San Francisco’s Comeback Investors: Why We’re Betting Big Despite the Risks

https://news.theregistrysf.com/san-franciscos-comeback-investors-why-were-betting-big-despite-the-ris

Exclusive developer roundtable reveals acquisition strategies, cost challenges, and fears that could derail the city’s recovery

The developers and investors actually writing checks on San Francisco real estate delivered a blunt assessment at The Registry’s annual Outlook event last week: the recovery is real, fragile, and threatened by forces both local and global that could derail momentum at any moment.

Four principals managing billions of dollars in Bay Area real estate investments gathered for a candid discussion that ranged from janitorial contract markups to geopolitical uncertainties—revealing both the practical challenges of urban development and the existential risks facing the market.

Early Movers Capitalize on Distress

The panel brought together developers who have been among the most aggressive acquirers during San Francisco’s distressed period: Razmig Boladian of Rubicon Point Partners, Chris Freise of REDCO Development, Christopher Meany of Wilson Meany, and Riaz Taplin of ArtHaus Partners.

Their collective portfolio spans office conversions, multifamily repositioning, and master-planned communities like Treasure Island. What united them was a willingness to deploy capital when institutional investors remained on the sidelines—and growing concern about whether that bet will pay off.

“This has been a miserable six years that we’ve been living through in San Francisco, and so much of it is things we did to ourselves,” Meany said, praising Mayor Daniel Lurie’s administration for changing global perceptions but warning against complacency. “This will be a very fragile recovery if we don’t continue to dig in and dig hard and make ourselves better over the coming years.”

The Capital Markets Shift

Taplin, whose firm ArtHaus Partners focuses on workforce and attainable housing throughout the Bay Area, described the dramatic shift in investor sentiment over the past year.

For years, the pitch was nearly impossible. “Our problem was fundamentally, whether you say it was COVID or the Bay Area, we had dog shit performance,” Taplin said. “It’s a little hard to be there like ‘we’re doing really bad for you. You’ve been better off doing nothing. Please give us more money.’ It’s a difficult pitch.”

That changed in the second half of 2024. “For the first time, people were like, ‘Okay, there’s this dead cat bounce has occurred, and there’s a recovery. How do we play the recovery?'” Taplin said. He recently formed a $50 million strategic partnership with Belay Investments Group, signaling renewed capital availability.

“We are now seeing institutional money come in in a big way, whether it’s Madison Capital, Lone Star, like all these groups that are repeat buyers,” Freise added.

The Exit Capital Question

Despite transaction activity, a critical question remains unresolved: who will provide exit liquidity for value-add investors?

“We haven’t seen the second trade. We haven’t seen the core money coming in and buying the value add groups out of it,” Boladian said. “People that are spending $100-$150 million behind your building need to probably do a $300 million exit. That exit does not happen with another value-add fund.”

This uncertainty is shaping acquisition strategy. Boladian said Rubicon is focusing on cash-flowing office deals with strong credit tenants and smaller price points—assets that family offices can absorb if institutional buyers don’t materialize. The firm recently acquired a 50 percent vacant office building at 200 Pine Street in downtown San Francisco, betting on the Main Street corridor’s recovery.

Taplin noted his firm bought 300 units in Oakland for $100,000 per door—transactions that pencil to 10 percent cap rates. “At the end of the day, price is the best amenity for what I do,” he said. “My cost based on each of those units is $125,000 a pop. It’s a little hard to lose money when it would cost me $400,000 to replace it.”

The Construction Cost Crisis

Perhaps no topic generated more consensus—and frustration—than the Bay Area’s extraordinary construction costs, which developers identified as an existential threat to development.

Boladian described touring a Salt Lake City building where construction costs with tenant improvements ran approximately $400 per square foot. “That building is over $1,000 here,” he said. “Why? We both use similar materials.”

Union labor differentials have become particularly stark. Freise cited a 100,000-square-foot industrial project in Hayward where union bids came in at $160 per square foot versus $98 for non-union contractors. “This is not complicated construction,” he emphasized.

Meany questioned why union construction costs rose 65 percent over a period when general inflation was only 35 percent—and why those increases hit San Francisco harder than other markets. “Why does a union electrician in San Francisco work a seven-hour base pay day, and if you go outside of the city limits, it’s eight hours?” he asked. “That’s not anti-labor. It’s asking why are we treating San Francisco worse?”

All three developers stressed they build union and support organized labor, but argued the current cost structure makes projects financially infeasible.

Boladian offered another striking example of cost inflation. He described discovering a janitor making $24 per hour while his building was being charged $52 per hour. When he offered to pay $30 directly including overhead, “they’re like, ‘No, I’ll just go elsewhere.'”

A nearby building that’s 50 percent leased pays $1.2 million annually for janitorial services, he added, because “the capital sits in New York, that absentee capital outsourced to property management. When someone is willing to pay that money, that’s the new benchmark in the industry.”

Repositioning Strategies: Experience Over Expense

With costs high and lease terms shortening, developers are rethinking how to add value to office buildings.

REDCO’s approach emphasizes experience and community over expensive finishes. “It is a highly personal, cultural community building exercise,” Freise said. The firm hosts quarterly happy hours, maintains ongoing tenant relationships beyond lease renewals, and is converting security staff into “hospitality service providers.”

At REDCO’s building at 10 California with construction partner GCI, the firm is installing “the most ambitious Andytown” coffee shop ever attempted, complete with DJ booth, pop-up bartenders, and a vinyl booth. The Wells Fargo building REDCO recently acquired will receive a $15 million lobby renovation and penthouse with four decks, targeting tenants seeking 200,000 square feet or more.

Cost efficiency extends to tenant improvements. Freise cited Roger Fields’ 550 California as a model—fully leased with average TI costs of just $35 per square foot. REDCO recently self-procured 80,000 LED lights for its 208 Utah building, saving $500,000.

“If you’re trying to do a $65 gross lease and your TI costs are $200-$250 a foot, you bought the building for $200 [per square foot], the math doesn’t work,” Freise explained.

AI: Savior and Threat

The artificial intelligence boom emerged as both the market’s greatest strength and potential vulnerability.

AI companies represent 25 percent of current San Francisco office demand. San Francisco-based AI companies captured 25 percent of worldwide venture capital funding in 2025.

“When you talk about a market that has a 35 percent vacancy and you say I’m optimistic that in the next couple of years I can be in the single digits, that doesn’t happen with organic growth,” Boladian said. “That happens with exponential growth that we’re seeing right now because of what AI is doing.”

But developers expressed anxiety about both valuation bubbles and longer-term displacement effects. Boladian described watching demonstrations of AI tools and their capabilities, noting conversations with tech CEO friends who say “there’s so many of our staff we don’t need anymore.”

“I think it’s going to completely change the way office is used, and as a result, the way retail, multifamily [are used],” Boladian said. “I think San Francisco is probably going to be the last to go. I’m not going to say we’re going to be immune from it, but that’s a big question mark.”

Taplin summarized the paradox jokingly: “The thing that’s going to save all of us is also going to kill all of us.”

Meany highlighted another troubling trend: AI tenants demanding shorter lease terms even as buildings require heavier capital investment. “The buildings are getting more expensive while the lease term is getting shorter. That’s what scares me,” he said.

Tax Policy: The Golden Goose Problem

Every panelist identified San Francisco’s tax structure as a competitive threat, though they differed on severity.

Freise reported that gross receipts tax is directly influencing location decisions for growing companies. “We’re seeing AI companies think, ‘Well, you know what, I’m gonna open a London and New York and an Irish and a Dublin office’ versus having 500,000 feet here. And you ask them why, and it is literally the gross receipts tax and how it impacts their business.”

Meany called for political engagement from the development community, including differentiating between taxes that must be opposed—like transfer taxes—and those that may be necessary, like transit funding measures.

“If we have a mayor that’s doing well, we have to tell them that, we have to support him,” Meany said. “We have to come out to the ballot and differentiate between things like the transfer tax, which has to be repealed, and things like community tax, which, frankly, we probably all have to swallow and support because we need public transportation.”

Market Bellwethers: Toast Sales and Young Professionals

Freise offered an unconventional metric for tracking recovery: Toast point-of-sale system receipts at the bar and restaurant his firm owns.

“This last year, we did $1.8 million, which for us was half a million dollars more than we thought we would have done,” he said. “When it’s a bar restaurant business, it’s really tough. So that’s a good sign.”

Multiple panelists cited the return of young professionals as evidence of sustainable momentum. Some firm’s tracks intern retention—young people who had been choosing New York and Austin are now staying in San Francisco.

The Geopolitical Wild Card

Taplin delivered perhaps the evening’s most sobering assessment when asked about threats to the recovery.

He described the post-World War II global economic order that allowed the Bay Area to thrive for 80 years—and the current administration’s willingness to destabilize it. The dollar’s status as reserve currency and U.S. Treasuries as the risk-free rate underpin American real estate markets.

“The idea that we have an administration that is playing with just those two things, forget everything else, is absolutely mind boggling,” he said. Could the 10-year Treasury yield spike to 10 percent with no buyers? “That could happen. That’s what scares me.”

Long-Term Optimism, Short-Term Fragility

Despite the litany of concerns, panelists maintained conviction in San Francisco’s fundamental advantages.

“This is the most beautiful city in the world. We have the most educated population in the world,” Meany said. “If we all commit ourselves to building our community, not just focusing on how we can cream a short term trend, we’re actually going to be fine.”

