By Jon Peterson
Oakland-based California Capital and Investment Group has closed on the acquisition of the 449,233 square foot Walnut Creek Executive Park office property in Walnut Creek. The purchase price was $49.6 million, or roughly $110 per square foot, according to sources that were following the transaction.
The seller of the property was Irvine-based The Koll Company, which was represented in the transaction by the San Francisco office of JLL. Those working on the sale of the property included Erik Hansen and David Dokko, both senior directors with the firm. JLL declined to comment on the sale of the property when contacted for this story.
The final sales price on the property did not quite reach the planned pricing guidance on the complex. The expected pricing had been in the high $50 million range when the property was first put up for sale in September of 2021. One of the challenges, according to sources, was the fact that the property is occupied by multiple tenants, which has been a challenge for investors given the current work-from-home environment and the unpredictability of workers returning to the office. Many investors would prefer to invest in single-tenant office buildings with strong credit ratings when considering a traditional office asset.
Walnut Creek Executive Park is an office property that includes a total of 12 buildings with several addresses. These are 2775-2855 Mitchell Drive, 2730-2880 Shadelands Drive and 2125 Oak Grove Road. The complex was developed over several years between 1973 and 1986. The properties had been renovated in consecutive years in both 2016 and 2017.
When the complex was put up for sale last year, it had an occupancy level of 85 percent. This included a total of 47 percent of the space leased to investment grade or government tenants, according to the property’s offering documents. A large tenant in the asset is Verizon, which has a lease covering approximately 21 percent of the complex. Other tenants of note include Kaiser Permanente with 11 percent of the asset, Republic Services, which takes up around two percent of the property and Sherman Williams, which occupies one percent of the development. The complex did have an average weighted remaining lease term of 4.2 years when it was placed on the market for sale in 2021.
The office park does have a planned development zoning designation. This would allow the new owners to consider multiple uses for the property in the future. Other uses could be for traditional offices, medical offices or even multifamily redevelopment.
Walnut Creek Executive Park is located within the Shadelands suburban office market in this East Bay city. This region is considered to be the lower-priced alternative to downtown Walnut Creek. The rents in Shadelands are normally offered at around 45 percent discount compared to rents in the downtown area, according to sources that track this information.