SKB Buys San Francisco Giftcenter & Jewelrymart for $94.8 Million
Portland, Ore. – ScanlanKemperBard Companies has acquired the San Francisco Giftcenter and Jewelrymart for $94,750,000. The Portland, Ore.-based real estate merchant banking firm plans to invest an additional $8,650,000 to reposition and stabilize the 388,324-sf, two-building property in the rapidly gentrifying South of Market (SOMA) area of Downtown San Francisco.
The San Francisco Giftcenter and Jewelrymart are housed in 888 Brannan St., an architecturally noteworthy five-story building developed in 1918, and 850 Brannan St., a three-story building developed in 1987. Also included in the acquisition is 925 Bryant Street, an adjacent one-story, 13,125-sf warehouse constructed in 1963 that will be used to create additional parking opportunities for tenants and patrons.
The Giftcenter and Jewelrymart buildings house nearly 300 tenants who use the facilities primarily to market their products directly to retailers and interior designers. The Jewelrymart portion of the development is 99% leased; the Giftcenter portion 69% leased.
“The Giftcenter has experienced a significant drop in daily traffic count from prior years and a stubborn vacancy rate primarily because of facility decline and the lack of a strong marketing effort,”says SKB president Todd Gooding. “By taking care of deferred maintenance items, completing significant structural and cosmetic upgrades and implementing an aggressive marketing plan, we believe the Giftcenter can be reinvigorated within a couple of years.”
In addition to the showroom rent that the buildings generate, supplemental income is generated from special events hosted in 888 Brannan Street’s signature five-story atrium known as “the Pavilion” which will be completely renovated; a billboard facing north-bound traffic on US-101; two roof-top cell phone towers. Additional supplemental income will be generated from the future parking contract at 925 Bryant Street.
Showplace Square, a submarket of the SOMA, is the primary wholesale and interior design district servicing Northern California, Oregon and Northern Nevada. Showplace Square has over 1.5 million square feet of permanent showroom, including 888 Brannan and 850 Brannan. SKB’s capital investment in the these two buildings is expected to not only spark renewed interest in the Giftcenter but also increase Pavilion rental income and trade show revenue streams.
“After a combination of capital work and marketing attention, new tenants and customers alike should be attracted to the Giftcenter because of its location in the rapidly changing SOMA area,” says Bob Scanlan, SKB’s founder, chairman and CEO. “It has historically enjoyed long-term occupancy by its tenants due to the lack of competitive mart alternatives in the region and the critical synergy generated from housing the jewelry, gift and apparel wholesalers in one locale.”
Nearby, the University of California at San Francisco is designing a 2.7 million square-foot campus development to accommodate over 9,000 bio-technology students in Mission Bay, a suburb of the SOMA. In addition, new residential construction, with 32,000 units either completed or planned, is adding a mixed-use housing component to the district.
SKB acquired the Giftcenter and Jewelrymart from Pacific Union Development, which has owned and operated the buildings since 1976. Acquisition financing was provided by Wachovia Securities.
Approximately half of the equity SKB used to acquire the buildings came from SKB Real Estate Investors LP, a private equity fund to acquire value-add retail, office and industrial properties throughout the Western United States.
“We are continuing to focus on what we do best, which is acquiring assets in ‘A’ locations that have B-class improvements and then repositioning those assets in their respective submarkets,” says Scanlan. “We have several additional properties and portfolios under contract to be acquired over the next several weeks.”
About ScanlanKemperBard Companies
Founded in 1993, SKB acquires industrial, retail and office in the Western United States. For more information, contact SKB principals Bob Scanlan or Todd Gooding at 503-220-2600 or visit http://www.skbcos.com.
