By Meghan Hall
Oakland’s commercial real estate market has bloomed over the last few years, as firms eager to be central to the Bay Area — but outside of San Francisco and Silicon Valley — have targeted the East Bay city for its proximity to public transportation and walkability. As investment has poured into downtown, historic assets have become attractive to both tenants and investors in the area. For San Francisco-based Paceline Investors and Argosy Real Estate Partners IV, investing in 1714-1720 Franklin in Oakland was ideal due to the property’s location right near Oakland’s downtown.
“It is incredibly well located, just one block away from the 19th Street BART Station in an area that is surrounded by a lot of existing amenities,” said Jay Atkinson, managing principal at Paceline Investors. “Those amenities are only going to improve, and we think it’s a remarkable infill opportunity not just in the Bay Area, but in Oakland.”
The property, purchased from Sama Land Holdings, LLC, traded for $11 million, or about $331 per square foot. Sama Land is associated with Terra Nova Trading, an export company that is currently based in 1714 Franklin. Overall, the site consists of a five-story building with a leasable basement, including retail on the ground level and office on the upper floors, a one-story standalone building that is currently home to Lunch Box restaurant, and a ten-stall surface parking lot.
Both parties were represented by David McCarty and Ben Jones of Lee & Associates.
The new owners intend to begin a physical value-add program to the property, improving the façade as well as other, previously unimproved areas of the building. According to Atkinson, Terra Nova had already completed a round of upgrades, including renovations to some of the existing office space as well as seismic retrofitting. How much Paceline and Argosy will spend on additional renovations, Atkinson was unwilling to disclose. However, the pair intends to update the third floor of the building, portions of the ground level and lower floor, and some of the façade.
“I think part of what attracted us to the property is that it has really good bones,” stated Atkinson. “It’s got what tenants really prefer to see today, which is these kinds of historic, brick and timber finishes but with modern amenities. The previous owner had already completed a partial renovation of the building, so we weren’t starting from scratch.”
The floor plates of the office building are each about 7,500 square feet, explained Atkinson, so the property will likely attract small and growing professional service and technology firms.
The property is surrounded by numerous eateries, retailers and entertainment venues, from the Oakland Ice Center to the Fox Theater, Duende, Liba Falafel and Terra Mia Coffee. The site is also easily accessible via Oakland’s China Town, Interstate 980 and BART.
Overall, Oakland’s location — just east of San Francisco at the nexus of several major freeway and transportation lines — have made it an ideal spot for growing companies. Developers are bullish on the area. At the end of 2018, more than 9,300 housing units, 240,000 square feet of new retail and 945,000 square feet of office were under construction and slated for delivery in 2019, 2020 and 2021, according to a report released in March of this year by the City’s Office of Economic Development. Atkinson estimates that in the blocks surrounding the Franklin St. property alone, some 1,000 residential units are in various phases of development.
“All indications are that Oakland will remain robust and very much a strong market, attracting overflow from San Francisco. But organically, it’s growing in its own right,” said Atkinson. “We think that the location will only improve as an office market as the residential around it is delivered and people live here, and choose not to take BART into San Francisco but rather just stay in Oakland.”