An uncertain economic outlook has brought the real estate investment market in San Francisco to a near halt, but the sale of a luxury auto dealership site was a source of much-needed optimism in the city's road to recovery.
IndiGo Auto Group, a Houston-based network of high-end car brands, purchased the former Mercedes-Benz showroom at 500 Eighth Street in San Francisco for $60.2 million, marking one of the largest deals to close last year and garnering it a 2023 CoStar Impact Award, as judged by real estate professionals familiar with the market.
The move-in-ready property, which was built in 2006, will soon reopen as a Porsche dealership.
San Francisco's retail market — especially outside of its primary shopping district, Union Square — has long faced challenges that were then exacerbated by the onset of the pandemic in 2020. Investors have been turned off by the city's bureaucratic hurdles and increasing crime rates, and high-profile tenants such as Gap Inc. and Walgreens have closed more locations than they've opened.
The IndiGo purchase bucked the sour investor sentiment and meant an otherwise vacant retail site would reopen as a new luxury car dealership to reignite the San Francisco street corner.
About the Project: The nearly 91,200-square-foot building previously housed a Mercedes-Benz dealership until the location closed in mid-2021 and the luxury car brand relocated to a new location in South San Francisco. The space is located in the city's Showplace Square neighborhood, which is home to numerous tech offices including Airbnb, Asana, Zynga, Stripe and Volta.
What the Judges Said: "The sale of the Mercedes-Benz dealership to another car dealer is a positive development and contributor to job retention and economic activity in San Francisco at a time when the local economy has been struggling to recover from the effects of the pandemic," said CoStar Impact Award Judge Mary Alam, also an executive vice president with NAI Northern California. "Had Mercedes-Benz moved out and the building remained vacant, it would have been a blight to the local area and would have also resulted in decreased employment, economic activity and growth."
They Made It Happen: Touchstone Commercial Partners' Zach Haupert, Michael Sanberg and Trevor Gudim represented seller Rialto Capital Management in the deal. Jeff Badstubner and Ben Lazzareschi with JLL brokered it on behalf of IndiGo Auto Group.