Locally based investors in San Francisco are facing new competition from Texas-based buyers in the city’s commercial real estate market. According to a report by the San Francisco Standard, there has been a noticeable increase in out-of-state investment, particularly from Texas, as tech workers and artificial intelligence companies move into San Francisco. This trend is contributing to renewed activity in a market that had previously slowed.
The Union Square area has experienced significant interest from Texas investors. Dallas-based investor Douglas MacMahon acquired the One Union Square building in August and later purchased a five-floor retail property at 240 Post Street in November. Since August 2024, MacMahon has bought more than twelve properties across the city, including the former Burberry building at 225 Post Street and a portfolio of eleven retail properties located in Hayes Valley.
MacMahon, who previously lived in San Francisco, commented on his investment strategy: “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,” he told The Real Deal last year.
Another Dallas-based firm, Lone Star Funds, is preparing to acquire the 360,000-square-foot building at 600 California Street in the Financial District. The property was formerly owned by WeWork before it defaulted and entered receivership in 2023.
Houston-based Hines also expanded its presence by purchasing an 87-unit apartment building in Duboce Triangle last year. The company has submitted plans to build a 76-story office tower downtown that would become San Francisco’s tallest office building.
Additionally, Charles Schwab is seeking to lease office space within San Francisco despite relocating its headquarters to Westlake, Texas in 2021.
— Chris Malone Méndez
