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Dallas-based investment group has expanded its San Francisco retail portfolio with the acquisition of 11 Hayes Valley-centered properties for $10.9 million. The purchase includes five buildings and a total of 16,232 square feet of retail space at a price of $671 per square foot. This deal follows the group's earlier buy of the Burberry building in Union Square.
The buyer is an ownership group led by Douglas MacMahon, who clarified that this investment was made with a different partnership group than his company, Moran Capital. MacMahon stated that they are long-term investors and believe San Francisco is a great market for real estate investments. They plan to add more retail, hotel, and office buildings to their San Francisco holdings.
The properties were sold by Strategic Realty Trust (SRT), which acquired them in 2016 and 2017. SRT used the $9.8 million from the sale to pay down debt on its "Silverlake Collection" in Los Angeles. The company did not comment on the sale.
Colliers' Peter Mikacich and Julie Taylor marketed the portfolio, which was also retained by MacMahon's group for leasing purposes. Despite the city's retail vacancy issues, MacMahon stated that his group is comfortable with the asset class and has made investments in retail before.
The partnership's first San Francisco buy was 225 Post Street, a 17,000-square-foot Union Square property sold for $17.4 million this summer. The building will be leased by Kazuko Morgan of Cushman & Wakefield, who notes that it is rare to find flagship fully-occupied buildings in Union Square available for lease.
This sale suggests that the local buying pool might be broadening, as an out-of-town investor recognized and seized the opportunity. Industry experts point to this deal, along with recent sales like 795 Folsom Street in SoMa, as evidence of growing confidence in the San Francisco market.
