SAN FRANCISCO — A joint venture between Hines and the National Pension Service of Korea (NPS) has acquired the historic Pacific Gas & Electric Co. (PG&E) campus in the South Financial District of downtown San Francisco. The purchase price was $800 million, according to The Wall Street Journal. The buyers plan to completely reimagine the campus with a $2.5 billion redevelopment project.
The first of two office projects will consist of the restoration and renovation of a 600,000-square-foot office complex dating back to the early 1900s. Hines plans to retain the historic architecture of the building façade and the original lobby. The building systems and technological capabilities will be upgraded in order to achieve the modern functionality of a Class A property.
Secondly, 77 Beale is an existing 1 million-square-foot, 34-story tower that will be repositioned and renamed 200 Mission. The building will receive new systems and aesthetics. Architectural firm Pickard Chilton is leading the design.
Lastly, Hines plans to develop 50 Main, a new apartment complex with more than 600 units. A timeline for construction was not released.
Upon completion, the PG&E campus will represent the largest deal along Market Street in San Francisco over the last 10 years, according to Hines.
“The site of PG&E’s headquarters is undoubtedly one of the best locations along the entire West Coast, and we believe these projects will be the epitome of the next generation of office buildings, designed to answer future tenant needs by addressing what their employees want,” says Paul Paradis, senior managing director at Hines.
The venture between the two companies targets a build-to-core strategy to create a portfolio of prime assets resilient to market uncertainties, says Scott Kim, head of the real estate investment division at NPS. “This project embodies our belief that long-term investments in proven locations, supported by innovation and new technology, will capture sustained demand and create outsized value,” he says.
Houston-based Hines has a long involvement with the PG&E campus, having completed a redevelopment project in the mid-1990s and serving as property manager for a decade thereafter. Historically, Hines has developed, redeveloped or acquired approximately 1,486 properties totaling more than 492 million square feet. Currently, the firm has more than 171 developments underway around the world.
NPS is one of the largest pension funds in the world with approximately $786 billion in assets as of June 30.
— Kristin Hiller