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New Owners Have Big Plans for Multimedia Gulch Building
Arthur M. Louis, Chronicle Staff Writer
A private investment partnership has purchased a modest building on Brannan Street in San Francisco and plans to spend up to $50 million to turn it into one of the premier office properties in Multimedia Gulch.
The two-story, 140,000-square-foot building is at 475 Brannan, between Third and Fourth streets. The new owners will restore the 89- year-old building's brick and timber structure, retrofit it against earthquakes and add two more stories, bringing total floor space to 250,000 square feet. That will make it the second largest office building in Multimedia Gulch. A U-shaped atrium will be cut into the interior to add windows and light, and the basement will be converted to a 200-car garage.
The building will be fitted with up-to- date telecommunications, mechanical and electrical systems.
Stein Kingsley Stein, a real estate investment and advisory firm, teamed up with an unidentified partner to buy the building last week from Brannan Acquisition Partners, a Houston investment group that owned the property for a year. Although the purchase price was not disclosed, the property has an assessed value of $4,590,000, according to the San Francisco assessor's office.
At present, the building is occupied entirely by administrative employees of Southern Pacific. SP, whose operations are being shifted to St. Louis and Omaha in the wake of its acquisition by Union Pacific, will vacate the building early next year.
Dan Kingsley, a principal in Stein Kingsley Stein, said the renovated building should be ready for occupancy by late 1999. He said his group hasn't lined up any tenants yet, but ``we have what we consider to be active prospects. We've had extensive discussions with very large tenants.'' He said he ``wouldn't be surprised'' if the building can be filled with just two substantial multimedia companies. ``We're very confident. We've been active in this market the past few years.''
His firm, in partnership with other investors, already owns buildings at 301 Brannan, where Advent Software is based, and 139 Townsend Street, where Polygram Records has offices.
Kingsley said the lease rate in the newly acquired building will be around $30 per square foot per year, or $7.5 million annually overall. That is at the high end for quality Multimedia Gulch offices, many of which lease for less than $25 per square foot.
However, rates have lately been climbing at roughly a dollar a month in the area, as more and more companies in the burgeoning multimedia industry compete for limited space. Multimedia Gulch -- roughly bounded on the north by Harrison Street, on the east by the Embarcadero, on the south by China Basin and on the west by 7th Street -- houses about 200 multimedia companies with 2,000 employees in 5 million square feet of office space.
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