(EDITOR’S NOTE: According to sources in the industry, the transaction closed for $170 million. This is a developing story, and the pricing will be updated once The Registry gets additional confirmation.)
CHARLOTTE, N.C., July 29, 2021 — Barings, one of the world’s leading investment managers, announced today it has acquired a 275,746 square foot office campus with a waterfront location on the San Francisco Peninsula at 555-577 Airport Blvd. in Burlingame, California. This campus will be converted and developed into a 536,001 square foot project including specialized science and technology focused office and lab buildings, and rebranded as Peninsula Innovation Point.
Peninsula Innovation Point provides Barings with multiple execution strategies to maximize the portfolio of assets’ value proposition. The campus consists of three components – an existing 126,419 square foot office building that will be converted to either life science or specialized technology space, a pad to develop 260,255 square feet of specialized lab and tech oriented office space and a 149,327 square foot office building that will undergo improvements to drive further appreciation.
“This transaction is emblematic of our targeted investment thesis that revolves around innovative markets that attract skilled workers and dynamic life science and technology companies. Barings seeks to be a leader in the space of innovation oriented property investment,” said Joe Gorin, Head of U.S. Real Estate Acquisitions and Portfolio Management for Barings.
Barings has high conviction that there is strong relative value in the specialty office sector due to the need for amenity-rich, high-quality, sustainable assets with a focus on health and wellness and collaboration space to foster collective intelligence. This is reinforced by tailwinds in the life science sector, driven by an aging population, technological advancements, and surging investment into healthcare.
“Life science and technology tenants require unique physical space that many existing buildings are unable to satisfy – the specific market locations and properties we are targeting are anything but commodity. Innovation oriented tenants require specific characteristics such as elevated ceiling heights, higher floor loads for weight bearing, larger elevator and service area configurations, amongst other difficult-to-produce qualities,” continued Joe Gorin. Earlier this year, Barings acquired 1155 Island, an office-to-life science conversion in San Diego, CA, and 301 Hillsborough, a specialty technology tenant-focused new office tower in Downtown Raleigh, NC, as part of the firm’s value-add program.
The San Francisco Bay Area life science market is the second largest in the U.S., behind Cambridge, MA, and as the life science sector continues to grow, tenants are looking for next generation space. Peninsula Innovation Point boasts an exceptional, high profile waterfront location with unobstructed views of the San Francisco Bay and Peninsula Hills, and further benefits from its prominent visibility from Highway 101. The campus is three miles south of the San Francisco International Airport and is in close proximity to BART and other modes of transportation. The project is also adjacent to Downtown Burlingame with hundreds of national retailers.
“We’ve aggregated a significant amount of data that proves out not just where office demand is growing today, but also where the skilled workforce and resultant employer expansions are likely to occur in the future. This micro submarket has already attracted some of the most innovative companies and we believe it is poised to continue to grow in terms of long term office and life science demand,” commented David Otte, Managing Director and Acquisition Officer for Barings.
Barings anticipates this strategic repositioning and improvements to the existing assets will result in Green Building Council certifications, and the development component will be a state-of-the-art asset with desired ESG-specific features and qualify for LEED certification, marking the project as a desirable next-generation campus in high demand by innovative companies.
Barings is a $382+ billion* global investment manager sourcing differentiated opportunities and building long-term portfolios across public and private fixed income, real estate, and specialist equity markets. With investment professionals based in North America, Europe and Asia Pacific, the firm, a subsidiary of MassMutual, aims to serve its clients, communities and employees, and is committed to sustainable practices and responsible investment. Learn more at www.barings.com.
*Assets under management as of June 30, 2021