Tidewater Capital & Goldman Sachs Finalizing Price Reset for 140K SF Office in SF

San Francisco’s office market is undergoing significant changes, and Goldman Sachs may be facing a financial hit on its property at 351 California Street. The building, located in the city’s Financial District, is co-owned by Goldman Sachs and Tidewater Capital. JLL has been hired to sell the property, but the expected price could reflect the downturn in the office market.

The Pandemic's Long-Term Impact

San Francisco’s commercial centers have not fully recovered since the pandemic, with work-from-home trends drastically reducing the need for office space. This shift, especially among tech companies, has led to a sharp decline in demand, resulting in high vacancy rates. The city's office vacancy rate now stands at a record 37 percent, further complicating the sale prospects for properties like 351 California Street.

Occupancy and Valuation Concerns

The building itself is only 53 percent occupied, a fact that will likely require any potential buyer to have a long-term, patient strategy. According to industry sources, the asking price could be in the upper $200 per square foot range—less than a third of the price Goldman and Tidewater paid in 2019, when they purchased the property for $108 million, or $771 per square foot.

Comparisons with Recent Sales

Nearby office buildings on the same stretch of California Street have sold for between $205 and $300 per square foot, providing a benchmark for prospective buyers. However, competition might emerge from the sale of another office property at 600 California Street, which is currently being overseen by a court-appointed receiver.

Uncertainty Surrounding the Sale

Goldman Sachs and Tidewater Capital secured an $84 million loan from Bank of America when they bought the building, but it is unclear whether the bank is pressuring them for a distress sale. Tidewater, meanwhile, seems to be navigating the current downturn strategically. While they handed back another office building in Oakland to its lender, they have also raised a $200 million fund to explore new opportunities in the Bay Area’s real estate market.