Invesco Real Estate and ASB Real Estate Investments have sold San Francisco office assets at steep discounts, reflecting a broader downturn in US tech sector-dependent office markets impacted by post-pandemic work trends.
Ellis Partners and Flynn Properties have agreed to buy the 631 Howard property for around $35.6m (€32.6m) from Invesco, according to people familiar with the matter.
The 631 Howard asset was last sold for $62m in 2014. The 108,768sqft asset is fully leased to SC Johnson and Finix with leases expiring in September 2025.
Ellis Partners declined a request for comment.
According to sources, ASB has also sold the 187,000sqft 795 Folsom asset with a 33% occupancy to Fountainhead Development for $46.8m.
ASB, which acquired the property for its core open-ended fund in 2013 for $110m, declined a request for comment.
The San Francisco office market is experiencing a downturn, with even fully occupied properties selling at reduced valuations, according to market sources.
As reported in IPE Real Assets, US cities with office markets dependent on the tech sector, like San Francisco, have been notably affected by post-pandemic working practices. Capital Economics had forecast a 40% fall in capital values in the San Francisco office market between 2023 and 2025.
Late last year, IPE Real Assets also reported that Rubicon Point Partners paid $72m for The Townsend Building in San Francisco, representing a 45% drop in the price that CBRE Investment Management paid to buy the US office building three years earlier.
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