By Meghan Hall
After three years of ownership, Menlo-Park-based Lane Partners has decided to place Walnut Creek’s Station Plaza on the market. The Class A building is located within the 125-acre master planned Contra Costa Transit Village and is being marketed as a property well-positioned for suburban growth as a result of COVID-19. According to a source familiar with the market, Lane Partners is looking to sell the asset for about $14.5 million.
“It is a very well-positioned value-add deal,” stated the source.
Located at 3100 Oak Road, Lane Partners originally purchased the 51,930 square foot property in the fall of 2017 for $15.3 million, or about $309 per square foot. At the time, the seller of the asset was Walnut Creek-based Thomas Properties and Station Plaza was 94.2 percent occupied.
Brokerage firm Newmark Knight Frank, which helped Lane Partners acquire the asset originally, has been retained to market the property for sale.
An offering document obtained by The Registry notes that today, the property is 67 percent leased to 11 tenants, including CPS, Schofield Law Group, Center for Career Evaluations, and Congressman Mark Desaulnier. Station Plaza’s tenant base is made up of about 22 percent legal firms, 21 percent consulting firms, 25 percent healthcare firms and 22 percent finance. Government and insurance companies account for smaller shares of square footage, at six and two percent, respectively. The lobby and common areas of the building were also recently renovated.
Current market rents in the area are at about $3.75, which is about 17 percent above the property’s weighted average rent of $3.12. 34 percent of total rentable square footage is set to expire in the next 12 months, meaning that a future investor could benefit from strong in-place cash flow and upside opportunities. The memorandum also indicates that the property will continue to benefit from rent growth; the asset has experienced 56 percent cumulative rent growth since 2011.
The asset is also very well located. The Contra Costa Transit Village is a hub of more than 84 tenants and 2.4 million square feet of office space. The community also features 50,000 square feet of retail and dining, two full-service hotels and more than 2,700 residential units within the immediate vicinity.
“The winner of numerous awards, this master-planned development exemplifies strategic planning,” states the memorandum. “The unique location provides tenants and residents with diverse dining options, as well as a variety of commuter benefits for daytime employees.”
Nearby companies include MetLife, CenturyLink, John Muir Health, Cigna, and others. The Registry’s source believes that Station Plaza will appeal to firms—particularly FIRE firms—who are looking to use a hub-and-spoke model moving forward.
“Walnut Creek is very well-located not just from an amenity standpoint, but there’s also been inflows of smaller finance, insurance and real estate tenants who are looking to reduce their commute and have an outlet from the work from home environment,” said the source.
The hub-and-spoke model means that as companies are re-evaluating their space needs, there will still be one primary office, but perhaps several decentralized offices, closer and more accessible to employee bases. Markets such as Walnut Creek—close to transportation and amenities but still in less-dense suburbs—stand to benefit from this model in the future.