DivcoWest Places Two-Building Complex in Concord on the Market, Pricing Could Fetch $130MM

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Image courtesy of JLL

By Jon Peterson

The sale of a large office property in the East Bay city of Concord could set a new watermark for the city’s commercial real estate pricing. The planned sale of 2000 and 2001 Clayton Road in Concord, a 600,000 square-foot office complex, could attract pricing at $130 million, as stated by sources familiar with the property being sold. This level of pricing would result in the assets getting traded at $216 per square foot.

The seller of the two-building campus is San Francisco-based DivcoWest Properties. The real estate investment firm has hired the San Francisco Capital Markets team from JLL to be the listing agent on the sale. Among the people working on the sale are Rob Hielscher, Michel Seifer and Erik Hanson. Both DivcoWest and JLL declined to comment for this story.

DivcoWest has owned the two buildings since 2012. It had paid $94 million for the assets, which were placed in its DivcoWest III commingled fund. The seller of the assets at the time was San Francisco-based Swift Real Estate Partners.

The two properties are considered to be Class A buildings. 2000 Clayton is a fully-leased 395,914 square foot asset that has a triple-net lease with Bank of America that runs through July of 2023. One of the on-site amenities for the Bank of America employees is a fitness center that includes locker rooms, showers and towel service. 2001 Clayton has a current occupancy of 25 percent. The only tenant in the 204,182 square-foot building is Wells Fargo. It occupies two floors of the building with a lease that goes until October of 2027.

The two leases in a way exemplify the Concord market, which in some respect is considered a fringe submarket in the East Bay, but also an important back-office operation for a number of financial services organizations as well as some technology companies.

Newmark Knight Frank just recently announced the nearly 70,000 square-foot relocation of Cerus and Homebridge Financial Services, Inc. to 1200 Concord, a recently repositioned and rebranded property owned by Sierra Pacific Properties.

Cerus signed an 11-year lease occupying just over 65,000 square feet of space in the building. Cerus Corporation is a company focused in the field of blood transfusion safety.

HomeBridge Financial Services, Inc., one of the largest privately-held, non-bank lenders in the U.S., signed a 3,500 square-foot lease at the property.

DivcoWest’s buildings have a strong location for both mass transit and walkable downtown amenities. The two buildings are situated directly adjacent to the Concord BART station. This is an important fact as office buildings near BART or Caltrain stations do attract a rent premium in this and other submarkets across the region. BART-adjacent buildings in Concord have a vacancy of 18.8 percent and rents of $2.95 per square foot on a triple-net basis versus a 28 percent vacancy and rents of $2.56 triple-net for buildings no near BART, according to JLL’s marketing materials for the property.

The buildings on Clayton Road do allow employees to be able to walk to certain amenities. This includes the de facto “City Center” of downtown Concord, which has a wide variety of restaurants, bars/shops, a weekly farmer’s market, live music and art festivals.

Several notable sales in Concord in the last few months included San Francisco-based Swift Real Estate Partners selling the 358,589 square-foot One Concord Center located at 2300 Clayton Road for $70.5 million, or approximately $197 per square foot. The buyer was Bridge Investment Group, which has offices in both Salt Lake City and Atlanta. This sale closed in August of 2017.

Also in August, Meridian announced the acquisition of Sutter Square, a 174,689-square-foot, nine-story office building located at 1800 Sutter Street in Concord for $26.2 million, or $149 per square foot.

In January of 2018, PGIM Real Estate sold the 347,129 square-foot Concord Corporate Centre for $63.5 million, or approximately $183 per square foot, to Alabama-based Harbert Management. This 7-story, two-building property has Patriot Contract Services, Barrett Business Services, Eichleay and Patelco Credit Union as some of the companies in the property. This was this asset’s third sale since 2011. In that year, the property was acquired by San Diego-based Westcore Properties for $41 million, or around $118 per square foot. This real estate investment firm then sold the property in 2014 to PGIM for $55 million, or $158 per square foot.

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