A lot can happen in a year. And in the case of Menlo Park-based Lane Partners and their partner, Chicago-based Walton Street Capital, that meant a 5X gross return on the investment made in the 1954 Telegraph Ave. building in Oakland, also known as the Sears building.
To much regional and even national attention, the sale of the building was announced to San Francisco-based Uber earlier this week, which, according to city documents was $123.5 million, or roughly $325 per square foot. The two companies purchased the building in June of last year for $24.2 million, or just over $63 per square foot, according to CoStar.
The two companies also invested roughly $40 million into the project, so the net return is actually lower, but this does pose a new watermark for other potential sales in Oakland.
Other recent sales include White Plains, New York-based True North Management Group paying $28.25 million, or almost $248 per square foot, to acquire the 114,000 square foot Plaza 360 at 360 22nd Street office building in Oakland.
Late last year, San Francisco-based Ellis Partners had acquired the 277,030 square foot 180 Grand office building in downtown Oakland. The purchase price was roughly million to $60 million or $220 per square foot, according to sources familiar with the transaction
Lane and Walton have also sold several Apple-leased buildings in June of this year in Sunnyvale for around $450 per square foot or a total of about $117 million. Lane Partners purchased the six-building, 262,000-square-foot campus in 2010 for approximately $23.5 million.
The San Francisco Business Times quotes industry sources saying that at least four other Class A office buildings are for sale in Oakland, this includes the 34,000 square foot 2000 Franklin, which is marketed by JLL’s managing directors Sam Swan and Robert Hielscher.
According to a recent, second quarter of 2015 industry report from Colliers International, downtown Oakland is experiencing 5.4 percent direct vacancy for class A space. This figure represents roughly 556,000 square feet of total availability in the East Bay city, plus another 37,000 of sublease space, according to Antony Prokopiou, research analyst II at the firm’s Oakland office. There is no availability in Oakland for contiguous space that is 100,000+ square feet, and even finding a full floor of available space in the city can be a challenge, Prokopiou said.
The half a million number does take into account the 380,000 square feet in the Sears building, so upon final close the availability in Oakland will dramatically drop.
Rendering courtesy of Gensler