Taplin noted that “betting against the smartest people, the innovation capital of the world has been a mistake over and over again.”

The city’s challenge is navigating what developers believe is the early phase of a new boom without repeating past mistakes—overtaxing growth, allowing costs to spiral, and failing to build sufficient housing.

Boladian noted that rents in San Francisco have returned to pre-COVID levels, but “that money is worth 30 percent less, let us not forget, and the expenses are up by 30 percent.” True recovery requires rents rising another 20 percent just to reach 2019 purchasing power parity.

“We need three or four years of this in order to be back to an even place,” Boladian said.

Meany concluded with a challenge to the development community: take shared responsibility for the city’s trajectory. “A city in which it takes $410,000 of income to qualify for the median home is something we should not like, and we should go work on bringing down costs and making it so more people can live here.”

San Jose approves 126-unit Willow Glen project under state's builder's remedy provision

https://www.bizjournals.com/sanjose/news/2025/12/18/willow-glen-residential-building-advances.html

Story Highlights

• Redco Development received approval for a 126-unit development in San Jose.

• California's builder's remedy provision enabled the project's approval despite zoning.

• Thirty percent of units are reserved for low and moderate-income households.

A proposed seven-story residential structure in San Jose’s Willow Glen neighborhood has received a site development permit under a state provision that streamlines housing development.

The green light to advance on the 126-unit mixed-use development at 940 Willow St. was given to San Francisco-based real estate firm Redco Development at a Dec. 3 planning director hearing as first reported by San Jose Spotlight. The project will sit on a roughly one-acre lot at the southeast corner of Willow Street and Kotenberg Avenue and will feature 1,626 square feet of retail space.

The development will replace an existing Beer Wine & Spirit liquor store and is moving forward largely because of California’s builder’s remedy provision.

Builder’s remedy, which took effect in February 2023, prohibits local governments from refusing projects that do not adhere to their zoning and planning guidelines unless a specified detriment to public health and safety can be demonstrated.

San Jose is subject to the provision as it pertains to the 33 applications submitted — such as the Willow Street project — while the city lacked a substantially compliant, state-approved housing element. The concept of builder’s remedy has been around for over 30 yearRuth Cueto, San Jose’s principal planner, said there are “very narrow findings” for the project’s denial. She added that the development does not have considerable negative effects on public health or safety and largely meets zoning or development design standards.

“Or where it doesn’t, there are categories under state density bonus law or the Housing Accountability act that it falls under. And therefore, I must approve this project because there aren't any federal or state laws where this project can be denied and the project has not shown that it would have any significant adverse impacts on public health and safety based on objective standards,” a transcription for the hearing reads.

According to project manager Alec Atienza, 15% of the units are reserved for “very low income households” and 15% of the units are reserved for moderate-income households.

Further, the project includes an application under the State Density Bonus Law for a 97% density bonus that doubled the amount of allowable units.

The Willow Glen community was largely divided on the forthcoming project, opponents said the development would lead to more traffic congestion and did not fit the neighborhood’s identity.

“It is just too large for a very old neighborhood,” said Michelle Belasco, a Willow Glen resident of more than 40 years.

She continued, “This is a very old neighborhood, and we need to realize that the size of that building will dramatically impact the quality of the sewer system and the health and safety that will impact [residents,]”

Proponents argued that it would spur positive foot traffic, add much-needed housing which bolsters the notion that Willow Glen would contribute its “fair share” to new development and expressed excitement about the promise of commercial amenities and revitalization.

Another resident named Emanuel said he grew up going to the liquor store that currently stands at 940 Willow St. but referred to the space as “underutilized” and that it is time for Willow Glen to put up its healthy dose of affordable housing.

“I just wanted to express my approval for the project,” he said. “I'm really glad that that underutilized liquor store that sometimes I see undesirable activities at … when I drive by in the evening or at night, is getting repurposed into multi-family housing so 126 other individuals or families are able to live in this beautiful neighborhood that has so many resources, and anybody should be able to live in.”

Emmanuel added that many of the concerns shared by other neighbors echo the “same, tired comments” he hears whenever housing is proposed.

Redco Development co-founder Chris Freise told the Silicon Valley Business Journal that his firm has spent time trying to acknowledge the voices of adjacent neighbors.

This includes building the development in a way so that it appears less imposing.

According to the Mercury News, the project will be composed of 52 studio apartments along with 50 one-bedroom, 20 two-bedroom and four three-bedroom apartments.

“We're building 25 units that are at 60% of AMI,” Freise said. “Those are going to be for teachers, firefighters, professors at San [Jose] State, like, just stuff that the city needs, it deserves.”

What’s more, this isn’t the first time a seven-story project in Willow Glen that has been approved.

According to a 2023 San Jose Spotlight report, the city green-lighted plans to demolish a roughly 30,000-square-foot former senior assisted living facility to establish a more than 200-unit apartment building on 2.2 acres at 1050 St. Elizabeth Drive. The Elizabeth Drive development was projected to be completed in 2026; however, its status is unclear.

Freise said Redco’s proposed development is positioned in a terrific area with many neighboring restaurants and retail thanks to Willow Glen’s bustling Lincoln Avenue, something the project will complement once complete.

“If you're going to put density somewhere, [the development is] a block and a half off of Lincoln, where all the kind of streetscape and the retail, all the things that we want. Why shouldn't it go there?”

Harrington’s officially has new owners, and their bet is paying off with downtown S.F. ‘sea change’

Two years after a group of local investors, longtime patrons and stalwart bar veterans invested in the revival of one of San Francisco’s oldest pubs, the owners officially have the deed and say their bet is paying off thanks to a revival in the Financial District.

In late 2023, Tonic Nightlife co-founders Ben Bleiman and Duncan Ley, Tonic operations chief Lucia Camarda, and Chris and Jason Freise of Redco Development signed a lease agreement with an option to purchase the low-rise building at 245 Front St. from the Harrington family, who opened the bar in 1935 and ran it until its closure in 2020. The new owners have now finalized the deed transfer for what amounts to a $4 million property acquisition.

The owners say the business has never been busier after a stronger-than-expected summer boosted by stabilizing office attendance and large events utilizing the block's first-in-the-state "entertainment zone," which opened last year.

"This hasn't been an easy road," Camarda said. The "insane growth" in foot traffic in the past year, she said, has turned 2024's slowest calendar months into this year's busiest.

"It's just proof that when we create reasons for people to come downtown beyond work, whether it's a festival or block party or public art installation," she told the Business Times. "We see an immediate economic boost."

Harrington’s will have participated in at least 19 block parties of various sizes by the end of 2025, like the Bhangra & Beats night market, St. Patrick's Day celebration and monthly First Thursdays. Block parties such as Oktoberfest, hosted by Downtown SF Partnership, bring in the range of 10,000 people and can generate the equivalent of a full week of business. Another block party is on the way Thursday, Nov. 6, from the Urban Land Institute; a top city official and potentially State Sen. Scott Weiner, who authored the entertainment zone legislation, are expected to speak.

Corporate parties and private events have been another major source of revenue, and regulars have re-materialized and filled in from before the 2020 closure, the owners told the Business Times. New leases across a plethora of formerly vacant spaces in the vicinity have encouraged the owners about downtown's direction.

The venture wouldn’t have made it to last month's purchase had it not been for a group of roughly 150 friends and longtime patrons of Harringtons, including many local brokers, who —while not signatories on the debt-financed building deal — provided a crucial infusion of startup capital in the early going.

The activity rebound and nearby leasing of restaurants and office-catering businesses has given the bar owners greater confidence that vacant storefronts in the immediate vicinity can find new tenants in the near future, including the former McDonald's, Walgreens and Lee's Deli spaces. Improvements to the neighborhood block are under development from the DSFP, including string lights to enhance the nighttime glow and potentially help with slower weekend nights.

Bleiman said it's been an “absolute sea change in activity downtown” over the last two years. In 2023, he said, “we would tell people what we believed in (and) some would look at us like we’re crazy.” Now, and especially within the last year, Bleiman added. “People are realizing Harrington’s is fun."

Redco’s bet on Harrington’s adds to a prolific dealmaking streak while the market was at its lowest downtown. Chris Freise, named the Business Times Dealmaker of the Year in 2024, has clinched Redco deals for 300 California and 87,000-square-foot office building 400 Montgomery. Next door to that, the firm is fresh off its largest deal to date a little over a month ago: the 400,000-square-foot former Wells Fargo headquarters at 420 Montgomery St., bringing its San Francisco portfolio to nearly 700,000 square feet.

Abridge Leases 80,000-Square-Foot Office Space At 208 Utah Street In San Francisco

https://traded.co/deals/california/office/lease/208-utah-street-1/

Total Square Footage: 80,000 SF

Transaction Type:Lease

The property asset involved in the transaction is an 80,000-square-foot office building located at 208 Utah Street in San Francisco. It was recently leased to Abridge, an AI startup valued at $5.3 billion. The property was purchased by REDCO Development for $15 million, indicating significant investment in the San Francisco market.

Summary of transaction details:

• Property Type: Office

• Transaction Amount: $15 million

• Square Footage: 80,000

• Address: 208 Utah Street

• Market: San Francisco

• Landlord: Chris Freise & Jason Freise - Redco Development

• Tenant: Shiv Rao - Abridge

The deal was executed as part of Abridge's expansion strategy, moving from a 14,000-square-foot office in the Mission district. This lease reflects the ongoing demand for tech space in San Francisco, driven by the growth of companies within the technology sector.

