Investment Offering Fall, 2014

838 Grant
San Francisco, CA

VALUE-ADD / OWNER-USER INVESTMENT OPPORTUNITY

Confidential Offering Memorandum

Capital Markets | Investment Properties

The Offering

Unparalleled
world-class
location in the
best performing
office market in
the country

CBRE, as exclusive advisor, is pleased to present the unique opportunity to acquire

838 Grant Avenue, San Francisco, California (the Property) an approximately
63,126 rentable square foot, six (6) story office and retail building located midblock on Grant Avenue between Clay and Washington Streets. The building was
built in 1966 by present ownership. This iconic building is coming to market for
the very first time and offers investors a rare, value-add opportunity in the heart of
Chinatown in downtown San Francisco. The future owner may continue operating
the building in its current condition, increasing rents while keeping operating
expenses low and enjoying excellent cash returns or fully renovating the building,
taking advantage of its excellent bones to create ideal space to cater to creative/
technology tenants in a portion of the building and reposition the existing office/
retail to meet the needs of todays retailers and restaurateurs.
838 Grant Avenue is an approximately 63,126 rentable square foot, six (6) story
reinforced concrete office and retail building and is situated on approximately
8,250 square feet of land. The Property is located on the east side of Grant Avenue
between Clay and Washington Street in the heart of the Citys Chinatown. It is
currently configured with retail on the park level, ground and mezzanine spaces,
offices on floors 2-4 and a restaurant/banquet/event space on the 5th, 5th floor
mezzanine and 6th floor of the building.
The building houses over 27 tenants in suites ranging from 139 square feet to
7,600 + square feet. The building owner occupies the entire park level and second
floors of the building, representing 23.5% of the Property.

942 Market Street | San Francisco, CA

Property Address

838 Grant Avenue

Rentable Area

63,126 rentable square feet

Year Built

1966

% Leased

98.6%

Number of Tenants

27

Lease Expiration Date(s)

M-T-M, 12-31-2014

03

INVESTMENT HIGHLIGHTS
Landmark Chinatown Location
Located mid-block on the east side of Grant Avenue between Clay and Washington Streets
and is the tallest and most prominent building in the neighborhood.
World-Class Location The Property is located in the heart of Chinatown on downtown
San Franciscos oldest street, Grant Avenue. The property is immediately adjacent to Portsmouth
Square Park and garage and is located two short blocks to the Transamerica Pyramid.
Pre-eminent Building 838 Grant is the tallest and most recognizable landmark in
Chinatown, with no other properties currently for sale anywhere near the size and scale
of the property. Height limits surrounding 838 Grant are 50 feet, thus it is unlikely that new
construction will be anywhere near the height and scale of 838 Grant Avenue.
Bridge to SOMA by virtue of the propertys proximity to the to-be-built Central Subway
Chinatown stop, 838 Grant Street will bridge Chinatown to SOMA.
Outstanding Access to Public Transportation 838 Grant is surrounded by the Citys
public transportation infrastructure, with MUNI light rail and BART (the Bay Areas highspeed rail system) less than 8 blocks away, the Chinatown stop of the Central Subway less
than 2 blocks away, (currently under construction) as well as numerous surface bus stops
less than 1 block away. This robust public transportation infrastructure easily connects
the Property to all parts of San Francisco, the South Bay, East Bay and Marin county.
With the opening of the Central Subway in 2017, the Property will easily access the
Caltrain Station at 4th and Townsend, which provides heavy rail service to the Peninsula
and Silicon Valley. 838 Grant also benefits from easy access to Interstates 80 and 280
and Highway 101, providing convenient automobile transportation connections to the
entire Bay Area.
Portsmouth Square Park and Garage Portsmouth Square San Franciscos first
open space, widely referred to as the heart of Chinatown, is a history and amenity rich
park located immediately to the east of 838 Grant. The park is also home to a 505 stall, 4
level subterranean public parking garage which offers hourly, daily and monthly parking to
the general public. The San Francisco Planning Department has recently designated the
Portsmouth Square Area Project to reimagine one of the Citys most significant historic,
cultural and civic spaces through a joint effort of the San Francisco Planning Department
and the San Francisco Recreation and Parks Department. Presently, the Project is in
phase 2 Portsmouth Square concept design with detailed design development,
environmental review and legislation & approvals anticipated in 2015.
Tourism San Francisco hosted 16.9 million visitors in 2013, with visitor spending reaching
its highest level ever of $9.38 billion. Chinatown is one of the top 3 neighborhoods visited
according to the San Francisco Travel Association.

