By Meghan Hall
Two years and a round of extensive renovations later, HP Investors and LNG Management have placed 1700 Broadway, a ten-story, 31,500 square foot office building within downtown Oakland’s Uptown District, on the market. HP and LNG bought the property from Oakland-based California Capital and Investment Group back in 2017 for $13,2760,000, or about $443 per square foot. Updated guidance pricing was not immediately available.
“The best part of the building is that it’s just sitting squarely in the center of town, right on top of BART, right next door to a major new residential apartment building that Lennar delivered, and so the market is just continuing to get better and better along Broadway and in Uptown,” explained Newmark Knight Frank Senior Managing Director Tyler Meyerdirk. “It’s all filling in.”
The property, which also include 3,300 square feet of ground-level retail, was originally constructed in 1913 and has been updated twice since, in 2002 and then again over the course of the past year. To date, five of the nine office floors have been fully or partially repositioned, and updated suites feature large windows, new light fixtures, exposed brick and beams and hard surface floors. The floors were renovated upon tenant rollover, states HP Investors’ website. The 19th Street BART Station is also just steps from the building’s front door.
1700 Broadway is currently 90.4 percent leased, per an offering document that was released by brokerage firm Newmark Knight Frank mid-September. However, 76 percent tenant rollover within 36 months and an average weighted lease term of 2.3 years means that there is plenty of potential upside for interested investors. Expiring rents are about 29 percent below market and 45 percent of the NRA, as well. Current tenants include Californians for Safety & Justice, Nuts.com and the Taproot Foundation.
The Oakland office market has grown steadily over the past several years and is the Bay Area’s newest up-and-coming submarket. Following in the footsteps of San Francisco and Silicon Valley, Oakland is increasingly becoming a destination for businesses and investment. On a wider scale, the East Bay’s population is now at 2.8 million, and with 11 percent population growth per year, now represents almost 40 percent of the Bay Area’s total population. Oakland itself has also experienced 30 percent household growth since 2010, as well as nearly two million square feet of tenant relocation and expansion since 2014.
Oakland’s Central Business District, of which 1700 Broadway is apart, has 9.4 million square feet of inventory, and according to Newmark Knight Frank, there currently exists 3.67 million square feet of tenant requirements. Market occupancy in the CBD is also high, at 90 percent. However, there are several major developments in the pipeline that will also continue to drive the market forward in the coming years.
Uptown Station, Eastline, The Key at 1100 Broadway and 601 City Center are just several of Oakland’s major commercial developments under construction, and all of whom have major tenants lined up. The Key, the smallest of the four developments, will total 18 stories and include 352,000 square feet of office space; it’s tenants include Credit Karma and UCOP. Uptown Station, similar in size, will include 360,000 square feet of office and an additional 30,000 square feet of retail. Upon completion, technology company Square, ShakeShack, One Medical and Slicehouse will move in. 601 City Center, at 600,000 square feet, will be home to Blue Shield, IPG and Charles River Associates, while Eastline, which will total 1.5 million square feet, is being built-to-suit for Kaiser Permanente. Eastline will also include 68,000 square feet of retail and community space.
Residential development is also having an impact, and encouraging more employees to live closer to work; NKF estimates that more than $3.2 billion in total investments have been made into Oakland, and more than 1,600 apartment units will be delivered in the next six months. In the next seven months, more than 3,000 units will be completed. A further 1,542 units have also been approved and are expected to break ground. At all stages of the development pipeline, including 2019 deliveries, there are 7,624 units proposed, under construction, or recently delivered in Oakland’s CBD alone.
“There continues to be a lot of positive momentum,” said Meyerdirk. “When that happens, and you tie that into all of the residential construction and delivery, it creates the perfect environment for the office investment market to seek continued rent growth in the market. People are remaining bullish on what is going to happen in Oakland.”