By Jon Peterson
An Oakland property that has been marketed unsuccessfully a few years ago is hitting the market again. Murray Hill Partners based in Oakland has offered up for sale the 38,187 square foot professional/medical office building in its hometown located at 401 Grand Avenue. The asking price on the sale is $11 million, or roughly $288 per square foot, according to the offering document that its brokers have been distributing throughout the industry.
This will be the second time that the property owner has attempted to sell the building in the past four years. In 2018, the company had offered the asset up for sale with an asking price of $15 million, according to previous reporting by The Registry. No sale was ever worked out. The price reduction today is a reflection of the current market dynamics and the challenges that sellers are facing with office assets across the region. Factors related to the uncertainty of the office market and the rise of interest rates have turned away many capital sources.
The seller is again working with brokerage firm Newmark as the listing agent on the sale. The team engaged on the property is the Bay Area Private Capital Group. Some of the people working on the sale are Mark Geisreiter, executive managing director, Seth McKinnon, senior managing director, and Nadav Kariv, associate director. They all work out of the company’s San Francisco office. Newmark did not respond to phone calls seeking comment for this story.
If the current asking price is reached, the going-in cap rate on the transaction would be 6.3 percent, according to the information stated in the property’s offering document. This would be based on the property’s current net operating income. The return on cost for this property would be 9.4 percent.
Murray Hill has owned the property owner since November of 2016. It acquired the building for $8.4 million at that time, according to public records. The company made a number of improvements in the asset when it went through a renovation in 2021. The amount of new capital invested in the building was $2.7 million.
There has been a significant drop in occupancy in the property since it was placed on the market in the spring of 2018. At that time, the property had a diverse group of professional, medical and non-profit tenants that occupied roughly 88 percent of the building. The current occupancy of the property is 62 percent. There is now roughly 14,000 square feet of vacant space in the building.
The overall Oakland office market continues to be impacted by the residual effects of the global COVID-19 pandemic. According to data compiled by Newmark, the office vacancy in the market increased by almost 3 percentage points in the second quarter of this year. It went from 17.6 percent to 20.3 percent, which represents its highest vacancy level in almost a decade.