In the latest sign of how the artificial intelligence boom is bolstering San Francisco’s office market, a creative office building near the city’s waterfront sold for $10 million after languishing in foreclosure limbo for many months.
Nashville-based Realm, a high-net-worth investment collective, and San Francisco investor and developer Cannae Partners scooped up the four-story, 65,718-square-foot building at 340 Bryant St. in the city’s up-and-coming South Beach neighborhood, a former industrial area that is now dotted by high-end condo buildings.
The sale price represented the diminished fortunes of the uniquely shaped 1932 office building that's tucked into the grassy center of a looping freeway on-ramp to the San Francisco-Oakland Bay Bridge. It got a $14.7 million makeover that added modern systems and a roof deck back in 2015, as tech tenants were vying for office space in the city. Pollack Financial Group paid $49 million for the property in 2017.
Like many other office properties in the city, its fortunes changed after the onset of the COVID-19 pandemic in 2020. It was mostly occupied by the coworking venture WeWork, which failed to pay rent on its 48,000-square-foot lease there throughout 2021, according to bondholder notes. The previous owner defaulted on a $30.7 million loan backed by the property in 2022, and the following year a special servicer foreclosed on it. It hit the market in mid-2024.
In a statement, Realm cited San Francisco’s ongoing office market recovery in the wake of the AI boom. Founder and Chief Executive Travis King said the building is “positioned to attract leading-edge tenants while capturing near-term cash flow and long-term appreciation.”
“South Beach’s resilience, combined with citywide recovery signals, suggest rapid stabilization and sustained momentum,” he said in a statement.
Growing momentum
The buyers said their investment strategy for 340 Bryant centers on value-add execution, targeted leasing, selective capital improvements and marking rents to market, to capture upside as San Francisco’s office transitions to recovery.
Computer accessories manufacturer Logitech also previously had a presence in the building, which is now vacant.
Cannae and Realm have scooped up several properties around the Bay Area in recent months amid growing enthusiasm surrounding the region’s real estate rebound. The pair paid $13.5 million for a Silicon Valley industrial building in the Peninsula city of Milpitas that’s home to TE Connectivity, a manufacturer of electronic connectors. They acquired a biotech manufacturing facility for $8.5 million in the East Bay suburb of Pleasanton in September.
Back in 2012, Cannae purchased a historic building at 1019 Market St. for $9.5 million and embarked on a full renovation of the property, leasing it to software company Zendesk and then selling it for $48.25 million in 2014 at the height of San Francisco’s last tech boom. Zendesk departed in 2022 as part of a pandemic-era downsizing of its footprint in the city, and the building sold at a public foreclosure auction for just over $10 million in September.
San Francisco’s office market is enjoying a resurgence, driven by the rapid growth of artificial intelligence companies. AI startups have helped reinvigorate the nearby SoMa, or South of Market Street, neighborhood and other popular downtown-adjacent tech hubs following several difficult post-COVID-19 years.
While the city is still grappling with a vacancy rate of about 23%, according to CoStar data, AI companies have been a critical source of demand as many have fueled blockbuster deals and have been quick to sign on for more space, in some cases within a matter of just a couple of months.
ChatGPT maker OpenAI, Nvidia, Anthropic, Harvey AI and other companies have been at the forefront of that trend, signing some of San Francisco’s largest office deals and helping to drive leasing activity back toward positive territory.