Investor Activity Heats Up as SF Office Market Shifts

After years of volatility, San Francisco’s office market is showing new signs of momentum—and opportunistic investors are taking notice. With prices still well below pre-pandemic levels, several high-profile assets are hitting the market, drawing renewed interest and signaling the early stages of a market recovery.

In Q1 2025, the average price for office towers in San Francisco’s Financial District hovers around $310 per square foot, a significant drop from the pre-2020 average of $800 per square foot. For investors with a long-term outlook, that delta represents a potential upside.

Owner-Users Step In

Among the latest deals: San Francisco-based fintech LendingClub Corp. is acquiring 88 Kearny Street, a 21-story, 234,000-square-foot tower, for $74.5 million—roughly $318 per square foot. The seller, Teachers Insurance and Annuity Association of America, is exiting the property as LendingClub prepares to make it their new headquarters.

Distressed Assets Hit the Market

Meanwhile, several notable assets are being listed as distressed office properties change hands.

• 45 Fremont Street, a 620,000-square-foot tower owned by Shorenstein and Blackstone, is now being marketed by Eastdil Secured at the direction of Bank of America, the lender on a $347 million loan originated in 2019. Blackstone had previously written down its 49% stake in the property to zero.
• Eastdil is also marketing a $417 million loan secured by Market Center, a two-building, 745,000-square-foot complex at 555–557 Market Street, once the downtown HQ of Chevron.
• At 55 Second Street, the KPMG Building—owned by Paramount—is seeing its $187.5 million loan marketed by Newmark. The 380,000-square-foot tower is expected to trade in the mid-to-high $300-per-square-foot range. Anchor tenant KPMG is scheduled to relocate later this year.

Paramount has now written down its stakes in three major San Francisco properties, including:

• A 44% stake in the KPMG Building (originally purchased for $402 million in 2019),
• The Market Center (acquired for $722 million),
• And 111 Sutter, a 293,000-square-foot tower acquired for $227 million.

Paramount defaulted on its Market Center loan last summer. Flynn Properties is now in talks to purchase the debt for approximately $175 million, or $230 per square foot, according to the San Francisco Business Times.

Largest Office-to-Resi Conversion in the Works

Another key development: Forge Development Partners is in negotiations to acquire 420 Montgomery Street, the 409,000-square-foot former headquarters of Wells Fargo, for $54 million—just $135 per square foot. Forge plans to convert the building into residential use, which would make it the largest office-to-residential project in San Francisco to date.

Forge previously announced plans to convert the Humboldt Bank Building at 785 Market Street into 120 homes, and a partial conversion is also underway at the Warfield Building at 988 Market Street.

Wells Fargo, meanwhile, has officially relocated its headquarters to a leased space at 333 Market Street and continues to reduce its San Francisco office footprint. The company has shed about 50% of its pre-pandemic space, including the 550 California Street property, which was sold in 2023.

Office Recovery Gains Ground

Fueling the current investment interest is the broader upswing in San Francisco’s leasing market. Q1 2025 marked a 10-year high for office leasing activity, with 3.4 million square feet signed—driven in part by large tech deals. According to Savills, overall availability dropped to 35.6%, a 100 basis point decline from the previous quarter.

Final Takeaway

While challenges remain, a combination of distressed sales, owner-user interest, and early signs of recovery in leasing fundamentals are repositioning San Francisco’s office market for a new cycle of opportunity. For strategic investors, the current environment offers a chance to step in while values remain well below their historical highs.