Juul Labs Relists San Francisco Tower at $174 Million, Less Than Half Its 2019 Purchase Price

Juul Labs has put 123 Mission Street back on the market for $174 million, less than half the $397 million the e-cigarette maker paid for the South of Market tower in June 2019, in a relist that underscores how far San Francisco's office market has fallen since the pandemic.

Broker Newmark holds the listing at $450 per square foot for the 29-story, 387,600-square-foot building. When Juul first purchased the four-decade-old tower from Northwood Investors, it paid more than $1,000 per square foot, planning to fill the space with a rapidly expanding workforce. That ambition collapsed as Juul's products came under federal regulatory scrutiny, and in early 2020 the company announced it would move its headquarters to Washington, D.C.

Juul listed 123 Mission at the start of 2020, initially asking $450 million, but what followed was, in the words of one account, "a multiyear, stop-and-start effort to sell the building." Separate deals with PGIM and Pimco, the latter working with Lane Partners, both fell through amid the pandemic that year.

The current relist is further complicated by a CMBS loan tied to the property. Lender Affinius Capital is separately in talks to sell that debt to Madison Capital, though no agreement has been finalized and pricing terms remain unclear. Sources suggest that if the debt sale closes, it could position Madison to eventually take control of the property depending on the loan's performance and structure. Both Juul and Affinius declined to comment. Madison Capital has invested nearly $800 million in the Bay Area over the past eight years, making a potential move on 123 Mission consistent with its regional strategy.

The asking price reflects a brutal stretch for San Francisco office sales. Last summer, Wells Fargo's 620,000-square-foot tower at 550 California Street and UBS Realty Investors' 374,000-square-foot building at 455 Market Street were both pulled from the market after drawing lackluster offers, despite asks of $160 million and $280 million, respectively. There have been exceptions: buildings at 510 Townsend and 505 Brannan streets, formerly leased to Stripe and Pinterest, sold for $572 million combined, and 153 Townsend, leased to Ancestry.com, sold for $225 million.

Analysts forecast a wave of distressed office deals ahead, with some owners expected to hand keys back to lenders rather than absorb further losses at sale. For Juul chairman and CEO K.C. Crosthwaite, the $174 million ask already represents a paper loss of roughly $223 million from the 2019 purchase price, and that figure assumes the building sells at the listed price at all.