The US real estate investment arm of Swiss insurer Zurich Insurance Group has returned to the San Francisco office market after more than a decade.
Zurich Alternative Asset Management has closed on a $32.8m (€27.9m) acquisition of 394 Pacific Avenue, its first office purchase in the Californian city since 2015.
The seller of the 54,700sqft property was Grosvenor Americas, the US-arm of London-based Grosvenor Group, according to sources that track the sales of office buildings in San Francisco. It had paid $32.2m for the property in 2016.
The price paid by Zurich comes in at $607 per sqft, making it higher than the pricing on many of the recent office building sales in San Francisco, which have been in the range of $300 to $400 per sqft. A factor in Zurich’s transaction is that the property is fully leased and many of the other assets acquired had vacancy issues.
It could mark the start could mark the start of more investments by the insurer in San Francisco, a city that was particularly affected by the post-COVID downturn but is now seeing a potential boost from growth in the AI sector.
Sean Bannon, managing director and head of US real estate for Zurich, said: “We believe that now is a good time to re-enter the marketplace. Rents are increasing in the Jackson Square sub-market where we acquired our asset and new leases are happening including with AI companies. We would like to find a couple more assets to acquire in the San Francisco market.”
Zurich is looking to invest in office, retail, industrial and apartments in San Francisco. It had attempted to acquire a retail asset in the city, but was not the winning bidder. Bannan said Zurich might look at other US office markets, including Nashville.
Zurich has capital to invest in US real estate through its balance sheet and a core open-ended fund it formed in 2021 on behalf of insurance group affiliates.
