Graham Street Realty Buys East Bay Office Building at Below Appraised Value

Concord, Contra Costa County Employees’ Retirement System, CCCERA, CenterCal Properties, HFF, Steven Golubchik

Concord, Contra Costa County Employees’ Retirement System, CCCERA, CenterCal Properties, HFF, Steven GolubchikBy Jon Peterson

San Francisco-based Graham Street Realty has bought the 1355 Willow Way office building in Concord for $1.45 million below its $10 million appraised value.

“I think that this transaction turned out this way as the property has a great deal of deferred maintenance. We are planning on spending an additional $1.5 million above the purchased price to make improvements to the property. Most of this work will be with the exterior of the building. This will include repairing the rot on the exterior of the building and putting in a new roof. There will also be some work done to refurbish the lobby of the property,” says David Messing, a principal with Graham Street.

[contextly_sidebar id=”HPkFaBY7U5qYrbfC7uZxwpdebpIGUYvz”]The seller of the property was the Contra Costa County Employees Retirement Association. The pension fund had put the property up for sale in September of last year. The institutional investor had hired the San Francisco office of HFF as the listing agent. The lead person working on the transaction for HFF was Steve Golubchik, a senior managing director with the company. The pension fund had placed a value of $10 million on the property when it was brought to the market for sale, according to a board meeting document for the investor.

Graham Street is of the opinion that it will be able to add some value to the property in the future. “The rents in the property now are on average around 15 percent below market. We should be able to add some value in the future as our current tenants come up for renewal,” said Messing.

1355 Willow Way is an 84,715 square foot office building. The property was built in 1979. At the time the property was bought, the occupancy was ay 94 percent. One of the tenants in the property was the Contra Costa County Employees Retirement Association. The buyer estimates that the cap rate on its purchase was seven percent, based on the in-place rents of the property.

Graham Street likes the location of the Willow Way property and sees more opportunities in surrounding area. “We are in an area that has very strong retail amenities nearby, which includes the Willows Shopping Center and the CenterCal development, which will be starting soon,” said Messing. As The Registry reported in July of last year, El Segundo-baed CenterCal Properties purchased the 572,000 square foot redevelopment site located at 2001 Diamond Blvd. in Concord for $42 million.

Graham Street also recently bought the 43,033 square foot The Promenade in Berkeley for $13.4 million. The property is located at 1936 University Avenue. “We think that one of the interesting features of this property is that along with it [the property] includes a 120-space parking structure. There aren’t many office buildings in Berkeley that have this much parking associated with it. Our tenants find this as a very good amenity,” said Messing.

Graham Street on the last two transactions used private capital sources. The company is looking at using real estate fund managers for some of its deals in the future that might be in the range of $20 million to $40 million. The company seeks to buy value-add office buildings. It has a focus on deals in Northern California for now. It the next year or two it could be expanding into other markets. One potential market is Seattle.

West Coast Commercial Real Estate News