04

942 Market Street | San Francisco, CA

05

838 Grant
Avenue

06

942 Market Street | San Francisco, CA

07

Ideal Owner-User Opportunity

With the entirety of 838 Grant Avenue becoming available on or about December 2014 and an unparalleled North Financial District
location, the Property is an ideal candidate for a wide variety of owner-users including venture capital, technology, entertainment,
retail, retail mall operators or family/private companies of any kind. With the lack of quality space alternatives in NOMA and a wide
variety of financing options available, 838 Grant Avenue will appeal to owner-users looking to control their real estate destiny in
this supply-constrained marketplace.

Free and Clear

The Property will be delivered free and clear of existing financing, allowing an investor or owner-user to capitalize the transaction
in the most efficient manner.

Excellent Market Fundamentals Nations Strongest Office Market

San Franciscos office market fundamentals continue to be the strongest in the nation:
Average vacancy rates across San Francisco have dropped to 6.2%, down over 55% from their 2010 highs. The vacancy rate for
CBD is currently 6.8%, a nearly 75% decline since 2010.
Average asking rental rates across San Francisco have increased for 17 straight quarters. NOMAs average asking rental rates
have grown over 98% during that time.
San Francisco has experienced positive net absorption in each of the last 14 quarters, with over 6 million square feet of total
positive net absorption since the beginning of 2011.

INVESTMENT HIGHLIGHTS (cont)

Value-Add Opportunity
The entire building will be unencumbered upon the expiration of the Empress of Chinas lease in December 2014 all other tenants
are M-T-M.
Conversion to Creative Space: Tenant demand continues unabated for well-located, quality creative space, with these spaces
leasing faster and at significant rental rate premiums. With the M-T-M leases and the Empress of Chinas lease expiring in December
2014, the future owner will have maximum flexibility to take advantage of what is an excellent leasing marketplace in an ideal
location in close proximity to the downtown financial district. With nearly 18 clear ceiling heights on the fifth floor and nearly 12
clear heights on the sixth floor of the building, concrete floors, beautiful waffle ceilings and extensive window-line showcasing
outstanding bay and City views, 838 Grant has the potential to become some of the finest creative office space in San Francisco.
Conversion to Retail Mall Concept: Unparalleled opportunity for restaurant and retail space in the heart of Chinatown. This
flagship configuration has access and visibility not only to the heavily trafficked Grant Avenue but also Portsmouth Square Park.
The park is a bustling public space with significant local and tourist traffic year round. The impending park renovation will only
make the space more inviting and primed for a retailer or restaurant to play off of the activity. The space is arranged such that a
restauranteur could create one or more dining experiences and/or curate a market place which would be a destination for locals
and tourists from around the globe, a blank canvas and opportunity to amenitize an iconic destination. San Francisco is a City
with a significant culinary culture and Chinatown is a highlight.

08

942 Market Street | San Francisco, CA

09

838

Grant
San Francisco, CA

Investment Contacts

Leasing Contacts

Debt & Structured Finance

Dave Terzolo
Senior Vice President
+1 415 291 1732
dave.terzolo@cbre.com
Lic. 00906167

Charlie Withers
Senior Vice President
+1 415 291 1715
charlie.withers@cbre.com
Lic. 01414522

James Korinek
Executive Vice President
+1 415 772 0416
jim.korinek@cbre.com
Lic. 01917740

Sean Sullivan
Executive Vice President
+1 415 772 0139
sean.sullivan@cbre.com
Lic. 01199428

Laura Sagues
Urban Retail
+1 415 772 0122
laura.sagues@cbre.com
Lic. 01888298

Michael Walker
Vice President
+1 415 772 0278
michael.l.walker@cbre.com
Lic. 01843658

CBRE, Inc. | Broker Lic. 00409987

101 California Street, 44th Floor | San Francisco, California 94111

Capital Markets | Investment Properties

2014 CBRE, Inc. The information contained in this document has been obtained from sources believed reliable. While CBRE, Inc. does not doubt its accuracy, CBRE, Inc. has not verified it and makes no guarantee,
warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent
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