CFAH

From the San Francisco Business times:

Peter Tso, a Chinese investor who owns several properties in Union Square, has paid $8.5 million for the 11,000-square-foot building at 239 Grant St., the first significant retail building to sell in Union Square since early 2008.

The $773-a-square-foot sale price is less than half what retail buildings were selling for during the height of the market in 2007, when 240 Post St. sold for $1,819 a square foot. The last major building that traded in the exclusive shopping district was 33 Grant St., which traded for $1,300 a square foot.

239 Grant is 100 percent leased.
Landlord adds to portfolio of Union Square holdings [Business Times]

Comments from Plugged-In Readers

  1. Posted by asiagoSF

    when those two lines meet, Union Square will fall in the bay
    sorry, I just couldn’t leave this post-less for the whole weekend!

  2. Posted by SausalitoRes

    Does anyone know anything about Joe’s Jeans? From their website, they seem to be another “concept” apparel store with lots of attitude. Four retail locations in all (this is the only one west of Chicago). The website shows photos of various celebs wearing their product.
    Is anyone familiar with them? How popular are they? How’s the strength of their business (and credit)? These aren’t the only people in the world selling fancy blue jeans. If they went belly-up,the owner would be left with no retail tenant in a difficult leasing market.

  3. Posted by chuckie

    Bottom!
    That seems to be the punchline of this lame joke..er story. This building last sold 6/2004 for $3.65M.
    http://www.propertyshark.com/mason/san_francisco/Reports2/showsection.html?propkey=30423334
    I do see that the property was renovated but that’s an f’ing 133% gain during the 5 year hold or a 335% gain on the $1.45M that was put down to purchase the building.
    I happened to walk by the building on Saturday about 4 pm… JOE’s is about a 500 sqft showroom. I seem to recall there were 3 salespeople in the store and no customers even though there was a ton of foot traffic in the area.
    So, the seller is walking away with a nice chunk of change and buyer has 7.2% cap rate…I would say that’s a win-win all around!

  4. Posted by SausalitoRes

    @Chuckie:
    Keep in mind that a lot of value is created in a Union Square building with the addition of a tenant. What may seem like a lot of profit on a five-year “flip” doesn’t account for downtime, refitting costs, commissions to the leasing agent, and a little something to the developer for the effort.
    That cap rate looks great as long as Joe’s holds it together…the rent on that smallish street-level space likely represents most of the building income. If they folded, the building owner would incur heavy costs to find a new tenant (and might end up receiving less rent).
    I suspect the market to sell high $ retail buildings in Union Square isn’t as deep as it was a couple of years ago.
    I repeat my question…has anyone out there heard of Joe’s Jeans? From looking at their website photos, their product looks pretty good on Katie Holmes and Beyonce but not so good on Matthew Perry.

  5. Posted by chuckie

    SausalitoRes, JOE’s Jeans is listed on Nasdaq last trading $0.70 a share..
    http://markets.ft.com/tearsheets/performance.asp?s=us:JOEZ

  6. Posted by SausalitoRes

    Good find Chuckie. It’s $0.68 this morning. Considering the risk, that 7.2% cap rate isn’t looking all that generous.

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