SAN FRANCISCO — Los Angeles-based Hudson Pacific Properties Inc. (NYSE:HPP) has completed the $90 million acquisition of 901 Market Street, a mixed-use property located at the intersection of San Francisco’s Union Square and South of Market submarkets. The 212,000-square-foot historic building consists of 149,000 square feet of office space and 63,000 square feet of ground floor and lower level retail space. The purchase price comes out to be approximately $425 per square foot.
“We are very pleased to close the acquisition of the 901 Market Street property,” said Victor Coleman, chairman and CEO of Hudson Pacific. “901 Market Street is a great complement to our San Francisco portfolio and represents a tremendous opportunity to reposition a property in one of the best locations and best markets in the country.”
The property, a former Hale Department Store building, is located adjacent to the Westfield San Francisco Shopping Centre and Union Square BART entrance. It is currently 62 percent leased to a diverse tenant base. The seller was CFRI/Urban 901 Market LLC.
The San Francisco market is considered a marquee arena for commercial real estate activity and development. ULI and Pricewaterhouse Coopers named San Francisco the third best market in the U.S. in their most recent Emerging Trends report, citing the city’s office market as a key contributor. Investors are targeting well-located office properties in San Francisco with high vacancies like 901 Market Street because of the upside with rental increases, according to the report.
The historic property was built in 1912 and has been maintained to operate efficiently, earning the Energy Star label in 2011. The building was renovated in 1986 and features a central six-story, sky-lit atrium.
Hudson Pacific’s portfolio consists of approximately 4.7 million square feet of space, not including undeveloped land. The company’s portfolio will exceed 5 million square feet with the addition of another previously announced purchase, Olympic Bundy Media Campus in west Los Angeles. Hudson Pacific purchased the property for $89 million.
Hudson Pacific Properties’ stock price closed Tuesday at $16.08 per share, up from $15.03 per share at this time last year.
— John Nelson