasing elsewhere in the current down market,” said Diaz.
180 Howard is located in San Francisco’s SoMa neighborhood, which represents approximately 11.2 million square feet of Class A office space, out of a total of 60 million square feet in San Francisco, according to a research report by brokerage firm Newmark’s second quarter of 2022 San Francisco Office Market Report. On the positive side, the second quarter of 2022 was punctuated by three lease transactions over 100,000 square feet, and leasing has steadily increased so far this year, the report stated. At the same time, however, overall availability and vacancy across San Francisco increased to near-record levels by 240 basis points to 27.7 percent, or 24.5 million square feet. Total vacancy in SoMa is the highest in the City at 23.4 percent, and SoMa also holds the highest availability rate of 35.4 percent, which is not an enviable distinction for the neighborhood.
West Coast Commercial Real Estate News