By Jon Peterson
San Francisco-based Ellis Partners has put up for sale the 277,030 square foot 180 Grand Avenue office building in Oakland, according to multiple sources familiar with the property.
Ellis Partners declined to comment when contacted for this story.[contextly_sidebar id=”CqlEKWD29sgCRGBtO7rEGyxv9nMCacx4″]The expectation is that the property should attract a price much higher than what it was sold for to Ellis in December 2014. The real estate investor had paid $61.3 million or $234 per square foot for the property just over two years ago.
The pricing this time around is projected to be similar to what other Class A core office sales have traded in the Oakland market on a per square foot basis, according to sources that track the sale of office buildings in Oakland. One example of this occurred in August of last year was the sale of 1999 Harrison to New York City-based Clarion Partners. This property was traded for $468 per square foot. At that level, 180 Grand could fetch over $120 million, however fetching top dollar may be difficult. A few earlier proxy sales within the last 18 months in Oakland point to per square foot prices in the $250 to $324 range.
In October of 2015, San Francisco-based Rubicon Point Partners closed on the acquisition of two office buildings in Oakland for $115 million, for a combined $316 per square foot. A month later, San Francisco-based TMG Partners purchased 1330 Broadway in Oakland for $75 million, or approximately $250 per square foot. And a few months later in March of 2016, La Jolla-based HP Investors paid $19.5 million, or approximately $324 per square foot for the 1930 art deco building that sits across the street from the future Uber structure.
Ellis Partners has awarded the property listing for 180 Grand Avenue to the San Francisco office of CBRE. One of the main people involved in the transaction will be Russell Ingrum, a vice chairman of institutional properties for CBRE. He declined to comment when contacted for this story.
Ellis will have a couple of advantages with placing 180 Grand Avenue up for sale now. One is that there is more and more capital looking to buy office building assets in Oakland. This investor interest is being partly fueled by the per-square-foot difference of Oakland versus San Francisco. The average sales price in San Francisco is around $750 per square foot. Oakland is also a much tighter office market with very little if any new development projects in the pipeline.
Another advantage is that 180 Grand Avenue will be the only institutional core asset on the market for sale in Oakland at this time, according to several sources that follow the office building sales in this market.
Ellis has completed its business plan on 180 Grand Avenue. This included making some improvements and completing some significant new leases on the property.
Ellis had acquired the property in a joint venture with Chevy Chase, Md.-based Artemis Real Estate Partners. The capital source on this transaction was the New York State Common Retirement Fund. The pension fund had awarded capital to Ellis Partners through its emerging manager program.