By Meghan Hall
Headed into 2019, real estate experts are watching signs for a market slowdown, anticipating a correction as we head into the 10th year of the current market cycle. However, in another Bay Area mega-deal this week, an affiliate of Connecticut-based Starwood Capital paid a total of $494 million for three office towers in Oakland, according to Alameda County property records.
The buildings, located at 2100 Franklin St., 1900 Harrison St. and 2101 Webster St., were sold by CIM Group, the real estate management company who also owns Jack London Square. According to the Mercury News, who first reported the transaction, CIM Group has also agreed to sell Starwood a parking complex downtown, bringing the final price tag to $512 million.
All three properties are located within a few blocks of one another, just outside of downtown Oakland. The 19th St. Oakland BART Station is within walking distance, as are numerous other retailers and eateries ranging from Agave Uptown to Unami Burger to Duende and 24-Hour Fitness.
The deal occurred in two separate transactions. The first, which included the smallest of the three properties, 2100 Franklin, and the largest, 2101 Webster, totaled $347.1 million. 2100 Franklin totals around 215,000 square feet, while 2101 Webster, is 475,000 square feet. 2101 Webster was originally constructed in 1984, and in 2008, 2100 Franklin rose alongside the Webster St. property. 2100 Franklin is the first non-owner occupied LEED-Gold office tower in Oakland. Together, the pair of buildings is known as Center Twenty One.
The second transaction covered the 1900 Harrison St. property, which totals 272,000 square feet and was bought for $147.2 million, or around $541 per square foot. The Class A property was built in 1985.
According to previous reporting done by The Registry, CIM began looking to dispose of the properties, among several others including 1 Kaiser Plaza, 1333 Broadway and the 2353 Webster Street Garage in July of 2018. At the time, CIM was part of a greater group of Oakland investors looking to sell their assets after prices for properties in the East Bay city jumped due to renewed interest in the city and very low vacancy. CIM’s intentions to sell followed UBS’ announcement to sell its 520,000 square foot property on 1221 Broadway and TMG’s announcement in April 2018 that it was bringing its 316,000 square foot building on 1330 Broadway to market.
The sale of CIM’s properties is a continuation of the momentum started last year and investors’ eagerness to get into the Oakland market; in the fourth quarter of 2018, Latham Square, a 116,056 square foot Class B asset in downtown Oakland sold for $61.5 million, or $530 per square foot. Although TMG was also looking to offload some of its properties, the company bought UBS’ 1221 Broadway in partnership with KKR for $255 million, or $490 per square foot. According to Cushman & Wakefield’s fourth quarter 2018 Office Report for Oakland and the East Bay, investors will remain bullish in Oakland, even as new office and apartments are delivered.