Exclusive: $5.3B startup leases entire office building in Showplace Square

https://sfstandard.com/2025/10/07/abridge-ai-san-francisco-office-leasing/

An empty office building that just sold for a deep discount has landed a tenant. 

According to sources familiar with the deal, Abridge — an AI startup that converts conversations between doctors and patients into clinical notes — has agreed to lease an entire building located at 208 Utah St. 

The 80,000-square-foot building, previously occupied by the likes of Strava and Warner Bros., was purchased in June by San Francisco-based Redco Development for $15 million. The sellers of the century-old property were the Shorenstein family. 

Redco and Abridge did not respond to requests for comment. 

Abridge currently leases about 14,000 square feet at 450 Alabama St. in the Mission. It is not known when the new office will open. 

The company was founded in 2018 and has a valuation of around $5.3 billion after a $300 million Series E funding(opens in new tab) in June. At the time, Abridge said it was using the new capital to hire more scientists, machine-learning experts, and software developers. 

Abridge says its technology is used by more than 150 large U.S. health systems. In May, The Information reported that the company had reached $117 million in annual recurring revenue(opens in new tab).

The company’s AI-listening technology is meant to allow physicians to spend more time focusing on patients rather than inputting administrative notes. It also uses AI to access and share patients’ records.

The company was founded in Pittsburgh, where cofounder Dr. Shiv Rao is a practicing cardiologist. Last year, it shifted many of its corporate functions to San Francisco(opens in new tab). 

Redco has been on a real estate buying spree for the past two years. Last month, it purchased the former Wells Fargo building to go with its two office buildings on San Francisco’s famed California Street corridor. The company in June purchased the former Oakland Raiders training complex in Alameda for $24 million. 

Wells Fargo’s longtime S.F. HQ building sold for $55 million

https://www.sfchronicle.com/bayarea/article/wells-fargo-s-sf-hq-building-sold-for-55-million-21078483.php

Developer Redco has purchased Wells Fargo’s longtime San Francisco headquarters building for $55 million and has major plans to transform the 1959 building.

A new rooftop deck, ground-floor restaurant, café and martini bar are all part of a makeover planned for the 12-story property at 420 Montgomery St. An underground bank vault would become a fitness center, bowling alley and speakeasy under the plan.

The banking giant is leaving next year and has designated 333 Market St. as its new headquarters — although CEO Charles Scharf and other top executives work out of New York.

Redco bought Wells Fargo’s headquarters building for $55 million. Photo courtesy of Redco

The deal is another sign of increasing investor appetite for downtown offices, after an exodus of tenants during the pandemic and major price discounts. A return to office and a boom in artificial intelligence have added momentum to the city’s comeback.

Redco has purchased numerous Financial District buildings, including the neighboring 400 Montgomery St. and 300 California St. It saw an opportunity at the 400,000-square-foot Wells Fargo building, which had never been sold and is being rebranded as 450 California. Redco also obtained a major discount — the $55 million price was less than half of the property's $127.6 million city-assessed value.

“Once you get in, it’s really amazing,” said Chris Freise, Redco managing partner. “It’s got amazing bones.”

There’s already a Japanese Zen garden, views of the bay and the Transamerica Pyramid, and a penthouse attached to the planned new outdoor space. Wells Fargo has cut around half of its San Francisco office space since the pandemic and also sold 550 California St.

However, it renewed its lease in Concord for 257,000 square feet, the San Francisco Business Times reported. The bank didn’t immediately provide comment.

Redco plans to invest millions to renovate the building, Freise said. Construction is expected to start in the second half of next year and take around nine to twelve months, he said.

Floorplan of the new food and beverage amenities in the former Wells Fargo branch on California. Courtesy of Redco

An artist’s rendering of a new lobby at the former Wells Fargo headquarters, which would include a new cafe, restaurant and bar. Courtesy of Redco

Annual asking rent will be around the high $60s to low $70s per square foot, he said. That’s lower than the most expensive offices in the city, which can go for over $100 per square foot, and Freise expects the pricing to give Redco a competitive edge.

He also noted that there aren’t many other available listings for 400,000 square feet in contiguous vacant space that are in that pricing range.

Though another bidder had floated the idea of converting the building into housing, Freise said Redco was eager to capture the business growth in the city, which has been fueled in part by a boom in artificial intelligence.

“We believe in San Francisco. We believe in office. We believe in tenants growing in the city. We think this is a super compelling space offering for the right HQ user,” he said.

Redco buys Wells Fargo HQ building at 85% discount

Sale closed at $55M with plans to rebrand property, add amenities

Redco Development’s Chris and Jason Freise with 420 Montgomery Street (Getty, Redco Development)

https://therealdeal.com/san-francisco/2025/10/01/wells-fargo-headquarters-sells-to-redco-for-55-million/

Key Points

• Redco Development has purchased the former Wells Fargo headquarters at 420 Montgomery Street in San Francisco for $55 million, a significant discount from its pre-pandemic value.

• Redco plans to rebrand the property as "450 California" and transform the building with public-facing spaces, food and beverage tenants, and amenities like a speakeasy bar in the historic bank vault.

• This acquisition expands Redco's control of the California Street corridor, adding to previous purchases at 400 Montgomery Street and 300 California Street, and a recent acquisition in Showplace Square.

Redco Development has closed its purchase of a downtown San Francisco office building home to Wells Fargo’s former headquarters.

San Francisco-based Redco has acquired 420 Montgomery Street for $55 million, the San Francisco Standard reported. The sale price of approximately $150 per square foot for the part of the complex excluding the museum is more than 85 percent below the building’s pre-pandemic value of $370 million, or about $1,000 per square foot.

The 409,000-square-foot property contains the former Wells Fargo History Museum on Montgomery Street and a 12-story office building on California Street. The offices are mostly vacant after Wells Fargo moved much of its operations to a 620,000-square-foot lease at 333 Market Street last year.

The purchase comes after housing developer Forge Development Partners neared a deal to buy 420 Montgomery Street for a similar price with plans to convert the building into housing. The deal ended up falling through, leaving an opening for Redco.

Wells Fargo sunk more than $90 million in renovations on the property over the past decade. The office tower comes with a penthouse with a kitchen, dining hall, garden and rooftop deck that can be used for events.

Redco has big plans to remake the building, starting with rebranding the property as “450 California.” The company is looking to transform the lobby into a public-facing space with various food and beverage tenants including a coffee shop, bar and restauranAt the top of the building, Redco is hoping to bring in a single tenant to lease the upper four floors, including the penthouse. Each floor has about 27,000 square feet of offices that can be occupied by one tenant or divided between multiple.

Meanwhile, under the building, Redco plans to convert Wells Fargo’s historic bank vault with a speakeasy bar, fitness center, bowling alley and other amenities. The former Wells Fargo History Museum on the ground floor will turn into a dedicated entrance for a large tenant.

Redco’s acquisition gives the firm control of nearly two blocks on the California Street corridor. Last year, the company bought 400 Montgomery Street next door to the Wells Fargo building for $25 million and 300 California Street for $28.5 million.

Further south in Showplace Square, in May, Redco bought a 78,000-square-foot office building at 208 Utah Street for $15 million. That property was previously owned by Shorenstein and was vacant after anchor tenant Strava left for new offices downtown this year. 

Redco closes deal for Wells Fargo's longtime San Francisco headquarters, plans big upgrades to lure tech tenant

https://www.bizjournals.com/sanfrancisco/news/2025/10/01/redco-420-montgomery-close.html

Story Highlights

• Redco has acquired Wells Fargo's San Francisco headquarters for $55 million.

• Redco plans extensive renovations to attract a large 'tech user.'

• Wells Fargo has been steadily reducing its San Francisco office footprint.

Redco closed its acquisition of Wells Fargo’s (NYSE: WFC) longtime San Francisco headquarters on Tuesday, paying roughly $55 million for a building it plans to transform into a next-generation headquarters opportunity for a large tech user.

The San Francisco-based investor will immediately begin work on a multimillion-dollar renovation of 420 Montgomery St., a remaking that will cost more than what Redco paid to acquire the 400,000-square-foot building, Managing Partner Chris Freise told the Business Times.

Redco plans to renovate the lobby of 420 Montgomery St. to include several food and beverage tenants, including a coffee bar, pictured here in renderings.

Among the improvements Redco has planned: a full remaking of the lobby, which will transform from slightly dated Italianate-style space with a bank branch into a public-facing space featuring a roster of food and beverage tenants, including a coffee shop, a step-up bar and a restaurant. Patrons of the latter could walk through operable floor-to-ceiling windows to enjoy outdoor dining along a stretch of Leidesdorff Street between Halleck Alley and California Street. Redco also plans to transform multiple vaults in the lobby into a swanky, speakeasy-style amenity space and upgrade a 13th-floor penthouse, which already includes a full-service kitchen and multiple roof-decks, into modern amenity and service space.

The goal is to attract an anchor tenant — a user looking for 100,000 square feet or more in the building, Freise said. A tenant of that size could work with Redco to customize its renovation of 420 Montgomery St., which Redco will rebrand as 450 California St. (The T-shaped complex has a narrow arm to Montgomery but a larger frontage on California.) Rents could run in the $60 to $70 per square foot range depending on the intensity of the renovations a future tenant wants to implement, he said.

“We believe in the growing nature of big-block users,” Freise said. “And we think we’ve got — with the penthouse, the 28,000-square-foot floor plate, the location, the pricing — like, those four things really set it apart from all the other blocks of space."

