San Francisco Commercial Real Estate Sees Significant Investor Activity Amid Market Rebound

San Francisco's commercial real estate market has experienced a notable surge in investment activity this fall, particularly in retail and hospitality sectors, signaling a potential market bottom. A Texas-based investor has acquired multiple flagship retail properties in Union Square and Hayes Valley, while several of the city's largest hotels have found buyers at heavily discounted prices. These transactions, alongside key tenant movements, suggest a shifting landscape for downtown San Francisco.

Dallas-based investor Douglas MacMahon, a principal at Moran Capital, has been a prominent figure in the recent acquisitions. MacMahon's entities have purchased at least three flagship retail properties in Union Square, including the seven-story One Union Square building for $42.5 million and a five-floor, 32,000-square-foot retail building at 240 Post Street. Additionally, MacMahon's group acquired 11 retail properties across five buildings in Hayes Valley for $10.9 million. "My partners and I are long-term investors, and we believe San Francisco in the long-term is a great market for investing in real estate," MacMahon stated, indicating a strategic long-term outlook.

The city's hotel market has also seen significant movement. A partnership between Newbond Holdings and Conversant Capital recently acquired two of San Francisco's largest hotels, the Hilton San Francisco Union Square and Parc 55 San Francisco – A Hilton Hotel. These sales were reportedly made at substantially reduced prices, reflecting the broader market adjustments. The San Francisco commercial real estate market, particularly offices, saw prices bottom out in 2024, with a 20% increase in office leasing activity compared to the previous year, suggesting a broader recovery trend.

Tenant activity further underscores the changing market dynamics. Suitsupply, a menswear brand, purchased its building, demonstrating a commitment to its physical presence. Conversely, Uniqlo, the Japanese casual wear retailer, has decided to return to downtown San Francisco after previously exiting, indicating renewed confidence in the area's retail viability. These moves align with the sentiment shared by some real estate experts who believe the market has found its floor, attracting opportunistic investors.