Pleasant Hill Retail Property Trades Hands in $100 Million Deal as Retail Rates Make a Comeback

By Alex Girda, Associate Editor

One of the largest retail properties in Pleasant Hill recently traded hands, with Loja Real Estate LLC announcing the sale of one its most important assets. The Downtown Pleasant Hill Shopping Center was acquired by UBS Global Asset Management for a fee of approximately $100 million. Handling the transaction on behalf of Loja Real Estate was a Colliers International team consisting of Kevin van Voorhis, James Kaye, Jay Gomez and Lindsey Lantis.

The Downtown Pleasant Hill retail center offers 345,687 square feet of commercial space in San Francisco’s Pleasant Hill community. The center is the area’s main commercial hub, featuring a 40-strong tenant roster that includes names such as Century Theaters, Lucky Supermarket, Bed Bath & Beyond, Michaels, Ross, Golfsmith, Paul Mitchell the School and Zachary’s Chicago Pizza.

Loja Group LLC, a real estate investment management entity controlling Loja Real Estate LLC, has praised the newly offloaded property in a press statement as being a “strong property.” Katherine Burr, CEO of Loja Group LLC, said that “this was the opportune time to sell and advance other important initiatives at Loja.”

The multi-tenant retail property’s sale illustrates the increase in median prices for retail properties in the San Francisco Bay Area. Data from Marcus & Millichap Real Estate Investment Services points out that over the past five years, average prices decreased considerably in terms of both single-tenant and multi-tenant retail properties, with 2012 being the first year of growth since 2006. Single-tenant properties now charge higher per square foot rates than multi-tenant properties, with considerable growth being clearly visible for the past year.

Chart courtesy of Marcus & Milllichap Real Estate Investment Services at marcusmillichap.com

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Over-Performing San Francisco Office Market Produces Yet Another Office Deal

By Alex Girda, Associate Editor

San Francisco’s improving office market has produced yet another deal after a joint venture created by Hines and Invesco Real Estate moved to acquire an iconic construction located in the city’s South Financial District. The two real estate companies have completed a deal making their joint venture the new owner of the Rialto Building. While official financial terms for the deal were not disclosed, market specialists place the transaction’s value at around $57 million. The entity selling the Rialto Building was Africa Israel USA, or AFI USA.

Located at 116 New Montgomery St., the Renaissance-style Rialto was initially developed in 1902. The Great Earthquake of 1906 called for an extensive interior rebuilding and renovation process to be undertaken by the Meyer & O’Brien Architects-designed structure. It offers tenants 135,486 square feet of office and retail space.

AFI USA had owned the Rialto since 2007, a time frame in which the company had restoration works focusing on the original design of the structure, with main points of interest being the lobby, the elevator’s ornate metal doors, the painted panel ceiling, marble floor and bronze staircase. The building had an occupancy rate of around 85 percent at the time the transaction was completed. The current tenant roster includes names such as Trulia, Nelson/Nygaard, Walgreens and Chipotle.

According to a press statement issued by Hines Senior Managing Director Cameron Falconer, now that the building is part of the company’s portfolio, “Hines and Invesco will continue to invest in the building to complete its transition to a ‘creative core’ asset that caters to San Francisco’s burgeoning technology and multimedia industry tenants.” AFI USA CEO, Tamir Kazaz, went on to say that the deal “proves that San Francisco is still unmatched as the nation’s top-performing office market.”

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Former Solyndra Factory Given New Life as Seagate Unveils R&D Facility Plan

By Alex Girda, Associate Editor

The former Solyndra solar factory in Fremont is seeing sunshine again as the abandoned facility is set to be re-adapted. The site, previously owned by the failed solar panel manufacturer, will be transformed by Seagate Technology into a new research and development complex to be used by the data storage giant.

As Seagate is looking to the future of disk drives with its successful solid state and hybrid data disks, the company wants to capitalize on its current success and come up with the next big thing in data storage systems.

