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Mar. 13, 2013

Over-Performing San Francisco Office Market Produces Yet Another Office Deal

By Alex Girda, Associate Editor

San Francisco’s improving office market has produced yet another deal after a joint venture created by Hines and Invesco Real Estate moved to acquire an iconic construction located in the city’s South Financial District. The two real estate companies have completed a deal making their joint venture the new owner of the Rialto Building. While official financial terms for the deal were not disclosed, market specialists place the transaction’s value at around $57 million. The entity selling the Rialto Building was Africa Israel USA, or AFI USA.

Located at 116 New Montgomery St., the Renaissance-style Rialto was initially developed in 1902. The Great Earthquake of 1906 called for an extensive interior rebuilding and renovation process to be undertaken by the Meyer & O’Brien Architects-designed structure. It offers tenants 135,486 square feet of office and retail space.

AFI USA had owned the Rialto since 2007, a time frame in which the company had restoration works focusing on the original design of the structure, with main points of interest being the lobby, the elevator’s ornate metal doors, the painted panel ceiling, marble floor and bronze staircase. The building had an occupancy rate of around 85 percent at the time the transaction was completed. The current tenant roster includes names such as Trulia, Nelson/Nygaard, Walgreens and Chipotle.

According to a press statement issued by Hines Senior Managing Director Cameron Falconer, now that the building is part of the company’s portfolio, “Hines and Invesco will continue to invest in the building to complete its transition to a ‘creative core’ asset that caters to San Francisco’s burgeoning technology and multimedia industry tenants.” AFI USA CEO, Tamir Kazaz, went on to say that the deal “proves that San Francisco is still unmatched as the nation’s top-performing office market.”

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