Emerald Shops Potrero Center
Submitted November 17, 2011, 4:51 PM
San Francisco-based developer Emerald Fund has put the Safeway-anchored Potrero Center on the market for sale.
The not quite 230,000 square-foot property, which Emerald developed in 1997, is located at 2300 16th St. in the Potrero Hill section of San Francisco, near Potrero Avenue, west of U.S. 101.
The listing agent is Eastdil Secured out of its San Francisco office. According to the owner’s Web site, the property has a current value of $110 million. Emerald and its broker declined comment for this story.
The cap rate on the sale is projected to be in the low 5 percent range based on the existing rent being produced by the property, according to two industry brokers with knowledge of the asset and market. Offers for the property are expected toward the end of 2011 and a closing is anticipated sometime in early 2012.
San Francisco in general is a market where institutional investors such as pension funds and life insurance companies are interested in owning real estate. There also is strong investor demand for grocery-anchored or necessity-anchored retail centers because they are perceived as recession-resistant.
Retail vacancy in the city is below 3 percent, according to a third-quarter research report from Marcus & Millichap. The city’s job growth—more than 21,000 new jobs in 2010 and 2011, Marcus predicts—is also attracting interest from tenants. Marcus predicts a not quite 2 percent increase in asking rents for 2011 to nearly $33 a foot and a rise in effective rents to not quite $30 a square foot. Rents fell in 2010.
Besides Safeway, Potrero Center tenants include Ross Dress for Less, Office Depot, Petco and 24-Hour Fitness.
The resident population within a one-mile radius of the center is not quite 80,000. That total climbs to more than 90,000 during the day. Median household income is $62,605, according to Cushman & Wakefield.
The shopping center includes 704 parking spaces, which is important for a parking-challenged city like San Francisco. A recent zoning change would allow as many as 1,800 new housing units to be built above the retail, though there are no entitlements for that development.
