Even as Northern California CRE Market Pauses, Kennedy Wilson Sees Room for Growth

Kennedy Wilson, Kennedy Wilson Fund VI, Takenaka, San Francisco, 430 California, Merritt on 3rd
Merritt on 3rd. Image Courtesy of Kennedy Wilson.

By Meghan Hall

While some are taking a step back out of concerns for economic uncertainty, Kennedy Wilson has been active on multiple fronts throughout the Bay Area. Over the past several months the firm has not just expanded its property portfolio, but it has been actively working to expand its commercial brokerage platform Northern California by seeking out new talent. According to Kennedy Wilson’s new Managing Director of Property Services, Bruce Carlson, the company sees any pauses in the market as a good opportunity for growth. Carlson joined the Kennedy Wilson team in June of this year and has been tasked with expanding Kennedy Wilson’s team in Northern California—a key market for the firm. 

“The spread of the pandemic and the state of the economy pose unique challenges, but these challenges present opportunities,” explained Carlson. “It’s very difficult to make a change professionally when the market is moving 100 miles an hour. The state of our world has, on an interim basis, collectively slowed its pace, giving us all the time to evaluate. Now is the moment to focus on the future, and Kennedy Wilson is eager to expand our team and our offer our clients its entrepreneurial solutions platform.”

Kennedy Wilson, which is based in Beverly Hills, Calif., has been active in the Bay Area following on the heels of raising $775 million for Kennedy Wilson Fund VI at the end of 2019. The private equity fund focuses specifically on value-add and underperforming assets and real estate investments across the Western United States that can be improved through repositioning. The fund has a portfolio of 13 assets with an aggregate purchase price of $1.1 billion. Most recently, Kennedy Wilson used the fund to buy up a San Jose office and research and development portfolio in San Jose for $53.5 million. 

Also part of Kennedy Wilson’s portfolio is 400-430 California Street in San Francisco, which the firm acquired in December of 2016 for $135 million as part of a joint venture with the Takenaka Corporation. The building is leased to Union Bank, which is currently vacating the office tower on a staggered basis since 2019. The bank branch will be out of the property in about a year, at which time Kennedy Wilson and Takenaka plan to execute a full-scale repositioning of the property with the hopes of attracting a credit tenant in the future.

Kennedy Wilson also owns Merritt on 3rd in Oakland, and Bella Vista in Richmond, two recently modernized apartment complexes.

With plans for continued growth in the region, Carlson came on board after nearly three decades of commercial real estate experience. Prior to joining Kennedy Wilson, Carlson was responsible for sourcing and completing around $9 billion in transactions, with a focus on retail expansion and headquarters relocation for companies such as Cost Plus and The North Face. Carlson is also known in the Bay Area for selling the land for Santana Row, mixed-use development, to Federal Realty. Moving ahead, Carlson is looking forward to leveraging what he described as Kennedy Wilson’s creative and open approach to business.

“With my broad range of experience has come a wealth of relationships, which I am excited to leverage on behalf of Kennedy Wilson and our clients,” said Carlson. “I am thrilled to be joining the team, as Kennedy Wilson offers the horsepower of an institutional platform while retaining its bespoke service and entrepreneurial soul. 

According to Carlson, Kennedy Wilson has always done well in transitional markets, markets that are in the midst of change. Industries such as both retail and office are expected to see changes in the future that will shape the way Kennedy Wilson’s clients use real estate, and the firm is working to prepare for those changes by expanding its team. Some of the biggest changes, Carlson predicts, will come as office occupants require greater spaces for fewer employees, and the transition of big box retail into distribution centers.

“To offer a case study, the shopping center business has been in a free fall for years. Many call the situation apocalyptic, even prior to the pandemic, but I would argue instead that we are in the midst of a shopping center renaissance, and a renaissance always comes accompanied with discomfort and growing pains,” stated Carlson. Shopping centers will look extremely different moving forward, as will how we utilize commercial office space.”

Despite this, Carlson said that Kennedy Wilson is ready to tackle the challenges ahead and taking any slowdown in the market as ample time to breathe and grow. The firm is continuing to look for new hires across all parts of the San Francisco Bay Area as well, which Carlson is spearheading.

“My goal at Kennedy Wilson is to build upon the company’s strong reputation and build the Northern California market by recruiting top talent and growing the menu of brokerage services across office, industrial, retail, apartment and capital markets,” said Carlson. “…Our team is growing and we are open for business in Northern California.”

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