Among the amenities Redco plans to unveil at 420 Montgomery, which will be rebranded as 450 California St.: a roof deck on the building's 13th floor, pictured here in renderings.

The deal comes together as there is a growing sense of optimism forming around the future of San Francisco’s office market. Tenant requirements — the amount of office space being sought by prospective users during a given period — hit 9 million square feet in the third quarter of this year, according to data from real estate services firm JLL. That is a notable uptick even from the beginning of this year, when requirements were hovering at around 6.5 million square feet. Freise said he’s aware of a number of tenants who are out looking for 100,000 square feet or more; as of the end of September, JLL was tracking 16 such requirements, the firm said.

Now Redco plans to capitalize on that growing demand — much of which is for highly amenitized, top-tier office space — at 420 Montgomery, which it will position as a sleek headquarters opportunity in downtown San Francisco. That is a pivot from even a year and a half ago, when Redco closed its first acquisition in the postpandemic era: it snapped up the 120,000-square-foot 300 California St., paying $28.5 million for a building it acquired in partnership with a handful of tenants who signed on to lease space in the building before the deal had officially closed, bolstering the building’s occupancy rate and helping Redco secure financing.

Wells Fargo officially relocated its San Francisco headquarters to a 620,000-square-foot leased office at 333 Market St. as of Sept. 15, it revealed in a regulatory filing that listed 420 Montgomery as a "former address."

With Redco having closed on 420 Montgomery, the bank has now shed more than half of its prepandemic San Francisco office footprint; in 2023, it sold an office tower at 550 California St. to Peninsula investor Roger Fields. The bank recently renewed for 257,000 square feet of space in the East Bay city of Concord.

Wells Fargo leased back approximately a quarter of 420 Montgomery for one year, according to Freise; the rest of the building could be delivered “tomorrow,” he said. The firm has plans to build out some speculative suites in the building, but details of its renovation could ultimately depend on the desires of an anchor tenant, should one appear.

“You can show up and choose your own adventure,” Freise said. “I think over the next year, that’s the opportunity, if the tenant presents themselves.”

Redco plans to turn basement-level vaults into speakeasy-style tenant amenties space, seen here in renderings.

An anchor tenant could, for example, decide whether to claim the 13th floor penthouse and roof-deck for itself or have that space open to all tenants, he said. Redco also plans to designate the building’s entrance along Montgomery Street as a private entry for a large user.

The 400,000-square-foot 420 Montgomery is Redco’s largest acquisition in San Francisco to date, bringing its San Francisco office portfolio to nearly 700,000 square feet. The Business Times named Freise its 2024 Dealmaker of the Year for Redco’s acquisitions of the beloved Financial District bar Harrington’s, 300 California and 400 Montomery, an 87,000-square-foot building that sits directly next door to 420 Montgomery.

Wells Fargo put 420 Montgomery on the market at the turn of the new year to a somewhat tepid reception from stakeholders, who said the building — which Wells had said it intends to vacate – would need significant investment before it would be attractive to today’s tenants. Freise, who spent two years walking past the building on his way to 400 Montgomery, said he too was somewhat skeptical about what the building had to offer, though that changed when he finally stepped inside.

Between the views of Jackson Square, the former executive office space on the 12th floor, and the 13th floor penthouse and roof-decks, which come with views of downtown and the San Francisco Bay, “I was like, this is really compelling,” Freise said. “It just felt like there was going to be someone at the right price point who was going to be very excited about it, too. And we firmly believe that.”

The Business Times first reported Redco had emerged as a buyer for the building this summer; the investor stepped in after a previous deal with Forge Development Partners failed to materialize.

Oakland Soccer Clubs Secure Long-Term Home with $24MM Alameda Facility Purchase by Redco Development

https://news.theregistrysf.com/oakland-soccer-clubs-secure-long-term-home-with-24mm-alameda-facility-purchase-by-redco-development/

A San Francisco development firm has stepped in to provide Oakland’s professional soccer teams with the stability they’ve been seeking, closing on the former Oakland Raiders training complex after a previous buyer withdrew from the deal.

Redco Development completed the $24 million acquisition of the 16.92-acre Alameda site on Thursday, immediately entering into a long-term lease agreement with the Oakland Roots and Oakland Soul soccer clubs, according to the firm. The transaction provides both the city of Oakland and Alameda County with much-needed revenue while securing the teams’ operational future in the East Bay.

The deal represents a significant turnaround from December 2024, when industrial giant Prologis abandoned its planned purchase of the Harbor Bay Parkway properties. That withdrawal had left Oakland facing additional budget pressures amid a $115 million deficit, while the soccer clubs confronted uncertainty about their training operations.

“This agreement is great news for Oakland and our entire sports community,” Oakland Mayor Barbara Lee said in a statement provided to the Business Times. “By securing a long-term home for the Oakland Roots and Soul, we’re not only ensuring the growth and success of these teams, but we’re also investing in our city’s future, building community pride, boosting the local economy, and continuing to position Oakland as a dynamic sports destination.”

The facility, located at 1150 and 1220 Harbor Bay Parkway in Alameda, now renamed the UCSF Health Oakland Roots and Soul Performance Center, encompasses two buildings totaling nearly 119,000 square feet along with professional-grade turf fields and training amenities. The property spans 16.92 acres and includes a 100,607-square-foot state-of-the-art headquarters building, an 18,240-square-foot indoor training center, and multiple outdoor soccer fields. Originally built to professional sports specifications, the facility features top-tier amenities such as full locker rooms, private offices, a media production suite, a theater, conference spaces, and wellness infrastructure including two indoor whirlpools, a plunge pool, and a steam room.

“Roots and Soul are building something really special here in the East Bay, and we’re honored to help anchor that vision with a permanent home,” said Redco’s Managing Partner Chris Freise in a statement. “It’s a win for the club, for the city, and sports fans across the Bay Area.”

Oakland Roots and Soul SC President Lindsay Barenz emphasized that having a strong training facility is vital to the club’s success and expressed gratitude to the city, county, and Redco for helping secure a long-term home near Oakland Airport, calling it a huge step toward sustainability in Oakland.

The transaction ranks among the most competitively priced industrial land sales along the highly desirable I-880 corridor. With proximity to I-880, Oakland International Airport, and Harbor Bay Ferry Terminal, the location offers strategic access to the greater Bay Area and is uniquely positioned for professional sports and large-scale community use.

Colliers’ Joe Yamin, Grant Diede and Will Semone brokered the transaction for the property where the Oakland Roots and Soul soccer clubs have operated for the past four years. The new fifteen-year lease will ensure the property continues to serve as a hub for athletic excellence and community engagement, preserving the legacy of a storied site while propelling it into its next chapter.

“It’s a win-win-win—a win for Oakland soccer, a win for the City of Oakland, and a win for Redco,” said Joe Yamin in the announcement. “We’re proud to have helped secure a permanent home for the Roots and Soul at this legendary facility with a partner like Redco, and we’re excited to see how the clubs continue to grow from here.”

The property is widely regarded as one of the top soccer facilities in the United Soccer League, thanks to world-class amenities inherited from its time as an NFL training headquarters. Chief Real Estate Officer Lydia Tan praised Redco’s creativity in structuring the rent as a market-rate deal that acknowledges the team’s early development phase, allowing sufficient room for investment and improvements while ensuring investors receive market returns.

Both Oakland and Alameda County, which jointly owned the property, will receive approximately $11 million each from the sale after closing costs. The jurisdictions had struggled to monetize the asset since acquiring it in December 2020, including a failed auction attempt in 2023 that generated 65 registered bidders but no successful sale.

The Roots, established in 2018 and competing in the USL Championship since 2021, are playing in the Oakland Coliseum this season and recently sold out their inaugural home opener against San Antonio FC with a record-breaking 26,575 attendance. The team’s commitment to the Coliseum and the city continues to energize Oakland’s community of sports fans.

Tan indicated that once the practice facility is stabilized, the team will focus intensively on securing a permanent venue for the gameday experience. The team is pursuing discussions with multiple parties, including the African American Sports Entertainment Group regarding Coliseum redevelopment and the Port of Oakland concerning Howard Terminal development opportunities.

Tan noted that the deal makes their ability to remain focused on Oakland and the East Bay much more real, allowing them to stay true to their purpose of uplifting the community.

The successful completion of this deal provides both immediate financial relief for local government entities and operational certainty for Oakland’s professional soccer presence, marking a positive development in the city’s ongoing efforts to retain and attract sports organizations.

Oakland Roots and Soul soccer clubs, with help from Redco, secure former Raiders HQ as a home: 'A huge step'

https://www.bizjournals.com/sanfrancisco/news/2025/06/26/redco-roots-soul-oakland-raiders-alameda.html

Story Highlights

• Redco Development buys former Raiders facility for $24 million.

• Oakland Roots and Soul secure long-term lease for practice facility.

• Deal generates $22 million for Oakland and Alameda County.

San Francisco-based investor Redco Development closed on a deal Thursday to buy the former Raiders headquarters and training facility, and will lease the buildings to the Oakland Roots and Oakland Soul soccer clubs.

The purchase, which totaled $24 million, comes after industrial giant Prologis backed out of its bid to buy the 16.84-acre site in Alameda last year, and gives the Roots and Soul a long-term practice facility, now named the UCSF Health Oakland Roots and Soul Performance Center.

“Having a strong training facility is vital to the success of our club,” Oakland Roots and Soul SC President Lindsay Barenz told the Business Times. “We are grateful to the City of Oakland, the County of Alameda, and Redco for helping us secure a long-term home next door to the Oakland Airport, which is a huge step toward our long-term sustainability in Oakland.”