The old Solyndra site will be given a complete makeover as it morphs into a $180 million state-of-the-art R&D facility. Located on Kato Road in Fremont, the 411,000-square foot complex was bought by Seagate earlier this year for a fee of $90 million, San Jose Mercury News writes. The rest of the $180 million budget will be directed towards acquiring and installing the equipment that will turn the former factory into a Seagate facility that would create up to around 600 jobs in the field.

According to Mercury News, Seagate shopped around the Bay Area and Silicon Valley looking at around 40 potential locations to house the new project.

Solyndra closed down in 2011, a move that resulted in more than 1,000 layoffs. Seagate’s takeover of the facility will be a move welcomed by the local community, one that most likely would have preferred to avoid having an eyesore in the form of the former solar-panel manufacturing plant.

Image courtesy of user DarkSilverR53 via Panoramio

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Essex Property Trust Picks up Fox Plaza Residential Component, Commits to Improvement of New Asset

By Alex Girda, Associate Editor

Essex Property Trust has moved into San Francisco’s multifamily market to acquire a large chunk of housing units—part of a mixed-use building located in the city’s highly publicized Mid-Market district. The fully integrated real estate investment trust has shelled out $135 million for the residential component of Fox Plaza—a 29-story high-rise building located at 1390 Market St.—from Archstone, who was initially looking for a sale price more in the $150 million range.

The 444 units that Essex has acquired, located on floors 14 through 29, offer great views of the city and feature high ceilings and large decks. Three quarters of the units are 450-square foot studio apartments, with the remaining apartments featuring one- and two-bedroom floorplans. Essex Property Trust is also getting a two-level underground parking facility that can accommodate as many as 405 vehicles.

The acquisition deal did not include the lower floors featuring commercial office space. However, an adjacent two-story, 37,800 square-foot commercial building was part of the agreement.

The REIT’s interest in this second building is clearly linked with the fact that there is permitting in place for a 250-unit, 11-story apartment development. While Essex maintains that it has no immediate intentions of activating the entitlement, the entity has confirmed that the possibility of developing the tower will be evaluated in the future.

The new owner is set to commit $27 million over the next couple of years for the renovation and improvement of Fox Plaza. The 1968-built structure will undergo extensive interior and exterior improvement work in order to raise its current profile in one of the main emerging submarkets in the San Francisco Bay Area.    

Photo courtesy of user J. Ash Bowie via Wikimedia Commons

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Hotel Durant Acquired by Gemstone Hotels & Resorts in $27M Deal

By Alex Girda, Associate Editor

Berkeley’s Hotel Durant was the object of Gemstone Hotels & Resorts’ latest move on the hospitality market. The company, a full-service hotel management entity, acquired the property for a reported total of $27.3 million.

Gemstone is a hospitality company based in Park City, Utah that specializes in owning and operating urban upscale assets and chose the San Francisco Bay Area’s hospitality market for its current track record. The area has seen its hospitality figures increase in recent years, spurring a number of hotel deals.

The 144-key hotel is located at 2600 Durant Dr. in the immediate proximity of the University of California–Berkeley campus. The boutique hotel offers a great location within walking distance of Cal Bears Stadium and the Lawrence Hall of Science. The in-room amenities include high thread-count linens, hypo-allergenic pillows, ceiling fans, black-out shades, iPod docking stations, organic robes and laptop safes.

Additionally, graduate floor rooms benefit from a concierge-style service with daily complimentary breakfast servings and wine hour events. The on-site dining option is Harry’s, the hotel’s signature restaurant, with breakfast, lunch and dinner menus, craft-brewed beer, and California wines. The investment is seen by Thomas Prins, Gemstone principal, as “a great way to start the new year.”

“When this hotel became available, we knew it was perfect for Gemstone,” the official stated. The company was reportedly convinced by the fact that the Durant has its own niche market in Berkeley, making it a good addition to the company’s existing assets. Gemstone’s current portfolio also includes venues such as Maison 140 in Beverly Hills, the Mosaic in Los Angeles, the Copley Square Hotel in Boston and The Carlton in New York.

