Divco, Swift Realty Tie the Knot in Concord

DivcoWest, GEM Real Estate, Partners Group, Swift Plaza, Concord, San Francisco, Swift Real Estate Partners Wells Fargo

By Sharon Simonson

San Francisco commercial property investor Divco West has acquired 600,000 square feet of Class A office space in Concord from Swift Realty Partners, paying $94 million, or better than $156 a square foot.

The buildings represent half of the four-building 1.1 million square-foot Bank of America complex that Swift acquired in the summer of 2011 for $88 million, or $80 a foot, then renamed Swift Plaza.

They are fully leased to Bank of America through 2018 and are located at 2000 Clayton Road and 2001 Clayton Road adjacent to the Concord BART station. They include a Tier 4 data center.

Swift put the properties on the market in February after owning the complex for less than a year. The real estate investment company retains a vacant 189,000-square-foot building at 1755 Grant St. and a 300,000-square-foot building at 1655 Grant St., where Bank of America until this summer occupied five of 13 stories.

Swift founder and Chief Executive Christopher Peatross, who did not comment for this story, told The Registry in February that he hoped to sell the smaller of the two buildings to a user and was keeping it available with that goal in mind.

Details of the sale to Divco were released by a party with direct knowledge of the transaction who sought anonymity because he was not authorized to speak to the press. Divco declined comment.

The East Bay leasing market has not taken fire in the same way that San Francisco, the Peninsula and the Silicon Valley have. Office vacancy increased by a full percentage point to not quite 20 percent in the third quarter in the Interstate 680 corridor from Concord south to Pleasanton and Livermore, according to a just-released quarterly report from CBRE Inc.

But Larry Easterly, a senior vice president for Colliers International in the East Bay who specializes in tenant representation for office transactions, said the statistics don’t fully reflect known market activity. A broad brush also masks a shortage of large blocks of space across the East Bay.

Ross Stores Inc., which is headquartered in Pleasanton, is vacating an estimated 200,000 square feet there while acquiring more than 400,000 square feet in Dublin. “One of the largest companies in the East Bay will double in size in the next 18 months,” he said. And, a tenant who needed more than 150,000 square feet in the I-680 corridor north of San Ramon has one choice: Swift Realty’s Swift Plaza.

“We have seen rents rise 8 [percent] to 10 percent in San Ramon in the last year, which is driving rents higher in neighboring Dublin and Pleasanton,” Easterly said. “Rents in San Francisco have seen dramatic increases this year, which will likely translate into several San Francisco firms deciding to move all or part of their operations to the East Bay.

“Swift is ideally positioned to secure some of these larger users,” he said.

As of Sept. 6, the largest block available at San Ramon’s Bishop Ranch, with nine million square feet of corporate–quality office space, was 83,000 square feet on two contiguous floors, said Edward Hagopian, an executive vice president with Sunset Development Co., which owns 4.5 million square feet of the nine million square foot total. Sunset’s Bishop Ranch offices have less than 10 percent vacancy overall.

Peatross noted the same big-block space limitation at a Sept. 25 event about the East Bay sponsored by The Registry, where he was a panelist. With Bishop Ranch largely filled and another one million-square-foot campus in Pleasanton being eyeballed by two other users, the market is tighter for big tenants than the vacancy numbers reflect, he said: “For large requirements floating around in the East Bay, we are one or two leases away from, ‘Where do you go now?’”

West Coast Commercial Real Estate News