Third Quarter 2009-Market Overview
The big news on the Corridor is that the 60 or so Cathedral Hill office-building tenants were finally given notice to vacate their offices by the end of 2009. The hotel is also scheduled to close by the end of October 2009. This provided a much needed increase in activity on the Van Ness Corridor. A City Planning Committee meeting is scheduled for October 15, 2009 to take public testimony on the CPMC Institutional Master Plan. You can view the Master Plan on the San Francisco City Planning website http://www.sfgov.org/site/planning_index.asp The office vacancy is up slightly with the average rents down by about 20%. Sellers are dropping their prices to try to produce some offers and new development is non-existent.
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The office vacancy rate including sublease space is 10.1%, which is a .4% increase from last quarter. The average rents for all office buildings for all classes of office space dropped substantially from $26.28 to $21.03 psf. All the tenants at the Cathedral Hill Office Building were given notice to vacate by the end of 2009. This displaced over 60 tenants ranging in size from 500-2500 sf to scramble for new offices over the Van Ness Corridor and beyond. This has provided a nice spike in leasing activity for the owners in the area. 625 Polk Street which has been on the market for months is asking $9.50 psf NNN for its 78,000 sf feet of sublease space at the old Culinary building. 1233 Van Ness Avenue just put on 6000 sf of space at $18.00 psf. 1415 Van Ness has a 6000 sf sublease at 99 cents per month. 1557 Pine is marketing a 2000 sf space at $1.00 psf.
The retail availability is now at 171,217 sf, which equates to a vacancy rate of 4.3% on the total inventory of 2,880,690 sf. A late-night comedy club received approval from The City to open in the AMC Theater building at 1000 Van Ness Avenue. Holly’s plans to serve drinks and meals, including breakfast, with entertainment until 4 a.m. on Fridays and Saturdays. Overall asking rents are ranging from $1.00 sf NNN on the side streets to upwards of $4.17 on Van Ness Avenue to higher rates on Polk Street of $5.00 psf NNN. 810 Van Ness has had their 1251 and 1097 sf spaces on the market for quite sometime and are holding their rates at $3.50 psf NNN. A space of 885 sf at 1452 Bush Street just dropped their rate from $2.50 to $2.00 psf NNN. 752 Post Street dropped the rate to $2.50 psf for their 779 sf space.
How about there is no residential development! Developers trying to sell their sites cannot give them away. 77 Van Ness Avenue, a new mixed-use condominium project is selling units with a one-bedroom unit on the 6th floor of 840 sf with an asking price of $568,773 ($677/sf). A few units are for sale at Daniel Burnham Court, 14th floor 2-bedroom unit of 1009 sf at $669,000 ($663/sf) and 2nd floor 1-bedroom unit of 745 sf at $449,000 ($602/sf).
They could not lease it, so the 15,000 sf vacant building at 1350 Van Ness Avenue is on the market to sell with an asking price of $3,350,000. 1335 Larkin Street auto body garage on 7837 sf of land is on the market at $3,400,000. A 15-unit apartment building at 2725 Van Ness Avenue is priced at $6,000,000 with a cap rate of 3.08% or $400,000/unit. 1636 Bush Street a 2498 sf Victorian office building that has been on the market for many months has dropped their price by $200,000 to $1,695,000.
Jeffrey J. Hutchins
Vice President
Realty Investments
One Daniel Burnham Court
Suite 205c
San Francisco, CA
USA 94109
Tel: 415.776.1177
Fax: 415.776.4084
DRE Lic. #943179