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Boston Properties Acquires In-Development High-Rise in South Financial Submarket, Sets Sights on Mixed-Use Opportunity in Virginia

By Alex Girda, Associate Editor

Another major San Francisco office project is the object of a large commercial real estate transaction, after Boston Properties recently announced the purchase of 535 Mission Street. The project, located in the city’s South Financial submarket, was previously owned by Beacon Capital Partners. The company is set to revive the development process halted back in 2008, as construction is set to re-commence by the end of the month.

The overall cost of the acquisition is clocked in at around $71 million, with Boston Properties now owning not only the development site, but all materials purchased up to the point of the deal and the existing construction at the site.

535 Mission Street is a project for a 27-story building with a massive height of 378 feet. The building will offer 307,000 square feet of leasable Class A office and retail space in a LEED Gold certified environment. The property is set to cater to tech tenants looking to relocate or expand in the booming tech-oriented office market of the San Francisco Bay Area.

Design-wise, the building will feature a glass front, column-free floor plates, and will offer residents views of San Francisco and the neighboring bay. The development process could take the company’s overall investment in the office property to around $215 million, a recently issued company statement shows. A completion date is set for the fall of 2014.

Apart from being the new owner of the in-development office project at 535 Mission Street, Boston Properties has also secured the last available land parcel at the Reston Town Center. The company shelled out approximately $27 million for the property, which is currently zoned for a possible development of 250,000 square feet of office space. Boston reportedly has its sights set for a mixed-use development that could see a residential component take shape at the Reston Town Center.

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Image courtesy of Google Maps

San Jose Power Retail Center Sparks $200 Million Acquisition Deal

By Alex Girda, Associate Editor

One of the largest retail power centers in Silicon Valley recently traded hands for a substantial fee. The Plant retail center was recently acquired by Phoenix-based Cole Credit Property Trust IV for the staggering amount of $205 million. The transaction is one of the largest the real estate investment trust has ever shelled out for an asset.

According to the Phoenix Business Journal, news of the transaction surfaced after Cole Credit filed its 8-K with the Securities and Exchange Commission. A final closing date for the deal is set for March 1.

The Plant is one of the largest properties of its kind in the entire region, offering a total of 650,500 square feet of retail space in the city of San Jose, only 510,000 of which were included in the actual deal. This is a result of the fact that a number of retailers have acquired the space they inhabit at The Plant.

Big names amongst the residents of the power retail center include Best Buy, Home Depot and Target. The facility sports a strong occupancy rate, with only five percent of the available space currently vacant.

Cole Credit Property Trust IV is one of the six real estate investment trusts managed by Cole Real Estate Investments, and this recent purchase represents a landmark buy for the entity—which was also responsible for the acquisition of the Canarsie Plaza in Brooklyn, N.Y. for $124 million in 2012.

According to data provided by Marcus & Millichap Real Estate Investment Services, The Plant’s strong vacancy figures are perfectly in tune with the surrounding area. San Jose has been under the national average when it comes to retail vacancies for a considerable amount of time, illustrating that the demand is well in place for such properties.

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Chart courtesy of Marcus & Millichap Real Estate Investment Services at marcusmillichap.com

Recent Transactions in Bay Area and Silicon Valley Cement Area’s Appeal

By Alex Girda, Associate Editor

One of the largest contemporary commercial real estate transactions in the Bay Area was recently completed in Oakland. The building, serving as Clorox’ headquarters in the city’s downtown area, was reportedly acquired for a total of $110 million, InsideBayArea.com reports. The buyer was active real estate investment company Westcore Properties.

The new owner has already announced its intentions to renovate portions of the office building and upgrade the value of the property by bolstering its tenant roster. The 520,000-square foot building located at 1221 Broadway has served as Clorox’ headquarters since 1988 and will continue to be used by the household item manufacturer as per the terms of the sale.

