DivcoWest Pays More Than Appraised Value for Office Building in Foster City

DivcoWest, Foster City, Century Plaza, Marin County Employees’ Retirement Association, Peninsula, San Mateo, commercial real estate, Caltrain

DivcoWest, San Francisco, commercial real estate news, Foster City, Silicon Valley, San Mateo, East Bay, Central Peninsula,

By Jon Peterson

San Francisco-based DivcoWest paid almost $6 million above the appraised value of the 115,600 square foot Century Plaza office building in Foster City.

[contextly_sidebar id=”XJKSR0YqkrFw9PGVeibMwUHVaYCxZbE2″]The real estate manager paid $39.6 million or $342 per square foot to buy the property. The property had been appraised at $32.6 million by the seller, the Marin County Employees’ Retirement Association, as of the end of June 2014.

“We are very pleased with how the sale of the property turned out,” says Jeff Wickman, retirement administrator for the pension fund. DivcoWest declined to comment when contacted for this story.

The four-story, Class A office building in Foster City is located at 1065 East Hillsdale Blvd. The property was first developed in 1981 and is now around 80 percent leased. An added benefit to the tenants in the property is the option of using a free shuttle service to the nearest Caltrain station.

According to a third quarter report from Colliers International, leasing activity in San Mateo county remains quite strong. A slew of substantial rent increases and a wave of speculative developments has not been seen in years, the brokerage firm reports. Vacancy rates from the second to third quarter have plunged 37 basis points from 11.11 percent to 10.74 percent. At the same time, a new milestone not seen since the dot-com days has been surpassed. The average asking rate for office space on the Peninsula has moved beyond the $4 mark; the $4.10 full service average asking rate represents a 2.76 percent increase over the past quarter, according to Colliers.

The Hillsdale building in Foster City is the first of six properties that the Marin County Employees’ eventually plans to sell in the San Francisco Bay Area.

“We now have one other property on the market. This is the 32,800 square foot 1190 Borregas Avenue R&D facility in Sunnyvale. At this point, there has been no timetable established as to when the sale might be happening,” said Wickman.

The pension fund owns four other properties that it will eventually be bringing to market for sale. These assets are the 150-unit Woodland Villas Apartments in Pleasanton located at 4320 Valley Avenue, the 65,300 square foot Swift Avenue warehouse property located at 345-367 Swift Avenue in South San Francisco, the 124,000 square foot Airport Trade Center office/warehouse complex in San Bruno situated at Sneath Lane and Cherry Avenue and the 9,942 square foot Marina Bay Business Center R&D facility located at 1000, 1050-1090 Marina South, 1101-1121 Regatta and 1430-1470 Regatta in Richmond.

Marin County Employees’ owns all of these properties on a direct basis. These are held in a separate account relationship with Belmont-based Woodmont Real Estate Services.

The pension fund will be taking the proceeds from the sale of the properties and re-invest the capital into two commingled funds. It will be making $50 million commitments each into the AEW Core Property Trust and UBS Trumbull Property Fund.

The Core Property Trust is managed by Boston-based AEW Capital Management. The Trumbull Property Fund is run by Stamford, Conn.-based UBS Realty Investors. Both of these open-ended commingled funds buy core property types on a nationwide basis.

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