By Jon Peterson
San Francisco-based Sansome Street Advisors has decided to place on the market for sale the 118,295 square foot Latham Square office building in Oakland located at 1611 Telegraph Avenue. The potential sales price is $83 million, or $700 per square foot, according to sources that track the sale of office buildings in Oakland.
This sale would be the fourth time the asset will have traded in this cycle. The property was initially sold at auction in July of 2014 to Ridge Capital Investors and Contrarian Capital Management for $12 million. Then in October of 2016, Bentall Kennedy purchased it for $47 million and sold it to Sansome Street Advisors in December of 2018 for $61.5 million.
The listing agent on the sale is the San Francisco office of CBRE. The people working on the sale includes Kyle Kovac, Michael Taquino and Russell Ingrum. CBRE declined to comment when contacted for this story.
The property is in the process of reaching occupancy near the 93 percent level. This will become a reality once pending leases for the 7, 10th and 14th floors are concluded. These spaces in the building are now going through a renovation. Recent new leases signed in the property are Terrain Studios for the 15th floor and Mynd’s expansion on the 11th floor.
The types of tenants in Latham Square include technology, architects and professional services firms. The in-place rents in the building are around 20 percent below market with an average weighted lease term of 6.4 years, according to sources with knowledge of the leasing details in the building. Over the past six years, a total of $26.4 million of total capital has been invested into the asset for improvements. This included a full elevator modernization, seismic retrofit, a brand-new lobby, upgraded systems and tenant improvements.
The property also has some retail space. The 3,000 square foot Bar Shiru, a whiskey and jazz bar, that opened in early 2019 is in the building. There is more retail space that could be leased up. The property also has a 60-space subterranean parking facility and storage area that produces additional income for the asset.
The Class A Oakland office market is one that continues to see rising rents. Asking rents for Class A space in the market is now at $5.41 per square foot per month, which represents a 7.6 percent increase from the previous year, according to sources that track this data. Rents in Oakland are still a 29 percent discount to rents in the San Francisco office market.