By Jon Peterson
One of the effects of COVID-19 has been a renewed talk about the interest in suburban office from both real estate investors and tenants. For some, the return to office towers in central business districts brings a sense of unease and difficulty navigating the use elevators, shared spaces and ability to go up and down a building quickly. A potential test of interest for suburban office space will come from the planned sale of the 700,000 square-foot former office campus for Fireman’s Fund in Novato.
The campus as it stands now spans an area that totals 63 acres, and the 700,000 square feet of office space is currently vacant. This asset represents one of the largest office sites in all of Marin County, which is perhaps one of the smallest Bay Area office submarkets, however one that draws a lot of residential interest in the region. All of the current buildings have a total of four floors, therefore the use of elevators would likely be optional.
The complex was developed in 1982, and it had been the home for Fireman’s Fund Insurance until 2015 when the company announced it would be moving to Petaluma. Its lease in Novato expired in 2018.
The asset could be designed for a single-tenant or it could also be redeveloped. Any move away from office space could be a long process for a patient investors given the limited amount of new and/or redevelopment activity is typically allowed in Novato or Marin County more broadly.
The campus does have the benefit of being a mass transit-oriented development site. The site is located at 773 San Marin Drive, which gives it a 13-minute walking route to the San Marin stop for the SMART train service, which is located at 7700 Redwood Boulevard.
If the new ownership ops for a redevelopment opportunity, one potential new use that might be considered for part of the site would be either senior housing or medium density residential, according to a source that has experience with redevelopment projects in the San Francisco Bay Area.
The potential tenants that would be interested in the campus in Novato will be comparing it to a San Francisco office market that is seeing a substantial increase in sub-lease activity and very limited leasing interest occurring. According to data by Newmark Knight Frank, the amount of sublease activity has increased from 2.9 million square feet at the beginning of March to 4.7 million square feet as of July 20th. During this period there have been 88 new subleases issued or an increase of 113 percent. The two largest amounts of subleases issued were 68,216 square feet by Yelp and 45,513 square feet by Square.
The listing agent on the sale is the Northern California Capital Markets team of JLL based out of San Francisco.