By Jon Peterson
San Francisco-based Ellis Partners has acquired the 87,000 square foot Woodside Office Center located at 7250 Redwood Boulevard in Novato for approximately $16.25 million, according to sources familiar with the transaction.[contextly_sidebar id=”lSL1DPzryzGkSZYNlUAw56mMvTXlXRtp”]The capital source on this transaction was the emerging manager program funded by the New York State Common Retirement Fund and overseen by Artemis Real Estate Partners.
“This is a unique opportunity to acquire the best multi-tenant property in Novato and one of the nicest in all of Marin County,” says Jason Morehouse, partner and director of acquisitions for Ellis Partners in a prepared statement.
“Woodside Officer Center is another high quality, irreplaceable asset identified by Ellis Partners that we are excited to add to our portfolio. We are fortunate to have a deep relationship with Ellis Partners that dates back many years, and we are especially pleased to see the partnership continue and strengthen with the acquisition of Woodside,” says Jim Smith, portfolio manager for Artemis Partners in a prepared statement.
The seller of the property, which was developed in 2003, was Equity Office Properties. The asset was traded through the JLL Capital Markets team of Michel Seifer, Rob Hielscher, Erik Hanson and Dan Renz. They worked along with Whitney Strotz of DTZ.
The property is considered to be a core plus asset. This is due to the fact that it has strong income in place with an 85 percent occupancy level. There also is room to add value to the asset by leasing up the empty space in the building. DTZ’s Strotz and Steven Leonard were the leasing agent on the property and will remain in that role. The same firm will also assume property management duties on the asset led by Warren Mead and Don Denne.
There will be one new tenant added to the property in August. Regus Corporation, the world’s largest supplier of flexible office spaces has singed a lease in the building. Other companies in the property now include Hennessy Advisors and the law firm of Grancell, Stander, Reubens, Thomas and Kinsey. Ellis Partners hasn’t firmed up yet its improvement plans for the property.
The deal in Novato is the second office building in Marin County that Ellis and Artemis have bought together in the last year. At the end of October of 2014, they paid $34.9 million to buy 4040 Civic Center Drive in San Rafael. From a diversification standpoint, it’s unlikely these two firms would buy any more assets in Marin County for the same capital source.
Marin County as an office market isn’t one that sees a lot of new development activity. The current rental rates in the market don’t justify new construction, according to industry sources that track this information. This will make the existing properties in the market that much more valuable and allow them to achieve solid rental rate growth.