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PG&E to sell its S.F. HQ for $800 million, wants half of the money returned to customers – San Francisco Chronicle

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PG&E has agreed to sell its San Francisco headquarters for $800 million, a mega-deal that shows investors remain interested in downtown properties despite the coronavirus pandemic.

Developer Hines agreed to buy office buildings including 77 Beale St. and 245 Market St., PG&E said Monday. The utility company plans to move its headquarters to 300 Lakeside Drive in Oakland in the first half of next year to cut costs and provide better commutes for employees.

The PG&E properties span 1.5 million square feet next to Embarcadero BART station.

PG&E wants to return around $390 million to $420 million of the profits from the sale to customers over five years to offset future power rate increases. There’s not yet an estimate for how much each individual customer would benefit, a PG&E spokesman said. And the California Public Utilities Commission must approve the proposal, a move that PG&E said is required for the sale to close.

“We’ve made a commitment to keep customer costs as low as possible, and one way we’re following through on that is by selling non-core assets including real estate. This sale and relocation will achieve cost savings that directly help reduce customer bills,” PG&E CEO Patti Poppe said in a statement.

It’s another major commitment to San Francisco for Hines, which is planning to start construction on its $1 billion Parcel F tower a few blocks away PG&E’s Beale Street building. Construction is moving forward despite Salesforce canceling its office lease in the project as the tech company embraces more remote work. Hines previously developed Salesforce Tower with Boston Properties and also managed a seismic retrofit for the PG&E buildings.

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The PG&E deal comes two months after Dropbox’s headquarters sold for $1.08 billion, the second-highest price in city history for a single building. Despite Dropbox’s “remote first” policy change, the building is being subleased to biotech companies, which have continued to expand during the pandemic.

Another major deal was the Transamerica Pyramid’s sale for $650 million last year, a transaction that was delayed for months.

Roland Li is a San Francisco Chronicle staff writer. Email: [email protected] Twitter: @rolandlisf

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