A 25-story SoMa office tower adjacent to the eastern end of Salesforce Park has been sold for $111.3 million.
A partnership between San Francisco developer DivcoWest and investor Blackstone Real Estate purchased the vacant 420,000-square-foot property at 300 Howard St. (formerly known as 199 Fremont), with plans to upgrade it to attract AI tenants.
DivcoWest also owns 301 Howard, across the street from the newly acquired building, and is attempting to market the corridor as “AI Alley.” Among the planned renovations are “hospitality-inspired upgrades” that have been a focus of developers trying new ways to lure reluctant workers back to the office. These include a conference center, elevated lounge spaces, and fitness and wellness centers.
The building was completed in 2000. Over the years, it has been home to StubHub, Fitbit, and eBay, among others, but the pandemic pullback of the tech industry from downtown San Francisco has hollowed out such properties.
This is the first San Francisco office property this year to sell for more than $100 million. However, for context, when DivcoWest acquired a stake in the property in 2020, it was at a value 70% higher than the current deal.
DivcoWest has had some success in its strategy of positioning its properties for the AI wave. Last year, it leased the former Old Navy headquarters at 550 Terry A. Francois Blvd. in Mission Bay to OpenAI.
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Several downtown office buildings have been sold in recent months as buyers continue to see opportunities to invest in San Francisco real estate at a discount, with building owners reshuffling their portfolios and dumping underperforming assets.
A telling example is Blackstone itself, which manages more than $1 trillion in assets. It’s preparing to offload 45 Fremont St. — steps from 300 Howard and co-owned with Shorenstein — after writing down its investment in the property to zero in 2023.