By Jon Peterson
The owners of an Oakland central business district office building set between the city’s Lake Merritt and Uptown neighborhoods have put the property on the market after holding it since 2006.
When Greenbrae, Calif., -based Pacific Real Estate Partners Inc. and Washington, D.C.,’s ASB Capital Management LLC acquired Plaza 360 at 360 22nd St., it was only half leased. Occupancy in the 114,000 square-foot property is now 80 percent.
Trent Holsman, a senior vice president with Colliers International whose listings include Oakland City Center at 1333 Broadway and Lake Merritt Plaza at 1999 Harrison St., predicted solid buyer interest in the property in part because so few area landlords let go of their holdings.
“This part of Oakland is where many owners are in for the long haul and are not interested in selling their assets quickly. Many of them keep properties for five to 10 years,” he said. “I don’t see CIM Group selling 2101 Webster or The Swig Co. looking to sell its assets in the area either.”
Pacific did not respond to phone calls seeking comment. ABS chose not to comment for this story. The two firms spent $2.5 million to renovate the property in 2008, according to Pacific’s Web site.
Buyers also should be interested in Oakland because the pricing is so much lower than other parts of the bay. “You can buy office buildings in Oakland for one quarter of the price you would pay for properties in San Francisco,” Holsman said.
The sellers have selected Holliday Fenoglio Fowler L.P. as the listing agent. The investment sales team includes Managing Director Steven Golubchik, Associate Director Mark Damiani and Associate John Simerlein. All work in the company’s San Francisco office.
“This property represents a chance for a value-add private real estate equity fund to own an institutional-quality office building and improve it over the next few years in a growing market,” Golubchik said.
He would not comment on the potential price an investor might pay or the yield an investor might garner.
“This is an area where I think many companies like the location as being near restaurants, retail and apartment complexes. It’s also two blocks from a BART station, which also makes it attractive,” Golubchik said.
He also thinks there is an opportunity to add value by raising rents for existing tenants to current market rates. They are as much as 10 percent below that threshold now, he said.
The current owners hold the building free of debt. The sellers prefer an all-cash buyer.
The Oakland central business district has 10.6 million square feet of offices, according to CBRE Inc.’s first-quarter report on the Oakland and East Bay market performance. The Oakland CBD lost more than 217,000 square feet of occupancy in the year’s first three months, causing vacancy to hit 13.5 percent, CBRE said. Average lease rates remained flat, the brokerage said, but it predicted a rise in tenant demand because of the East Bay’s affordability and strong access to BART.
ASB Capital is a real estate investment management company. Its investment clients include public and union pension funds. According to its Web site, the firm owns 38 properties in the Pacific region totaling 1.81 million square feet with a net asset value of $575.3 million.
Pacific invests in underperforming real estate or non-performing real estate loans secured by Northern California property, according to its Web site. It is interested in offices, industrial buildings, research and development space and apartments.