San Francisco Office Buildings Selling for $300–$400 Per Square Foot as Local Buyers Outpace Institutions

Written by:

Rudi Davis

Date:

16 Sep 2025

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Major San Francisco office properties are trading at dramatic discounts to replacement cost, creating what one local expert calls an unprecedented opportunity for investors with ready capital, particularly those with intimate market knowledge.

“You’re talking about big office projects trading from 200 to 300 to $400 a foot, well below replacement cost,” says Cameron Baird, Senior Vice President at Kidder Mathews, describing current market conditions that have attracted significant investor interest.

The Local Advantage

While institutional capital remains active in San Francisco, local players are often moving faster to secure deals, according to Baird. “There’s a lot of local players that are really dipping in, that know this market,” he says, noting these investors are “structuring their finances and bringing partners together because they can see the writing on the wall.”

This local advantage stems from what Baird describes as “market knowledge and their awareness of what’s happening,” allowing them to “deploy capital faster than institutional capital that’s not local.”

The Investment Thesis

For investors with sufficient capital, the opportunity extends beyond immediate cashflow. “Some of these deals are, you could just basically land bank it,” Baird explains. “You buy it at a really low basis, you don’t even have to occupy it.”

Larger funds with available cash can acquire properties that might not be currently financeable, using their fund leverage instead. “They can buy something, and they don’t even have to really work on it — they could just sit on it for five years and probably double their money,”Baird says, though he notes most investors plan more active strategies.

The Rental Market Dynamic

Current market conditions have created a two-tier rental market. “You’ll get $36 rents on sort of ‘as is’ deals,” Baird says. “Or if you want to pay the freight, you can certainly pay a little bit more and get a TI package.”

At the premium end of the market, some properties are setting new records. “Class A spaces that are water views and things like that, those guys are setting records,” Baird notes. “In the Trans America building, he’s talking about how he’s getting $200 rents on some of those floors.”

Competition for Distressed Assets

While opportunities exist, competition for well-priced assets remains robust. Baird describes a recent transaction around Union Square where a property with a $13 million note was expected to trade at $7-8 million. “There was four or five people that made it to the second round,” he says, though ultimately the lender decided to retain the asset.

“The distress is not so distressed anymore,” Baird observes. “Every one of the large towers that’s going for these sort of really discounted prices, there’s multiple different offers on them. It’s not like there’s one buyer, it’s there’s multiple rounds.”