By Jon Peterson
Interest in choice retail properties with brand name tenants still exists in San Francisco, even as the price points don’t quite meet the sellers’ expectations. After hitting the market roughly six months ago, a Union Square property located at 166 Grant Ave. has found a buyer—San Francisco-based The Prado Group has agreed to acquire the high-street retail asset for $26 million, or roughly $2,311 per square foot, according to sources that were aware of the transaction.
The seller of the property was a San Francisco Bay Area-based family trust, which was represented in the transaction by the CBRE Capital Markets Team based in San Francisco. The people involved in the transaction were Kyle Kovac and Michael Taquino, both executive vice presidents with the firm, and Giancarlo Sangiacomo, vice president. CBRE declined to comment when contacted for this story.
The sale of this property marks another example of assets trading below asking prices across the San Francisco market. When this building was brought to the market for sale earlier this year the pricing guidance on the property was $35 million, or closer to $3,112 per square foot, which is significantly higher than what the potential buyers were ready to offer. This is influenced at the moment by less investor demand for assets in the San Francisco market presently, which in turn is a factor of the uncertainty in the city’s commercial real estate market presently. Part of this is driven by the rising interest rates, which has made financing acquisitions more difficult, according to sources that track the sales of properties in the region.
The family trust had been the owner of the property since 2005. It has purchased the property for $10.5 million during that year, according to public records.
166 Grant is a 11,246 square foot retail property, and it is fully leased to Giorgio Armani. The tenant is now paying rent with a lease that runs until 2030. The lease has 3.5 percent annual increases, which puts the rental rate above market rates at the moment. The retail property has three stories plus a mezzanine and lower level. It was first constructed in 1908 and was most recently renovated in 2016.
The sale of 166 Grant represents one of a limited number of properties that have come up for sale in this area. The 100 block of Grant Avenue has a total of seven commercial buildings, all of which have been owned for an average of more than 25 years and are fully occupied by luxury brands. Some examples of the tenants are Cartier, Fendi, Dior, Hermes and Valentino.
166 Grant is part of the Union Square retail sub market of San Francisco. When this property was put up for sale in March of 2022, the region had the third highest retail rent per square foot for luxury districts in the United States. It only trailed the Upper 5th Avenue in New York City and Rodeo Drive in Beverly Hills.
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