Lindsay Barenz is president of the Oakland Roots and Soul soccer clubs.

The soccer club has leased the the two-building site and its turf soccer fields, training facilities, offices and surface parking from the city and county since 2021 on a year-to-year basis.

The deal will generate much-needed funds for the city of Oakland and Alameda County, which together own the site and each are estimated to make at least $11 million off of the transaction after closing costs. The pair has tried to sell off the properties at 1150 and 1220 Harbor Bay Pkwy. since the NFL's Raiders departed Oakland for Las Vegas in 2020.

“This agreement is great news for Oakland and our entire sports community,” Oakland Mayor Barbara Lee said in a statement. “By securing a long-term home for the Oakland Roots and Soul, we’re not only ensuring the growth and success of these teams, but we’re also investing in our city’s future, building community pride, boosting the local economy and continuing to position Oakland as a dynamic sports destination.”

The Oakland Raiders' former headquarters in Alameda has been sold to Redco, which will lease the facility to the Oakland Roots and Soul soccer clubs.

Lydia Tan, chief real estate officer for the Roots and Soul, said the team entered a 15-year lease with Redco that includes extension options for up to 25 years, starting with lower rent payments that increase over time. That will allow the team to make long-term investments and upgrades to the property, like expanding the fields and upgrading locker rooms, showers and other spaces.

“Redco has lived up to their reputation as being very creative, and the rent is structured as a market-rate deal, but it also acknowledges the team is still in the early phases of its existence,” Tan said. “(They are) allowing us to have enough room early on to really make the kind of investment and improvements we need while making sure that their investors are getting a market return at the end of all this.”

Redco co-founder Chris Freise called the purchase a win for both Oakland and the Roots and Soul, and said the well-priced and located properties will be an asset to the firm.

“With their fan base supporting them, they feel bullish enough to make such a large commitment,” Freise said. “We believe in them from an organizational standpoint, that they’re going to be successful.”

Teeing up tenants for assets before purchasing them has been a successful strategy for Redco, which has scooped up several San Francisco office properties in the past year or so with tenants in tow, including 300 California Street, 400 Montgomery and 208 Utah, as well as beloved downtown Irish bar Harrington’s. That strategy and those deals earned Freise the Business Times’ 2024 Dealmaker of the Year award.

The Roots, founded in 2018 and part of the USL Championship league since 2021, are playing in the Oakland Coliseum for the 2025 season and exploring all options for a permanent stadium in the East Bay. Tan said the club is in talks with the African American Sports Entertainment Group, which is trying to buy the Coliseum from the city and county and redevelop it into a mixed-use, sports-oriented facility. It is also in talks with the Port of Oakland, which recently opened a request for proposals for Howard Terminal, a site the Athletics considered before leaving town, to explore building a soccer stadium there.

“Once we get the practice facility stabilized and underway, we’re going to be very focused on our permanent venue for the gameday experience,” Tan said.

The Harbor Bay Parkway properties total 118,847 square feet and were used by the Raiders as its former training facility and headquarters. The county attempted to auction off the former Raiders headquarters in 2023 with a minimum bid price of $35.8 million, but ultimately postponed the auction without reason or notice.

The former headquarters has a locker room, media production rooms, conference rooms, two indoor whirlpools with a steam room and a fenced and gated parking lot. The training facility has an indoor fitness space, an exterior pool and a large grass field.

“It makes our ability to continue to be focused on Oakland and focused on the East Bay that much more real,” Tan said. “It allows us to make sure that we are continuing to stay true to our purpose, which is all about uplifting the community. We’re really excited about it.”

Andytown Coffee to open a third S.F. Financial District cafe

https://www.bizjournals.com/sanfrancisco/news/2025/06/16/andytown-coffee-300-california.html

Story Highlights:

• Andytown has landed a lease for a signature lobby space at 300 California St.

• The coffee and breakfast sandwich specialist just opened a cafe on Front Street in May.

• The building's owner says Andytown is "a big selling point" for the future.

Andytown will be part of a redesigned lobby space on the ground level of 300 California St., and is shooting for an April 2026 opening, according to building owner Redco Development. It will be the ninth cafe for the darling coffee brand of the Outer Sunset and its third downtown after a 2019 flagship near Salesforce Park and a new cafe at 747 Front St., which just opened on May 27.

The cafe will be a “full Andytown concept with our drinks and breakfast sandwiches,” said Andytown CEO and co-founder Lauren Crabbe. “We are so excited to continue our commitment to downtown San Francisco.”

Crabbe co-founded the business with husband Michael McCrory in 2014 and has grown a cult following from the cafe's community ethos, Irish-influenced pastries and inventive drinks like the Snowy Plover — a staple of the San Francisco transplant starter pack.

The Andytown footprint will be typical, roughly 1,500 or 2,000 square feet, per Redco. The lobby redesign will involve knocking down a "faux wall" separating the lobby from the former Cafe Madeline space next door to create a fully open area.

"It'll feel a little like the LinkedIn building (at 222 Second), where you walk in and have coffee and a shared lobby experience," said Chris Freise, Redco's co-founder and managing partner as well as the Business Times 2025 Dealmaker of the Year.

The cafe adds to a flurry of retail activity converging near the corner of California and Battery streets: Wayfare Tavern opened its new digs at 201 Pine St.; Turtle Tower has been drawing celebrity intrigue and a packed lunch crowd at 220 California and Crustacean is nearing an opening at long last at 195 Pine St.

Adjacent to Andytown in the 300 California building, Flagstar Bank plans to open a new branch by year-end and activate a storefront that's been dead since Amazon Go shuttered there in 2023. Redco is also one of the main investors, along with Tonic Nightlife Group, in the community-led revival of nearby pub Harrington's.

Redco acquired the eight-story office building with partner GCI General Contractors for about $240 per square foot in May 2024 and has since signed six new tenants. The San Francisco-based investor is in discussions with several parties to take over the top two floors of office space and its 'anchor' signage.

"We're going to roll out a marketing campaign for those upper floors," Freise said. "We'd been kind of waiting to do it because we wanted this (Andytown) lease to hit, because we felt like that was a big selling point."

Andytown's newest cafe on Front St. is "to go"-focused and opened with hours from 8 a.m. to 3 p.m. on weekdays but could potentially expand those hours later in the summer, the business wrote on Instagram.

Redco Development makes latest San Francisco real estate play with deal for vacant office

https://www.costar.com/article/438366701/redco-development-makes-latest-san-francisco-real-estate-play-with-deal-for-vacant-office

Redco Development has further cemented its reputation as a prolific investor in post-pandemic San Francisco real estate, closing its bid to buy an empty office building in a neighborhood some real estate professionals have taken to calling “Area AI.”

Redco, run by brothers Chris and Jason Freise since 2019, paid $15.1 million to acquire a nonperforming $25 million loan backed by a more-than-century-old former industrial building at 208 Utah St. The four-story brick-and-timber building is in a part of Potrero Hill known as Showplace Square, or more recently, the Design District. Redco took ownership of the nearly 80,000-square-foot office building through a deed-in-lieu-of-foreclosure transaction requiring the cooperation of the building’s previous owner, San Francisco investor Shorenstein.

Redco said on its website that the building was “100% vacant at acquisition” and had benefited from “substantial shell improvements,” including new systems and tenant improvements.

Back in 2012 — in a much different climate when mobile internet start-ups in particular were on the upswing in San Francisco — the Shorenstein family paid about $25 million for the property, which was then around 80% leased by tech startups such as Strava, Trullia, Mode Analytics and WeddingChannel.com, according to prior CoStar data. The sellers in that deal, TMG Partners and Farrallon Capital Management, bought the building in 2010 for just under $8 million and spent another $2.5 million on renovations.

This spring, Shorenstein’s lender, Capital One, began marketing the debt on the property as a path to ownership, and Redco stepped up. The purchase marks the company’s fourth big acquisition in San Francisco in the past year or so, with all properties bought at steep discounts as office buildings in the city have come on the market for valuations not seen in decades.

Last spring, the firm partnered with San Francisco-based GCI General Contractors to buy 300 California St., a downtown office building. In November, Redco partnered with Bridges Capital, a family-owned outfit also based in the city, to acquire another historic financial district office building at 400 Montgomery St. The value-add investor and developer also teamed up with several other parties to buy Harrington’s, a nearly century-old waterfront pub that shut down in 2020 but has since reopened.

Once-in-a-lifetime bargains

The Freise brothers, like a handful of other San Francisco investors, have jumped on once-in-a-lifetime bargains in the city’s office market, insisting that San Francisco will soon boom again. In a blurb on its website, Redco said that 208 Utah St. "benefits from substantial shell improvements completed in 2012 including new buildings systems, seismic and tenant improvements making it available for immediate plug and play leasing."

The firm did not respond to a request for further comment on the deal.

San Francisco has seen its office vacancy rate rise from the lowest in the nation in 2019 to the highest, as a perfect storm of COVID-19 pandemic lockdowns, remote work and layoffs among technology companies caused tenants to downsize at record levels.

A gradual recovery is now taking hold, however, with high-profile investors making discounted deals for offices in downtown San Francisco.

In a bid to compete for a smaller pool of tenants, landlords are increasingly outfitting offices with amenities that in some cases range from climbing walls and pickleball courts to cafes, lounges and yoga studios.

