Power utility company PG&E Corp. has made a deal to sell off its San Francisco headquarters for $800 million to Hines Atlas to slowly try and alleviate its losses after going bankrupt last year and facing a series of criminal charges.
The company needs the approval of state regulators to sell off its massive 1.7 million-square-foot complex before it could move to Oakland next year. Officials have decided to sell the headquarters amid the devastating economic impact of the coronavirus pandemic.
A broker estimated in 2019 that PG&E’s headquarters could net up to $1 billion. The company is one of the top utility companies that have opted to leave San Francisco in favor of Oakland. The city is known for being cheaper than most regions in the Bay Area.
When PG&E put the headquarters for sale, they received more than a dozen offers, suggesting many investors are expecting a rebound after the economy reopens, Bloomberg reported.
“It’s a fantastic bet on San Francisco. While San Francisco has taken its lumps through COVID, perhaps more than other cities, there’s a lot of evidence that we will rebound over the next two or three years,” Executive Managing Director at commercial real estate brokerage Cushman & Wakefield J.D. Lumpkin said.
After the finalization of the deal, PG&E’s shares rose by 2.1% on Monday. Contrary to other large property sales in the city, the headquarters would require massive renovation from the buyer. Once the redevelopment is finished, the one who bought the property will have to fill it after a few years because there is no tenant in place.