- Insurer invests in third-priciest office market as rents jump
- Park Tower at Transbay to break ground Tuesday, finish in 2018
MetLife Inc. is taking a majority stake in a 43-story office tower being built next to San Francisco’s Transbay Transit Center, expanding the biggest U.S. life insurer’s holdings in one of the country’s most expensive office markets.
MetLife formed a joint venture with Chicago-based John Buck Co. and Golub & Co. for the property, called Park Tower at Transbay, the companies said in a statement before the building’s groundbreaking Tuesday. The tower, which doesn’t yet have a tenant, is scheduled for completion in 2018.
Financial terms of the venture weren’t disclosed. Fred Pieretti, a spokesman for MetLife, said the company will own a majority interest in the building.
The partners are aiming to woo large technology tenants with proximity to a major transit center that’s under construction, and amenities such as balconies with city and water views, high-end retail shops and a three-story atrium lobby. Salesforce.com Inc., the biggest maker of customer-management software, last year agreed to lease most of a tower two blocks away that will be the city’s tallest when it’s done in 2017.
Park Tower, with about 743,000 square feet (69,000 square meters), will be built at the intersection of Howard and Beale streets, and will feature a park at ground level.
“We’re marketing it towards Silicon Valley companies who want a large presence in San Francisco,” as well as local companies seeking a headquarters in the city, said Christopher Roeder, international director at Jones Lang LaSalle Inc., which brokered the MetLife deal and is handling the building’s leasing.
The tower will have other features that may appeal to tech tenants, including exposed ceilings and large, 28,000-square-foot concrete floors at the base, Roeder said in a telephone interview.
The surrounding area has been rife with new development, including apartments, retail properties and green space, as growth in the technology and life-sciences industries bolsters real estate demand. San Francisco led the country in office-rent growth in the third quarter from the previous three months, based on prices after any landlord discounts, according to Reis Inc., a property-research firm.
Effective rents in the city grew 1.5 percent, to an average of $40.77 a square foot, about 65 percent higher than the U.S. average. Only New York, where office rents averaged $55.18 a foot, and Washington, at $43.96, are more expensive, Reis data show.
Park Tower “fits our long-term strategy of developing core assets in markets with strong fundamentals,” Robert Merck, global head of real estate for MetLife, said in the statement.
Excluding Park Tower, MetLife owns 2.2 million square feet of office and industrial space in San Francisco, with a total of 6.4 million square feet in the Bay Area, which also includes Oakland and Silicon Valley.