On Friday, financially beleaguered utility company Pacific Gas & Electric (PG&E) announced in a statement that they will be selling their San Francisco Headquarters for $800 million.
PG&E, upon approval from the state, will move from the PG&E complex at 77 Beale Street and 245 Market Street to the Kaiser Center on Lake Merritt in Oakland after being headquartered in San Francisco for 115 years.
The move is largely the result of numerous financial and operational issues since the late 2010’s. The deadly 2018 Camp Fire and ensuing legal and insurances battle brought PG&E into bankruptcy in January 2019. Eventually pleading guilty to 84 deaths the next year, the utility company paid out $24.5 billion in settlements alone from the Camp Fire case, with billions more being paid in other settlements.
The bankruptcy itself nearly caused PG&E to be taken over by the state, and only avoided that due to large reforms made within the company. By the time PG&E exited bankruptcy in July 2020, the utility company had been largely changed and was in need of more cash to help pay down bill increases and pay for new equipment to help meet the heightened safety standards in place post-bankruptcy, as well as to reduce the high number of blackouts the company has caused in the last several years due to wildfire worries. Several open lawsuits over wildfires and around $42 billion of open debt also pressured the company to look for new sources of funds.
The building sale announcement on Monday for $800 million was a direct result of that need.
The complex, which had originally been estimated to bring in $1 billion or more for PG&E pre-pandemic, was sold to Delaware-based real estate investment venture Hines Atlas USA. The cheaper rent in Oakland and the shorter commute time for many PG&E employees who live to the south and east of the Bay are also expected to save the company money once the move is complete.
“This isn’t like all the tech companies leaving for Texas last year,” said Bay Area real estate broker Tim Li to the Globe on Monday. “But it does show how companies are still moving around in this post-pandemic shift of office space. And $800 million for those buildings? Obviously some companies are looking into the real estate market coming back in San Francisco.”
“For PG&E, well, they’ve been in the city since around the time of the Great Earthquake. It’s sad to see them go, but at least they aren’t going far. Based on all of their troubles in the last few years, anything they can do to make money and save a buck is going to be utilized. A move out of your main location never looks good for a company that isn’t growing, but PG&E needs to worry more about more than San Francisco real estate right now.”
PG&E is expected to begin moving to Oakland as soon as next year.
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