The company has opted to sell its 24-story office tower due to an ongoing process of moving a large chunk of its workforce to its new office and research campus in Pleasanton. Clorox will stay on as the building’s anchor tenant, a long-term lease being agreed to for around 300,000 square feet of space in the 1976-built highrise.

Also in recent San Francisco Bay Area office market news, a Mountain View building was recently acquired by Peninsula Land & Capital for a total of $17.75 million. This particular transaction attracted interest due to the profit the seller generated through the sale, Seagate Properties Inc. having previously acquired the asset for only $9.5 million. The 1989-built, 42,622-square foot facility had an occupancy rate of 66 percent, and its tenant roster included names such as Guardian Analytics, LyLife.com and Infor Systems.

The transaction illustrates the increasing interest in office assets not only for Silicon Valley in particular—but for the Bay Area as a whole. The positive influence of tech giants such as Facebook, Google and Apple that have, during the past couple of years, committed to Silicon Valley continues to attract real estate investment companies.

Image courtesy of user Coolcaesar via Wikimedia Commons

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Forest City Enterprises Offloads Coveted Office Property in Downtown San Jose

By Alex Girda, Associate Editor

One of San Jose’s largest office buildings recently traded hands after Forest City Enterprises Inc. agreed to the terms with CBRE Global Investors for sale of Fairmont Plaza. CBRE Global Investors paid $93.1 million for the Bay Area asset.

The property, also known as the Knight-Ridder building, was sold in order to generate net cash proceeds for the Cleveland-based owner. Also part of this strategy was the recent sale of the company’s Emerald Palms apartment community in southwest Miami.

Fairmont Plaza is a 17-story office building located in San Jose’s downtown area. It offers 405,000 square feet of quality office space in the emerging San Francisco Bay Area. Built in the late 1980s, the property is one of the most coveted Class A office properties in the downtown area.

Its tenant roster currently includes names such as Accenture and KQED, as well as the members-only Capital Club.  The $93-million sale has earned Forest City approximately $28 million in net cash proceeds, according to data provided by the company.

The sale of Fairmont Plaza, along with the aforementioned southwest Miami apartment complex, marks the company’s focus on core markets, with assets in non-core markets being traded away in order to generate cash. In fact, the company’s 12 recent sales have, until now, provided Forest City Enterprises with more than $125 million in net cash proceeds. The company currently handles $10.7 billion worth of commercial and residential real estate assets which it owns, develops and manages.

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Image courtesy of HarshLight via Wikimedia Commons 

TMG Partners Acquires Recently Vacated Office Property, Seeks to Improve Existing Space

By Alex Girda, Associate Editor

A vacant North San Jose office building was recently acquired by San Francisco-based real estate company TMG Partners. The buyer acquired the Class A property with the aid of equity partner Alcion Ventures LP. The seller was real estate investment company Kaufman Jacobs, based in Chicago.

The deal was perfected for an undisclosed amount, with the buyers representing themselves and Kaufman Jacobs employing Mark Ziemendorf—a representative of Cornish & Carey Commercial Newmark Knight Frank.

The Montague Park-located office building stands at 2851 Junction Ave. in the northern part of San Jose and offers potential tenants 153,000 square feet of Class A office space. The building was completed in 2002 and has housed offices of the county of Santa Clara.

The building is now empty, a situation that will help the new owner with its plans to renovate quite a bit of the property while completely rethinking the lobby, common areas, restrooms and outdoor eating areas. Additionally, brand new sustainable landscaping and electric vehicle-charging stations will also be introduced.

Upcoming works at the site were confirmed by TMG Partners CEO Michael Covarrubias, who stated that the company “will have the opportunity to further renovate and improve in order to continue to take advantage of the strong tenant demand for institutional quality buildings.”

Active for the past 28 years, TMG was founded and headquartered in San Francisco. The company is a full-service real estate developer and property manager that has had a hand in developing around 20 million square feet of commercial real estate throughout the Bay Area.

Image courtesy of loopnet.com

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