A Touch of Nostalgia
There is something about the Art Deco building at 140 New Montgomery Street that warms the heart, at least my heart. It opened in 1925 as the Pacific Telephone & Telegraph Company, which was San Francisco’s first single occupant building, the first high-rise South of Market Street, and the tallest building in the City (along with the Russ Building completed in 1927) for more than 25 years.
In 1929, Sir Winston Churchill, then Chancellor of the Exchequer, visited the building and reportedly made his first transatlantic phone call, phoning home. (for our history buffs, the first official transatlantic call occurred in January 1927 between the president of AT&T and the head of the British General Post Office).
In 2007, the “PacBell Building” was sold to Stockbridge Capital Group and Wilson Meany Sullivan for $118 million. In case Stockbridge doesn’t ring any bells, they are the folks who are developing more than 100 homes on Yerba Buena Island; land that was “controlled” by our U.S. Navy folks until the 1990s when the City and County of San Francisco assumed control. Speaking about the Navy - until 1978, the roof of 140 New Montgomery was used to convey official storm warnings to sailors (at the direction of the U.S. National Weather Service) in the form of a 25-foot-long triangular red flag by day, and a red light at night. (Makes you yearn for the good old days!)
The original development plan for the PacBell building called for its conversion into 100+ condominiums, but the inability to enlarge the building’s windows coupled with the onset of the financial crisis caused developers to change plans.Thus, the building sat idle for some six years.
Fast forward to 2012. The owners changed their planning back to office space and started major (costly) renovations, and Yelp signed a lease for more than 100,000 square feet, becoming the building’s major tenant.
In 2016, Boston-based Pembroke Real Estate Inc. acquired 140 New Montgomery for $284 million. Sounds like a good profit for the Stockbridge/Meany folks, but maybe not so good after considering the $80-$100 million renovation cost plus the multi-year holding costs.
Note: LISA will launch its first (test) game in Q3 and will feature the 39-story Jasper apartment building on Harrison at First Street in San Francisco. The Jasper building was designed by HKS Architects, built by BuildGroup, and developed by Crescent Heights, who sold it to Northwestern Mutual in 2020.
Previous Insights can be seen here.