Redco in talks to acquire troubled loan on Showplace Square property

https://www.bizjournals.com/sanfrancisco/news/2025/05/14/redco-208-utah-shorenstein.html

Story Highlights

• Redco has negotiated a $25 million loan acquisition for Shorenstein's 208 Utah

• The deal values 78,740-square-foot building at $15 million, enabling Redco's takeover.

• Shorenstein faces distress across 6-7 million square feet of office space.

Capital One has a buyer for a loan backed by Shorenstein’s 208 Utah St., positioning the Showplace Square building to trade hands.

San Francisco-based investor Redco is in talks to acquire a $25 million loan backed by the office and industrial building, according to multiple people with knowledge of the matter. The pending deal is expected to value the 78,740-square-foot 208 Utah at around $190 per square foot, or $15 million.

The deal, if closed, would tee up Redco to take 208 Utah off Shorenstein’s hands, either through foreclosure or a deed-in-lieu process, sometimes called a friendly foreclosure. Marketing materials for the loan obtained by the Business Times early this year advertised the opportunity to acquire the building itself, suggesting Capital One expected Shorenstein to cooperate with prospective buyers.

Capital One did not respond to a request for comment; Shorenstein declined to comment.

Redco has emerged as one of the most active buyers in San Francisco’s postpandemic downtown, snapping up beloved downtown Irish Bar Harrington’s; 400 Montgomery St., a 86,230-square-foot office building; and 300 California St., a 119,000-square-foot office building, all roughly within a three-block stretch of the Financial District.

Now 208 Utah could become the first San Francisco asset shed by Shorenstein in light of lender pressure. The Business Times reported in January that 2.7 million square feet of office properties owned by the San Francisco-based investor had been sold at losses or lost to foreclosure over the last year.

Shorenstein's national portfolio at the start of this year included between 6 million and 7 million square feet of additional office space in some form of distress; that pool includes assets subject to some form of lender control and buildings that, facing lender pressure, are not expected to remain in Shorenstein’s portfolio in the long term.

Among the troubled properties is 45 Fremont St., a 620,000-square-foot downtown San Francisco office tower Shorenstein has owned for decades. The Business Times reported last month Shorenstein and partner Blackstone tapped real estate investment bank Eastdil Secured to market the building for sale at the urging of their lenders.

"If you would have told me five or six years ago that we would be walking away from multiple properties, I would probably be a lot more stressed about it," CEO Brandon Shorenstein told the Wall Street Journal of the firm's losses. "But unfortunately that's just where the state of the business is today."

Shorenstein had 13.6 million square feet of space under management as of the close of last year, though that figure does not include several legacy investments in San Francisco. The Shorenstein family trust acquired 208 Utah in 2012 for $25.68 million and refinanced with the $25 million loan from Capital One in 2019.

Redco, if it closes the 208 Utah deal, will acquire a largely empty building. Strava’s 34,000-square-foot headquarters lease in the building expires next month; it has already relocated to a new home base in Meta’s old offices at 181 Fremont St.

Chris Freise of Redco is our 2024 Dealmaker of the Year

https://www.bizjournals.com/sanfrancisco/news/2025/03/27/real-estate-deals-dealmaker-chris-freise.html

Feeling pessimistic about the future of downtown San Francisco? Chris Freise would like to know the last time you paid a visit.

“The people who have been here of late have seen there’s an incredible renaissance going on,” he said.

Freise, who in 2019 founded Redco in San Francisco alongside his brother Jason, sees green shoots everywhere: in the new restaurants filling vacant storefronts; the entertainment zone that now runs down Front Street — and the patrons that fill it after working hours; night markets that crowd Chinatown in the evenings; the throngs of people that come to Second Street on First Thursdays. Meanwhile, the city’s office market has bottomed out, said Freise, who thinks the next year could give way to the kind of leasing demand last seen in San Francisco in 2019.

Spend even 10 minutes with Friese, and you walk away with the distinct understanding you’re dealing with someone who believes in San Francisco. For that belief — and for walking that talk not once but three times in 2024 — Freise is our Dealmaker of the Year.

In 2024, Redco helped reopen Harrington’s, the beloved Financial District Irish bar that shuttered during the pandemic. It acquired 300 California St., a 120,000-square-foot office building just two blocks from Harrington’s and also snagged 400 Montgomery St., an 86,500-square-foot property just down the street from its other two investments.

Freise is decidedly bullish about San Francisco’s office sector, said New York Life Real Estate Investors senior director of transactions Albert Pura. The two worked together two decades ago as analysts at RREEF, and Pura personally invested in the 300 California deal. Freise, Pura said, knows how to translate that bullish sentiment into deals.

“He is really smart, very motivated and he is a hustler,” Pura said. “He’s able to get information. He knows how to connect the dots, build relationships. He’s a really great connector of people and knows how to get things done.”

Tenants make great investors

Redco hasn’t been in the market for just any available building — nor were the Freise brothers necessarily looking to do the kind of all-cash deals that have fueled office investment sales activity in San Francisco for the last 18 months. The question became how Redco could acquire desirable properties while assuaging doubt from lenders, even as the San Francisco office sector’s vacancy rate remained more or less at historic highs.

Freise’s answer was, in retrospect, a fairly simple one: Bring the tenants into the deal.

At 300 California, Redco partnered with GCI General Contractors, Decker Electric and Heffernan Insurance Brokers, each of which contributed equity toward the building’s purchase and signed new leases there as the deal closed. The leases brought 300 California’s occupancy from roughly 50% to 75%, helping to win over lenders. It followed a similar strategy at 400 Montgomery, lining up a smattering of leases with tenant-investors while in escrow that bolstered the building’s occupancy rate to around 75%.

The strategy is both unique to Redco and a postpandemic pivot for the firm, which has historically worked with institutional partners. But as institutional appetite for San Francisco’s office sector has waned, the developer has begun working with its tenants, alongside high-net worth individuals and family offices, to capitalize on the opportunity Friese sees downtown.

“I give Chris a lot of credit,” said John Walsh, who helped broker the 300 California deal. “He had GCI in tow, he was able to get a couple more investors in the building, and it came together.”

‘We just bought a bar’

Perhaps the most diversified investor base Redco put together was for Harrington’s. It partnered with Tonic Nightlife Group, which is operating the bar, brought in members of the Harrington’s family as well as roughly 70 individual investors. The group signed a lease with an option to buy the business and the 10,000-square-foot building for a set but undisclosed amount and expects to exercise it this year.

Ken Harrington, one of the bar’s owners, first approached Redco in 2023, less than a year after the developer put up an unsuccessful offer to buy the 245 Front St. building that houses Harrington’s on its bottom floor. Freise and his brother drove to meet Harrington at his family home, with Freise telling Jason the whole way: “Whatever we do, we are not getting talked into doing Harrington’s.”

“We walked out of there with a handshake,” Freise said. “And you know, we’re really glad we did.”

Freise caved for a few reasons: Time spent early in his career forging a network at Harrington’s, for one thing, a watering hole famously popular among San Francisco’s real estate sector. A desire to preserve a San Francisco institution first opened in 1935, for another. And a grandfather — Robert Edward Daniels, to whom Redco’s naming convention is a tribute – who took no holidays in his work as a tradesman, save St. Patrick’s Day. The bar reopened on St. Patrick’s day last year.

So far the bar has exceeded Freise’s expectations: The team hoped that by its one-year anniversary, Harrington’s would have done $1 million in top-line revenue. As of March, it was on track to close at $1.3 million.

Both 300 California and 400 Montgomery have also exceeded Freise’s expectations less than a year into ownership, beating the respective pro formas Redco wrote ahead of closing its acquisition of each building. That’s the thing about San Francisco today, Freise said: Even for someone betting heartily on its recovery, the city is easy to underestimate.

“I can’t tell you how many times we’ve had these conversations with investors, and they were all thinking about how wrong it could go,” he said. “They weren’t thinking about how good it could go — how well it has gone.”

About Freise

Title: Co-founder & Managing Partner, Redco Development

Resume: Founded Redco with brother Jason in 2019; previously co-founded Lift Partners; LBA Realty

2024 Deals: Purchased 300 California St. in May and 400 Montgomery St. in November; leased 245 Front St. with an option to buy and reopened Harrington’s

City of Palo Alto Starts Draft EIR for Redco Development’s 382-Unit Residential Project

https://news.theregistrysf.com/city-of-palo-alto-starts-draft-eir-for-redco-developments-382-unit-residential-project/

Palo Alto could soon see new housing added to the city’s residential offerings. According to City of Palo Alto records, a proposed project envisions the construction of two high-rise towers with nearly 400 residential units across from the Caltrain station. The city has initiated the process of preparing a Draft Environmental Impact Report for the proposed mixed-use development at 156 California Ave. Earlier this month, the city released a notice of preparation of an EIR, beginning a 30-day scoping period to solicit comments on the scope of the EIR. Any public comments must be submitted by 5 p.m. on Jan. 16, 2025.

The project developer is REDCO Development, according to a report from SFYIMBY. The development team is acting in conjunction with Mollie Stone’s Market, which owns the property site. The architect is Studio Current.

The project would demolish the existing improvements on-site to construct a new mixed-use development consisting of 382 residential units and 19,500 square feet of commercial space, city records show. Consistent with the provisions of the Builder’s Remedy, a percentage of the units would be provided as below market rate units.

