By Jon Peterson
Uber Technologies, Alexandria Real Estate Equities and the Golden State Warriors have executed an agreement to form a joint venture on the development of two future office buildings located at 1655 and 1715 Third Street in San Francisco, as stated in the 2017 first quarter earnings report from Alexandria.
Alexandria will have a 10 percent ownership in the buildings. The public REIT will make an initial cash investment into the properties of $35 million. This investment will be funded at the closing of the venture in the first quarter of 2018. It was not stated in the earnings report how much of an ownership in the properties will be held by Uber and the Warriors.
The joint venture will acquire land with completed below-grade improvements, building foundation and parking garage, and will complete vertical construction of the two buildings totaling 580,000 square feet. All of the new space will be leased to Uber.
Alexandria is also in the process of buying a property on the Peninsula with future development potential. The property is located at 960 Industrial Road in San Carlos, and it will be acquired for $64.9 million. The deal should be closed sometime during the second quarter. This asset includes 195,000 square feet of existing space with a future development potential of 500,000 square feet.
Alexandria is planning to lease back the existing building to the seller, which it did not identify, on a short-term basis until the REIT is able to obtain entitlements. A Google search points to L3 Electron Devices, a manufacturer of military and aerospace devices, as the tenant in the building now. The seller was represented in the transaction by Cresa.
The public REIT is major owner of office buildings in the overall San Francisco Bay Area. The operating buildings that it owns in this market totals 3.4 million square feet, as of the end of March 2017. The occupancy on this portfolio is 99.8 percent. The properties are located in the three major regions of San Francisco, South San Francisco and Silicon Valley.