San Francisco's 560 Mission Trades for Record Price

[Huligar]

June 19, 2006
By Barbra Murray, Contributing Editor

The renowned 665,000-square-foot office tower at 560 Mission St. (pictured) is under contract to be purchased for a figure reportedly in excess of $400 million, or approximately $700 per square foot, said to be the highest price ever paid for a San Frisco office building.

International real estate firm Hines, which co-owns the property with CalPERS in a joint venture known as National Office Partners L.P., or NOP, confirmed that it committed to selling the property to the Irvine Co. Eastdil Secured assisted NOP in securing a buyer for the building, which is also known as the JP Morgan Chase Building.

NOP developed 560 Mission St., which was designed by the architectural firm of Cesar Pelli & Associates, four years ago in the South Financial District at a cost of $200 million. In addition to its Class A office offerings, the 31-story building also features 5,000 square-feet of retail space and a two-level underground parking facility. JP Morgan Chase leases the entire building under a long-term agreement that expires in 2017; the company occupies about half of the structure and subleases the remaining space.

“One of the reasons the building priced so high is probably that it was fully leased to JP Morgan at the height of the dot-com era under a 15-year deal at rental rates that were likely somewhere in the $60 per-square-foot range,� Brad Van Blois, Cushman & Wakefield Inc. senior research associate, told CPN. According to Cushman & Wakefield’s second quarter figures, the average rental rate for class A office space in San Francisco’s central business district, where the overall vacancy rate is 12.7 percent, is just over $39 per square foot. “It’s a safe investment,� he said. “They already know what the returns are going to be.� A Hines spokesperson told CPN that the company would not comment on pending transactions, and Irvine officials did not return calls by deadline.