MetLife and Sunset Pay More Than $250MM for East Bay AT&T Campus

GE Digital, Sunset Development Company, Bishop Ranch, Bay Area, CBRE, San Ramon

AT&T_Campus_San Ramon real estate The Registry MetLife Sunset Development

By Jon Peterson

New York City-based MetLife and San Ramon-based Sunset Development Company have paid in excess of $250 million to acquire the 1.8 million square foot AT&T Campus located at 2600 Camino Ramon in San Ramon.

MetLife owns a 49 percent ownership position in the property for the general account of the life company. This transaction is a first time deal for Sunset on two fronts. It never before bought an existing property and had not previously brought a partner into one of its projects.

MetLife feels good about the office market in San Ramon. “Fortune 500 companies continued to be attracted to San Ramon with its well educated labor force, options for executive and employee housing and relative value compared to San Francisco and Silicon Valley. San Ramon boasts a single digit vacancy rate, making it one of the tightest submarkets in the Bay Area,” says Joel Redmon, managing director of real estate investments for MetLife. He works out of the company’s regional office in San Francisco.

The office campus has a significant block of space available now and more in the future. “Right now there is 500,000 square feet of space that could be delivered to a tenant by the end of the year. There will be another 500,000 square feet available in another 18 months,” said Ed Hagopian, executive vice president with Sunset Development. The other 800,000 square feet will be kept by AT&T on a long-term leaseback.

Sunset is of the thinking that there will be a wide range of tenants looking at the space. “The kinds of companies will include technology, financial service and bio-tech firms who are already in the area or are now located in San Francisco and Silicon Valley and would be interested in the lower rents in San Ramon. I see that the rents here would be 50 percent less than what is currently being offered in Silicon Valley and downtown San Francisco,” said Hagopian.

His company is planning a project across the street that would give any tenants in the AT&T Campus both housing and retail options. “Our City Center project is fully entitled to build 500 apartment units and more than 500,000 square of retail. These amenities would be very much of interest to any workers of the companies that come into to the AT&T Campus,” said Hagopian.

Sunset and MetLife are planning a re-position of the property. Part of this will be taking the campus down to its shell. The amenities added will include a bicycle repair areas for employees who desire to ride their bike to work, an athletic club and child care.

MetLife sees that the initial plans call for upgrading and/or replacing building systems to modern high quality energy-efficient standards, updating meeting rooms, lobby and common area, and prepping the office space interior for new tenants. Exterior upgrades include landscaping, a new signage program and the addition of a new parking garage.

The San Ramon office market doesn’t have a great deal of vacancy. According to the Colliers International fourth quarter 2013 office building report, vacancy for Class A space was 4.7 percent. This is down from 4.9 percent for the third quarter of last year. The Class A market has 31 buildings totaling 7.5 million square feet with no new buildings under construction.

West Coast Commercial Real Estate News