KKR to Buy 1330 Broadway in Oakland for $176MM

By Jon Peterson

New York City-based KKR has been selected as the buyer of the 316,000 square foot 1330 Broadway office building in Oakland for around $557 per square foot, or $176 million, according to public records.

San Francisco-based TMG Partners is the seller of the property. It declined to comment when contacted for this story. The listing agent on the sale was the San Francisco office of Eastdil Secured. This company also did not respond to phone calls seeking comment for this story.

This potential sales price still puts the transaction well below replacement cost. Office buildings in the Oakland market have a replacement cost of approximately $700 per square foot, according to sources that track this information in Oakland.

TMG has been the owner of 1330 Broadway since November 2015. The real estate firm had acquired the property for $80 million at that time, or around $253 per square foot, according to public records.

There will be a chance for the new owner of the property to provide some additional value to the building in the future. Part of this would be leasing up a portion of the building that is still vacant; current occupancy stands at 83 percent. Another factor is that the average rent in the property is still below market rates, and more value could be created once some of the existing leases expire.

Oakland is an office market that remains very tight for Class A space. This sector of the office market in Oakland now has a 7 percent vacancy. Industry experts predict that even with the new development projects by Ellis Partners and Shorenstein, the demand for space going forward remains very high.

This dynamic has a number of owners in Oakland looking to sell. As The Registry has reported, nearly 13 percent of the office market is up for sale in Oakland. Earlier this month, Los Angeles-based CIM had placed on the market five of its Oakland properties that total over 1.5 million square feet of space. This announcement was followed by UBS, which placed on the market its property on 1221 Broadway, a building that is over 520,000 square feet. A smaller property on 401 Grand Avenue, which measures 38,988 square feet, is also for sale by Oakland-based Murray Hill Properties. Bentall Kennedy has also placed on the market for sale the 116,056 square foot Latham Square Building in Oakland. That brings the total property on the market for sale in Oakland to around 2.3 million square feet, which is over 13 percent of the entire 17.2 million square foot Class A and B office market of Oakland.