Southern California Investor BH Properties Closes in on Discounted Deal for Office in Hard-Hit San Francisco Market

Southern California investor BH Properties is making waves in the Bay Area real estate market with its latest acquisition of a discounted office space in downtown San Francisco. The 111,000-square-foot office at 989 Market St. is set to be purchased for $13.5 million, a significant 80% discount from its previous sale price of $61.2 million a decade ago.

The deal comes at a time when office valuations are declining nationwide, with the U.S. West region experiencing some of the steepest drops. In the past year, office building valuations in the West have decreased by about 5.1%, with San Francisco offices losing nearly 10% in value. The pandemic has exacerbated these trends, with remote work and tenant reductions contributing to a historic high vacancy rate of 22.2% in San Francisco.

BH Properties’ latest acquisition is part of a larger buying spree in the Bay Area, following its purchases of the Holy Names University campus in Oakland and the Anchorage Square shopping center in San Francisco. The investor paid about $123 per square foot for the office space, lower than some recent discounted deals in the area.

The real estate market in the Bay Area continues to face challenges, with investors and lenders grappling with decreased demand and higher interest rates. As the region navigates these uncertainties, BH Properties’ strategic acquisitions highlight the evolving landscape of commercial real estate in one of the nation’s hardest hit markets.