San Francisco's One Market Plaza Faces Significant devaluation
The value of San Francisco's One Market Plaza, a 1.6 million-square-foot office campus, has been drastically reduced by over $500 million from $1.76 billion in 2016 to $1.25 billion. The property owners, Paramount Group and Blackstone, have paid down their loan to $850 million to secure a three-year extension, reflecting a 29% decrease in appraised value. This reduction may indicate the property's connection to the general downturn in the San Francisco office market. Additionally, major tenants such as Google and Visa are exiting or downsizing their office space, further exacerbating the devaluation.
Key Takeaways
- One Market Plaza's appraised value slashed by over $500 million, signaling a 29% decrease from its 2016 value.
- Building owners Paramount Group and Blackstone reduced their loan to $850 million for a three-year extension, reflecting the downturn in the San Francisco office market.
- Major tenants like Google and Visa are downsizing their office space, contributing to the potential for further devaluation.
- A quarter of the building's leases are set to expire before 2026, impacting its occupancy and value.
Analysis
The devaluation of One Market Plaza aligns with the broader downturn in the San Francisco office market, impacting stakeholders like the building owners and major tenants. The impending expiration of leases further threatens the building's occupancy and value, potentially influencing the demand for office space in the region and commercial property investments across the US. Short-term effects may include financial strain for the building owners, while long-term consequences could involve significant shifts in office space requirements and commercial property values in San Francisco.
Did You Know?
- One Market Plaza: A 1.6 million-square-foot office campus in San Francisco, experiencing a significant value reduction from $1.76 billion to $1.25 billion.
- Paramount Group and Blackstone: The building owners who reduced their loan to $850 million to secure a three-year extension, reflecting the market downturn.
- Lease Expirations: Major tenants such as Google and Visa are downsizing, potentially leading to further devaluation due to expiring leases.