DivcoWest and Blackstone Real Estate have acquired 199 Fremont Street, a 25-story, 420,000-square-foot office building in downtown San Francisco.
The partners paid $111 million, making the deal the city’s largest post-pandemic office sale to date, according to the San Francisco Business Times.
The partners’ involvement signals renewed institutional interest in the city’s struggling office sector, where high vacancies and financing uncertainties have stymied large transactions.
Blackstone, which had previously devalued its nearby asset at 45 Fremont Street to zero due to market headwinds, noted a recent uptick in leasing activity. The firm, alongside DivcoWest, plans to revamp 199 Fremont, renaming it 300 Howard Street. Plans call for turning it into a contemporary workspace with amenities such as a wellness and fitness center and a conference facility.
The building is currently vacant. It sits near Salesforce Park, previously housing tenants like Fitbit and StubHub. A prior leasing attempt with Databricks fell through when the company chose a different location.
This acquisition also represents a re-entry for DivcoWest, which already owned a 49 percent stake in the building since 2020, alongside CalSTRS. The original valuation then was significantly higher at $905 per square foot. Other previous stakeholders included German fund manager Manova Partners and DWS, which managed a stake for the AFL-CIO’s Building Investment Trust.
The transaction highlights growing investor willingness to acquire San Francisco office properties at steep discounts compared to pre-pandemic valuations, then reinvest in improvements to attract tenants. Other recent deals with the same strategy featured New York Life, Barings, Brookfield and Flynn Properties.
DivcoWest continues to bet on San Francisco, with other assets including 301 Howard Street and 550 Terry A. Francois Boulevard, the latter leased to OpenAI. Gregg Walker, DivcoWest’s president, emphasized the area’s innovation potential, reinforcing the firm’s long-term commitment to revitalizing downtown office assets.
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