Prudential Financial Inc. (PRU:US), the second-biggest U.S. life insurer, bought a San Francisco office tower amid increased investor demand for commercial real estate in the city, according to two people familiar with the deal.
The insurer’s real estate investment management unit, Prudential Real Estate Investors, is the buyer, said one of the people, who asked not to be identified because they weren’t authorized to speak publicly about the deal. The 100 Spear St. high-rise in San Francisco’s South of Market district was purchased for $100 million and gives the buyer 203,000 square feet of space that is more than 91 percent leased, seller Clarion Partners LLC said yesterday in a statement.
San Francisco is the top-ranked U.S. office market for revenue per square foot through 2017, and grew last year by an estimated 11 percent, Green Street Advisors said in an October report. The city’s economy has been fueled by technology firms such as Salesforce.com Inc. and Twitter Inc., and offers “superior” returns along with West Los Angeles and Boston, according to the Newport Beach, California-based research firm.
“We have a very hands-on, pro-active management approach with respect to all of our portfolio properties,” Mark Weld, managing director for New York-based Clarion, said in the statement. “San Francisco in particular is a dynamic marketplace where we have recently aggressively executed on opportunities on both the buy and the sell side and expect to continue to do so.”
Bob DeFillippo, spokesman for Newark, New Jersey-based Prudential, didn’t immediately respond to phone messages after regular business hours.
The 100 Spear St. property has a renovated lobby, remodeled floors and upgraded elevators, Clarion said.
Office rents in San Francisco soared 27 percent in the fourth quarter from a year earlier to an average $48.83 a square foot, according to broker CBRE Group Inc. Citywide office costs including rent, taxes and service charges jumped 36 percent last year, the biggest gain of any global market, CBRE said in a separate report. Building sales climbed 93 percent to $6.37 billion in 2012, according to Real Capital Analytics Inc.
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