The project would demolish an existing grocery store and parking lot and construct one seven-story podium building and one 17-story tower, known as Tower A, city records show. Additionally, the project would demolish another existing parking lot and construct one 11-story tower, known as Tower B. The podium building and Tower A would share two levels of underground parking and be connected at the first and second floors. The third floor would include a courtyard between the buildings, and the remaining floors would be individual to each building. 

Tower A would include 3,316 square feet of commercial space on the ground floor and 192 residential units on floors two through 17, city records show. The podium building would include a 14,709 square foot grocery store on the ground floor and 112 residential units on floors two through seven. Tower B would include 1,422 square feet of retail space on the ground floor and 78 residential units on floors two through 11.

This project represents what could be a significant development for Palo Alto, addressing the city’s housing needs while incorporating sustainable design elements. Leveraging the state’s builder’s remedy provision, which allows developers to bypass local zoning restrictions in exchange for meeting affordable housing quotas, the project aims to significantly increase housing density in the area.

SF’s next real estate wave is starting to take shape

https://sfstandard.com/2024/12/28/san-franciscos-next-real-estate-wave-is-starting-to-take-shape/

He only just got the place, so you’ll have to forgive Glenn Gilmore for fumbling through his ring of keys. 

In the week when most office workers have decamped for the holiday break, the developer is charging ahead with renovations to 500 Washington St., a 100,000-square-foot office building in Jackson Square that was constructed in 1982.

His first order of business: replacing all physical door locks with digital ones that can be unlocked via phone. “I hate keys,” Gilmore said during a recent walk-through of the property. “Anything manual just feels super old nowadays.

“Plus, you don’t need a permit to start working on this kind of stuff,” he added.  

Brick & Timber Collective will remodel this 1980s building and launch it as "Park Washington." | Source:Benjamin Fanjoy for The Standard

His firm, Brick & Timber Collective, closed on the eight-story brick structure this month and is planning a complete remodel of the building kitty-corner to the Transamerica Pyramid. 

The ground floor will become a restaurant with outdoor seating reminiscent of Cotogna, a posh establishment that has become a neighborhood destination for business lunches and first dates alike. 

Upstairs, interior walls will be knocked down to expose a 360-degree view of the city that was obscured by cubicles and individual offices. A rooftop bar is also in the works. 

This level of investment is possible because Brick & Timber Collective was able to purchase the building for just $32.6 million, a hair over the $30 million the Public Policy Institute of California paid for it more than two decades ago, according to public records. 

Not only was the value of the sale on par with San Francisco’s distressed commercial real estate market but 500 Washington is notable in that it shows how more institutional investors are emerging from the sideline since the pandemic. 

Gilmore confirmed that Barings, a subsidiary of the Massachusetts Mutual Life Insurance Company, signed onto the project as a limited partner, helping pay all cash upfront and will add more layers of debt financing to the renovation after the new year. Remarkably, he said, the deal — his firm’s largest to date — took only four months to complete. 

Recent office sales have largely been confined to a handful of local private investors who were betting early on the city’s recovery. 

Now, nearly five years into San Francisco’s new normal, that belief is again spreading to outside capital, which fueled the city’s previous real estate boom. 

What signs are they seeing? For one, more office workers are returning. According to real estate firm CBRE, San Francisco’s office leasing activity this year reached its highest point since 2019. 

As a result, the city’s office vacancy rate declined for the first time in 19 quarters, from 36.9% to 36.7%. 

“The expectation is that tenant demand will once again increase in 2025 as growth plans gain momentum and additional office space is needed,” said Colin Yasukochi, executive director of CBRE’s Tech Insights Center. 

Perception matters

When times were good, the business model in the city’s commercial real estate sector was predicated on increased office demand, which in turn resulted in higher rents and property values. 

But the massive retreat of Big Tech, combined with the struggle to dela with quality-of-life issues such as homelessness and public safety, essentially made San Francisco a no-go zone for institutional investors. Adding insult to injury, billions of dollars of prepandemic loans are coming due.

Just last week, the Manhattan-based Teachers Insurance and Annuity Association of America had to liquidate its majority position in nearly 1 million square feet of San Francisco office space, across two buildings it acquired in 2014 for more than $700 million. 

Heading into the new year, the real estate industry has momentum, buoyed by optimism after the November election brought in wholesale political change, says Cyrus Sanandaji, managing principal of Presidio Bay Ventures, another local developer that was active in scooping up distressed office buildings in the early days of the downturn. 

“Two years ago, conversations with [institutional investors] were nearly nonexistent since we had a perception problem, and a lot of groups were still taking hits on their existing investments,” Sanandaji said. “Now, you’re going to see a much faster run-up in bidding, because at some point, these funds will have to establish conviction and start owning some real estate, even if they’re a little late in timing the bottom of the market perfectly.” 

While the office market has been contracting, artificial intelligence companies have been steadily leasing more space in San Francisco, the creative and financial epicenter of the nascent technology. 

“I think everyone is underestimating the scale that is going to be required to build these companies,” Sanandaji said. “Even if we only have a 10% success rate, you don’t need that many unicorns to occupy all the available space.” 

Local businessman Greg Flynn, whose holdings include chain restaurants, luxury resorts, and office buildings, agreed. 

“Sea changes tend to happen quickly,” he said. “And just as it was for the internet and social media, San Francisco is on the forefront of the next driving force.

“I think this was the year the city gained the resolution to turn itself around,” he added. “Now we need our biggest employers to start bringing their employees back into the office.” 

Build it and they will come

In just this year, brothers Chris and Jason Freise of Redco Development have closed on three purchases in downtown San Francisco. They started in February by acquiring Harrington’s Bar and Grill on Front Street after the beloved Irish pub fell on hard times. 

A few months later, they partnered with local firm GCI General Contractors to snap up a 120,000-square-foot office building at 300 California St., on the city’s famous skyscraper corridor, for $28.5 million, nearly half off the price paid in 2014 by the New York-based seller.

And a week before Thanksgiving, they got the keys to another building just a block away, at 400 Montgomery St., for roughly $25 million. Their two deals were closed with debt financing, which is another indicator the markets are warming up to San Francisco again.

Like their contemporaries, the Freise brothers are using the cost savings from those deals to renovate the properties in order to attract new tenants. 

The lobby at 400 Montgomery, for example, will be reoriented toward the busier, more visible California Street side of the building, while floors five through nine are being converted into turnkey office suites for tech tenants, ranging from 3,000 to 7,200 square feet, which fit nicely into San Francisco’s most in-demand office market. 

“Downtown urban cores are struggling, but one thing that hasn’t changed is that if you build a good product, people will seek it out,” said Chris Freise. 

On top of market-low rents, Redco is offering tenants the opportunity to buy into building ownership. The scheme, which Freise said is meant to foster “community,” would give participants a cut of the building’s income each year. 

This strategy is paying off. At 400 Montgomery, Redco got four tenants to agree to new leases while the building was in escrow, while 300 California has only two floors out of eight still available. 

“Leasing is as much about momentum as it is pricing,” Freise said, adding that initiatives such as the city’s first designated entertainment zone, in front of Harrington’s, will accelerate the office resurgence. 

Jesse Feldman, Gilmore’s partner at Brick & Timber, echoed that sentiment. He beams when talking about what the area around 500 Washington could be if it were activated using laser-light projections similar to those at Transamerica Pyramid. 

It’s a vision of the future he had to reiterate to investors who otherwise would have just passed over the building as another drab line item on a spreadsheet. 

“We have the opportunity right now to implement real changes to our physical environment,” Feldman said. “Forget just updating the tiles. Let’s build a fucking epic bar. San Francisco is about iconic places where you form lifelong memories with friends.”

Redco and Bridges Capital buy Kohl Building in San Francisco for $26M

Office property sells for $300 psf, compared with $900 psf when it last traded in 2019

https://therealdeal.com/sanfrancisco/2024/11/22/redco-and-bridges-buy-sfs-kohl-building-for-26-million/

Redco Development and Bridges Capital have bought a historic 12-story office building in San Francisco’s Financial District for $25.75 million.

The locally based investors bought the 86,230-square-foot Kohl Building at 400 Montgomery Street, the San Francisco Business Times reported. The sellers were Boston-based Intercontinental Real Estate and Harvest Properties, based in Oakland.

The deal works out to $300 per square foot. The building was marketed in April when market experts said it could fetch nearly $30 million, or nearly $350 per square foot, with Redco in talks this summer to pay around $26 million.

Intercontinental and Harvest bought the building in 2019 for $77.5 million, or $906 per square foot, 55 percent more than it sold for three years earlier. The building was then 91 percent leased, but its occupancy has fallen.

The landmark building, built in 1901 on Montgomery and California streets, survived the 1906 San Francisco earthquake. It was renovated in 2018.

Redco has made plays for commercial properties in San Francisco, which have plunged since a pandemic shift to remote work. Office vacancy now stands at 37.3 percent, resetting office values.

Late last year, the firm partnered with an investor group and members of the Harrington family to acquire Harrington’s Bar & Grill, a popular Irish bar in the Financial District, for an undisclosed price.

Last spring, Redco and GCI bought a 119,000-square-foot office at 300 California Street for $28 million, or $240 a square foot.

“We’re an active investor in San Francisco office,” Chris Freise, managing partner of Redco, told the Business Times. “We’re looking at new deals and writing offers, and trying to find more.”

Its plans for the historic Kohl Building include moving its lobby south toward California Street. Redco and Bridges also want to lease the fifth and ninth floors as 3,000-square-foot furnished office suites, to rent in the low $50- per-square- foot range.

