By Jon Peterson
Emeryville-based Orton Development has placed on the market the 518,761-square foot asset that sits on 26.8 acres of land in Richmond. The developer is selling its Ford Point office, R&D and warehouse space located at 1414 Harbor Way South in Richmond, seeking a price point somewhere in the neighborhood of $110 million, according to sources that are aware of the details of the proposed sale.
The seller has picked Cushman & Wakefield to be the listing agent on the transaction, and the team working on the planned sale includes Seth Siegel, Adam Lasoff and Steve Herrmann. Cushman & Wakefield declined to comment when contacted for this story.
Orton has been the owner of the property since 2004 when it acquired the asset from the City of Richmond Redevelopment Agency for an undisclosed price. The development firm has spent in excess of $50 million for a complete renovation of the property, and presently the Assessed Market Value on the asset is $43.7 million.
Some of the work Orton performed on the property included installing new building systems and undertaking an extensive seismic upgrade to repair damage caused by the Loma Prieta earthquake in 1989. Since 2008, an additional $11.3 million has been invested in an upgraded roof, electric vehicle charging stations, asphalt repaving and a one mega-watt rooftop solar system.
The Ford Assembly Plant was designed by the renowned industrial architect Albert Kahn in 1930 for the Ford Motor Company and has been listed on the National Register of Historic Places since June of 1988, according to the company’s web site. The plant was used to assemble tanks during World War II and was converted back to car assembly after the war until Ford vacated in 1955. The building began deteriorating around then and was badly damaged by the 1989 Loma Prieta earthquake.
The property now has a current occupancy of 87.3 percent. Historically, the asset has not ended the year with an occupancy lower than 91.9 percent since 2009. The largest tenant in the building is SunPower. This tenant has a lease for 120,627 square feet, and it has occupied space in the property for 13 years. Through a power purchase agreement with the current property owner, SunPower purchases output from the building system to make their offices and on-site manufacturing operation powered mostly by solar energy, supplemented by PG&E. The project also provides solar power for 100 percent of Mountain Hardwear’s annualized electric needs. This tenant has a lease for 84,143 square feet. Other tenants in the property are Title Nine, Monvera and California Closets.
The new owner of the property will have several pathways to increase the asset’s net operating income in the future. Currently, 138,125 square feet of the property is classified as industrial. If the new owner converts this to flexible space, it could capture R&D rents that are around 40 percent higher that current uses. Mark to market is another play that the new owner can apply. In-place rents are now approximately 35 percent below market rates, according to some estimates, with an average weighted lease term remaining of 2.3 years.
Ford Point is located next to the Richmond Ferry Terminal. This was transportation venue was completed last year, and it provides another transportation alternative for the new ownership. Another commuting option over the long term would be that the property has a dedicated shuttle to and from the Richmond BART/Amtrak station, which takes about eight minutes.