By Jon Peterson
San Francisco-based Ellis Partners has paid approximately $16.5 million, or roughly $118 per square foot, to acquire the 140,000 square foot office building located at 411 Borel Avenue in San Mateo, according to sources familiar with the transaction.
Ellis Partners declined to say what the acquisition price was on the property. The asset was acquired on a ground lease that is held by the Borel Family. It’s not clear how much longer does the ground lease have left to run.
“This investment represents a new market for us. We have been looking at assets to acquire in San Mateo for the last few years, mostly focused on the office market. On a long-term basis, we still think there is some rental rate growth that can occur in the San Mateo office market,” said Jim Ellis, a managing principal with Ellis Partners.
411 Borel was built in the 1970s and was designed by renowned Bay Area architect Art Gensler. The property is a six-story steel frame building that combines lush landscaping with heritage redwood trees and reflective glass creating a unique setting for a suburban Peninsula submarket. The occupancy at the time of the purchase was 82 percent. One of the tenants in the building is Morgan Stanley. The new owner plans several ways with which it can add value to the property in the future. “One is to bring in new tenants. The market occupancy in San Mateo has been sub 10 percent. Another factor for us is that some of the current rents in the property are below market,” said Ellis.
Ellis Partners has hired Cushman & Wakefield to be the leasing team on the property going forward. Those involved are Pat Yaeger, Gary Boitano and Mike Moran. Parkway Properties will take on the property management under the new ownership.