The San Francisco office tower known as the Standard Oil Building that was built more than a century ago for John D. Rockefeller has long reflected the city’s economic ups and downs. Now an end may be in sight for several recent years of financial woes.
The recent troubles for the 22-story historic property at 225 Bush St. began with the departure of a string of tenants following the COVID-19 pandemic. With the building’s value plummeting, owner Kylli defaulted on the $350 million debt backed by the building in November 2024.
But its lenders have engaged real estate services firm JLL to sell the nonperforming $350 million loan backed by the building. The listing comes amid a string of discounted office properties that have been eagerly scooped up by investors, especially since San Francisco’s narrative has shifted to that of a city back on the rise thanks to the artificial intelligence boom driving some property demand.
"The loan structure and underlying collateral present an attractive entry point for a new investor to take advantage of the rebound occurring in San Francisco," JLL Senior Managing Director Rob Hielscher of the firm's Capital Markets Investment Sales and Advisory team said in a statement.
JLL is selling the loan on behalf of a consortium of CMBS securitization trusts that collectively hold the debt known as Benchmark 2019‑B14, Benchmark 2020‑IG2, CF 2019‑CF3, COMM 2019‑GC44, and UBSCM 2019‑C18.
Ups and downs
Located in a prime section of the Financial District just a few blocks from trendy Jackson Square, 225 Bush St. was home to a number of high-profile tenants during the city’s last tech boom, including video game streamer Twitch, e-commerce platform Groupon and Zillow, the digital housing information service as well as old-economy heavyweights such as Blue Shield California and Wells Fargo Bank.
In 2012, San Francisco-based Flynn Properties, partnering with Germany’s Seb Immobilien Investment, along with GEM Realty Capital, paid $212 million for the iconic tower at a moment when the city was on the verge of dramatic recovery following the Great Recession.
Flynn’s plan was to renovate and redefine the building as a hub for creative technology companies that were then driving the city’s comeback.
The partners sold it fully leased in 2014 for $350 million to Kylli, the U.S. branch of Chinese investor Genzon. The building is now half vacant.
Commissioned by Rockefeller in the early 1920s, 225 Bush St. was a symbol of the companies that were the backbone of the American economy for much of the 20th century, housing the headquarters of Standard Oil — later Chevron — throughout its massive mid-century expansion until the company relocated to the suburbs in 2002 and later Texas.
The building was the tallest in San Francisco for the first three years of its existence. Designed by renowned architect George Kelham, the building was modeled on the Federal Reserve Bank of New York and features a combination of brick and intricate terra cotta details.
The building has undergone several renovations in recent years and now features modern amenities that include a fitness center and bike storage in addition to details like working windows and 13-foot ceilings. JLL noted in its marketing materials that new owners have “the potential to further activate the building by adding a premier tenant amenity center."
Current tenants include Crusoe Energy Systems, a Denver-based firm that builds AI-optimized data centers, and Handshake, a high-tech search platform for college students and recent graduates.
In recent months, explosive growth across the AI sector, coupled with many companies’ emphasis on in-person work, has translated into a procession of office deals that has helped reshape demand dynamics in many pandemic-battered cities.
In San Francisco alone, AI tenants are on the hunt for about 9 million square feet of office space, up from 6.5 million earlier this year, according to JLL.
And AI companies have signed upward of 85 leases in San Francisco so far this year, according to data from Cushman & Wakefield. San Francisco is home to the bulk of leasing activity among AI firms.