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Morgan Stanley Grabs Top Office Sale in SF South Financial District
By J.W. Elphinstone - CPN Online
August 17, 2004 - In the highest-priced office sale in San Francisco's South Financial submarket this year, Morgan Stanley Real Estate's Prime Property Fund bought the 610,000-square-foot Hills Plaza from Shorenstein Co.'s first fund for $197 million. Eastdil Realty marketed the property.
The property, 98.5 percent leased with little turnover through 2010, is home to both Gap Inc. and the corporate headquarters of The Sharper Image. It is made up of two buildings and sits on the waterfront along the Embarcadero promenade, overlooking Bay Bridge and Treasure Island. The 2 Harrison St. building is the original Hills Brothers Coffee factory built in 1925. The second building, 345 Spear St., was erected in 1989 while the first building underwent renovations.
The $323 price per square foot ranks second only to American Financial's acquisition of 215 Fremont St. for $367 per square foot.
"Morgan Stanley found Hills Plaza to be attractive because it's almost entirely leased, has very little rollover and it fits as a core long-term investment," said Donald Polishuk, senior vice president of Transwestern Commercial Services. "It's right on the waterfront, and those properties always go for a premium because they have a much lower vacancy rate compared to the rest of the market. And although the building is almost completely leased, you still look at that to determine a stable, solid building."
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