Such “half-floor, high-identity suites” aren’t available in San Francisco, and fill a niche in the market, Freise said.

Redco has already signed three letters of intent for a combined 16,000 square feet in lease deals, Freise said, though he declined to identify the tenants. The firm employed a similar leasing strategy at 300 California Street by signing prospective tenants before the sale closed.

The pending deals should bring the building’s occupancy to 65 percent.

Done deal: Redco snaps up 400 Montgomery

https://www.bizjournals.com/sanfrancisco/news/2024/11/20/redco-400-montgomery-san-francisco.html

Redco acquired 400 Montgomery St., its latest bet on San Francisco’s postpandemic downtown.

The investor partnered with a San Francisco-based family office, Bridges Capital, to buy the 86,230-square-foot 400 Montgomery from sellers Intercontinental Real Estate Corp. and Harvest Properties, Redco Managing Partner Chris Freise confirmed.

Redco and Bridges paid $25.75 million, or $299 per square foot, for the 12-story, early 20th century office building, the Business Times has learned. The deal closed Wednesday.

Intercontinental declined to comment; Harvest could immediately be reached for comment. Intercontinental acquired the building in 2019 from Chicago-based asset manager Nuveen and Harvest for $77.5 million, or roughly $906 per square foot; Harvest stayed on as Intercontinental’s operations partner following the sale.

The transaction marks Redco’s third buy in downtown San Francisco in roughly the last calendar year. At the end of 2023, it partnered with an investor group and members of the Harrington family to acquire the beloved Financial District Irish Bar Harrington’s. In May, Redco partnered with San Francisco-based GCI Contractors to snap up 300 California St., a 120,000-square-foot office building roughly a block from 400 Montgomery, for $28.5 million, or $240 per square foot.

The Business Times first reported the firm was in talks to acquire 400 Montgomery in July of this year.

“We’re an active investor in San Francisco office,” Freise said. “We’re looking at new deals and writing offers, and trying to find more.”

Freise said in May the firm is taking the long view of downtown San Francisco’s prospects in the postpandemic era. At 400 Montgomery, Redco has already signed three letters of intent for a cumulative 16,000 square feet in lease deals expected to close down the line, Freise said, though he declined to identify the tenants involved. The firm implemented a similar leasing strategy at 300 California St., signing prospective tenants leading up to when its acquisition of that property officially closed.

Those pending deals should bring 400 Montgomery's occupancy rate to roughly 65%.

Floor plates at 400 Montgomery measure roughly 7,200 square feet; Redco plans to release the fifth and ninth floors of the building to the market as roughly 3,000-square-foot plug-and-play office suites, complete with furniture, Freise said. Rental rates for those suites, which will be available "immediately," will run in the low $50 per square foot range.

Freise said the plug-and-play space will represent something not otherwise available in San Francisco today: “half-floor, high-identity suites that fill a niche in the market,” he said, given the building's location and its price point. Tenants in the 3,000-square-foot range have historically ended up on pieces of larger floor plates, he said, or else coworking space.

Redco and Bridges also plan to reorient the lobby of the building south toward California Street down the line — something the pair may work with current ground-floor tenant Sterling Bank to accomplish.

Intercontinental and Harvest tapped real estate services firm JLL to list 400 Montgomery for sale this past spring. The property, also known as the Kohl Building, was built in 1901 and survived the 1906 earthquake. Nuveen and Harvest spent millions to upgrade the property, restoring the facade and upgrading the lobby, common areas and restrooms.

It's official: Redco snaps up 300 California St. for $28.5 million

https://www.bizjournals.com/sanfrancisco/news/2024/05/21/redco-300-california-sale.html

Redco closed its acquisition of 300 California St., the second downtown San Francisco asset the developer has snapped up in recent months with an eye to long-term ownership.

The deal closed Tuesday, Redco Managing Partner Chris Freise confirmed.

The Business Times has learned Redco and partner GCI General Contractors paid $28.5 million, or around $240 per square foot, to acquire the 120,000-square-foot 300 California from New York-based seller LeFrak. LeFrak acquired the building for $58.25 million, or around $485 per square foot, in 2014.

John Walsh of real estate services firm Cushman and Wakefield represented Redco in the deal.

GCI will move its headquarters from 875 Battery St. to the fifth floor of 300 California in conjunction with the transaction. That deal, alongside one other completed lease for half a floor and a third deal of the same size nearing the finish line, will bring the building’s occupancy rate to roughly 75%, Freise said, up from less than 50% when Redco went under contract for the building earlier this spring.

Freise declined to identify the tenants behind the two smaller lease deals at 300 California, and details of their leases were not available Tuesday.

The deal cements 300 California as the latest downtown office property to trade hands for between $200 and $300 per square foot — postpandemic pricing that has solidified in San Francisco over the last year, luring investors back to the city in the process. Redco, which joins the ranks of local investors betting on the recovery of downtown San Francisco’s office market, is acquiring 300 California with plans to commit to the building for the long haul, Freise said.

“We’re open for business, and we’ll be here for a long time," he said.

The group took the same stance as part of an investor group that acquired Harrington’s, a beloved Irish bar in San Francisco’s Financial District that shuttered in the fall of 2020. Redco, together with members of the Harrington family and a consortium of investors including some of the bar’s long-time patrons, formed an investment group that signed a lease for the Harrington’s space and reopened the bar in March. You can read more about the Harrington’s reopening in this March article from my colleague Alex Barreira.

Redco plans to market the vacant top two floors of the eight-story 300 California for lease, Freise said. Investors acquiring office buildings in postpandemic San Francisco more or less fall into two camps: those who are buying at postpandemic pricing and then simply placing their buildings back up for lease at lower rental rates, and those who are investing their savings back into the buildings themselves, adding amenities to lure tenants. Redco largely falls into the second camp, per Freise, who said the firm’s vision for the building is hospitality-forward.

The building is up to date seismically, the elevators are new and most available office space in the building has been built out, Freise said, adding that minimal need for capital up front is one of the things that drew Redco to 300 California.

Among the building’s other interesting qualities: It was designed and approved for an additional three stories above the existing eight, Freise said, meaning Redco could could pull permits from the city and expand the building at will. The site itself — just more than a third of an acre at the northwest corner of California and Battery streets — is also zoned for “quite a bit more density" than eight stories, Freise said. That could open the door for a large-scale redevelopment of the property if such a play becomes viable in the future.

The building is one of several along the California Street corridor that has sold or is expected to sell in coming months. LBA Realty is said to be moving to acquire 255 California, a 182,528-square-foot office property diagonally opposite 300 California, for around $290 per square foot; the roughly 300,000-square-foot 350 California directly next door was one of the first office buildings to trade hands in postpandemic San Francisco when SKS Partners and the Swig Co. snapped it up last year for around $200 per square foot.

Here’s where S.F. Mayor Breed wants to make it legal to drink outside on city streets

https://www.sfchronicle.com/sf/article/s-f-mayor-breed-entertainment-zones-19436565.php

In the latest effort to enliven San Francisco’s streets, city officials are seeking to legalize “entertainment zones” that would enable bars and restaurants to sell alcohol for outdoor consumption.

The first of these zones would be on downtown’s Front Street, between California and Sacramento streets, as part of legislation backed by Mayor London Breed and supported by state Sen. Scott Wiener, D-San Francisco. The area is home to longtime eateries and bars Royal Exchange, Harrington’s and Schroeder’s. The Board of Supervisors must approve the zone, and allow other areas in the city to apply in the future.

Wiener’s bill last year, SB76, allows San Francisco businesses to sell alcohol outdoors during events permitted by the state’s Department of Alcoholic Beverage Control. Currently, restaurants and bars are not allowed to sell alcohol outside during events, but event vendors can set up and sell beer outside their doorsteps.

“San Francisco’s Downtown is seeing a new surge of excitement, and we are thrilled to be the first city in California to take advantage of this new law to bring opportunities that foster joy for our residents, workers and visitors,” Breed said in a statement. “Our message is clear: San Francisco is having fun, thriving and open for business.”

Breed also said the city will offer grants of up to $50,000 to support nightlife and entertainment, through the Office of Economic and Workforce Development and philanthropic nonprofit San Francisco New Deal.

The mayor is running for election this year against numerous opponents and sought to convey progress in reviving downtown, which generates the bulk of city taxes and has struggled since the pandemic.

Wiener is also working on a follow-up bill, SB969, which would allow California cities beyond San Francisco to create zones.

“For downtown San Francisco and other downtowns, this model is really good,” he said. “It can activate streets and create a really vibrant outdoor atmosphere.”

The entertainment zone efforts come the same week that an inaugural monthly block party on nearby Second Street drew thousands of people on Thursday. At that event, alcohol was served outside in closed-off areas.

“We’re seeing signs of life and increased activity, which is great,” Wiener said. “But we still have a big problem in terms of office vacancy.”

Wiener is, separately, working on a bill that would exempt new building projects proposed in downtown San Francisco and nearby areas from lengthy environmental reviews.

Ben Bleiman, owner of Harrington’s and president of the city’s Entertainment Commission, said flexibility is urgently needed as businesses struggle. Local bar sales were “way down” last year, which Bleiman blamed on lower foot traffic and inflation.

He noted that zones could be created outside of downtown and benefit residential business districts as well.

“We could transform parts of the city into places that have more of a European feel,” he said. “You can walk outside with a beer and sit at a table … and not feel like you’re breaking the law.”

“We need to give people reasons to come back to San Francisco downtown,” he said. “Nightlife is the number one reason.”