By Jon Peterson
San Francisco-based The Gap has bought the 180,000 square foot Building Four within the Rosewood Commons office complex in Pleasanton for $225 per square foot or approximately $40 million, according to sources that track the sales office buildings in that market.
The seller of the property was San Francisco-based Swift Real Estate Partners. The company’s founder and president, Christopher Peatross, declined to comment on the sale of the building when contacted for this story.
The office building was sold through the commercial brokerage firm JLL. The listing agents on the sale were Jim Peterson, Tom Maloney and Kevin Mechelke. They declined to comment on the transaction.
Building Four had been leased to The Gap in April of this year. As part of the lease transaction, The Gap did have the option of converting its lease into an ownership position at some point in the future. Swift Real Estate did earn a significant profit on the sale as it had paid $155 per square foot or around $27.9 million for the building in May of 2014, according to industry sources. This building was part of the 1.03 million square foot California Center six-building office complex that Swift bought for $155 million from New York City-based Deutsche Asset & Wealth Management, formerly known as RREEF. Swift changed the name of the complex to Rosewood Commons after it purchased the asset.
The lease by The Gap was considered an expansion. It had already taken space in the complex for 35,000 square feet at 4450 Rosewood Drive. The Gap’s corporate office location is in downtown San Francisco at Two Folsom Street.
Swift has had very strong leasing efforts at Rosewood Commons since it took over the ownership. When it first acquired the asset, there was 900,000 square feet of space available. “Since then we have leased up around 500,000 square feet of the empty space. We have increased the vacancy of the property up to 65 percent and we are far from finished,” said Peatross.
Some of the major tenants that have signed on at Rosewood Commons include The Gap, EllieMae for 140,000 square feet, ServiceMax for 60,000 square feet and 35,000 square feet each for Astex Pharmaceutical and SmartZip.
Swift is planning to bring an apartment complex to Rosewood Commons in the future. This will be for a 305-unit complex. The site for the apartment will either be sold to an apartment developer or constructed in a joint venture with a developer. The goal with the apartments is to create a live/work arrangement with market rate units.
Swift is now open for business with its next commingled fund, Swift Real Estate Partners Fund II. It will be targeting a $400 million raise. This will be a little higher than the $330 million it raised for Swift Real Estate Partners Fund I. The investment strategy will be the same to buy value-add office and industrial properties on the West Coast.