Harvest Properties, Lone Star Recap San Francisco Office Tower

Harvest Properties and an affiliate of Lone Star Funds have formed a joint venture to recapitalize 600 California St., a 20-story, 360,000-square-foot office tower in San Francisco’s financial district. The joint venture will implement capital improvements to reposition the property, which was previously owned by WeWork.

Harvest, a San Francisco-based full-service commercial real estate investment firm, has an equity interest in the office building and will be the operating partner. The firm will oversee day-to-day operations, leasing strategy and execution of the repositioning plan.

The amount of equity investment and price of the improvements were not disclosed.

Plans call for renovations to the lobby and exterior plaza and creation of a 10,000- to 15,000-square-foot shared amenity floor including a fitness center, tenant lounge and flexible meeting spaces. The joint venture will also add a roof deck and make upgrades to vacant floors.

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Harvest Director Chris Trotier will oversee the repositioning. Trotier said in prepared comments the firm’s investment in 600 California St. reflects the firm’s strategy of focusing on well-located and amenitized office buildings in San Francisco, which he said will benefit as leasing momentum driven by artificial intelligence startups accelerates in the city.

The building, which includes two floors of retail space, has office floor plates of 20,824 square feet. The tower has a side core design and gradual setbacks, which provide views for about 80 percent of the building, and 200 parking spaces in an underground garage.

Located at the corner of California and Kearny streets in the North Financial District, the LEED Gold-certified building was completed in 1990 and completely renovated in 2006. The transit-oriented property is within a quarter mile of eight stations, including BART commuter train stations and MUNI light rail stations.

The tower is mostly vacant, with more than 246,000 square feet available, according to Yardi Matrix data. WeWork is the main tenant, leasing nearly 90,000 square feet.

Harvest has tapped JLL Vice Chairman Christopher Roeder, Executive Vice Presidents Tom Doupe and Carlye Parker, and Senior Associate Lexi Castellino as exclusive leasing agents for the building.

Foreclosure leads to new ownership

Lone Star acquired the tower in April through a foreclosure process. In January, the firm purchased a nonperforming $240 million CMBS loan from Goldman Sachs for $130 million. The company took ownership of the property following an auction with no external bidders with a $216 million credit bid, according to IPE Real Assets.

WeWork Capital Advisors, an in-house investment arm of WeWork, had secured the CMBS loan in August 2019 when it acquired the property with partner Rhone Group from MEPT for $330 million, according to Yardi Matrix data.

The coworking company still leased space at the tower from WeWork Cap until early 2023 when it stopped paying rent, according to the San Francisco Chronicle. Yardi Matrix reports the loan was put on a servicer’s watch list in March 2023.

The Chronicle reported that the property was appraised at $109 million in 2024, down nearly 70 percent from nearly $320 million in 2019, when it last changed hands.

AI driving office market leasing

Although leasing is up and prices are higher, investment volume in the San Francisco office market has continued to cool off to one of the lowest levels in the U.S., according to a Yardi Matrix report.

One of the largest sales since the start of 2026 was Grosvenor’s $44 million sale of 240 Stockton St., a 10-story, 40,442-square-foot building in the North Financial District, to Moran Capital. The property traded at a 45 percent discount compared to its previous sale in 2016, Yardi Matrix data shows.

Although overall vacancy was 28.7 percent at the end of the first quarter, San Francisco recorded its largest quarterly net occupancy gain in more than six years, totaling 1.4 million square feet, according to a Colliers report. It was the third consecutive quarter of positive net absorption for the first time since 2018.

Leasing activity for the first quarter was 3.5 million square feet, the highest first-quarter total since 2000, Colliers reported. AI-focused firms were the primary driver of net new leasing demand across various space-size segments. The leasing was concentrated in Class A buildings, particularly within the North and South Financial Districts and Mission Bay. Anthropic, OpenAI, Databricks and Ramp were among the AI-related companies making major commitments.