PG&E’s Deal in Oakland Includes a 35-Year Lease with $892MM Option to Purchase the Building

300 Lakeside Kaiser Center Oakland KKR San Francisco TMG Partners Swig Company Rockpoint Group Eastdil Secured Gensler

By Vladimir Bosanac

Days after California’s public utility announced its intention to relocate across the Bay, details on PG&E’s 910,000 square foot transaction with TMG Partners have emerged in public documents that shed light on one of the most impactful deals made in the Northern California commercial real estate market.

It should be noted that TMG does not own the property at this time. The company is in contract with San Francisco-based Swig and Rockpoint Group to acquire it, and they have been negotiating the sale since February of this year. The Registry reported at that time that TMG was selected as the buyer of the property and the sale price at that time was pegged at $475 million.

From PG&E’s Form 8-K, which was filed on June 5th, the public utility announced that it had entered into an agreement with a TMG subsidiary to lease approximately 910,000 square feet of the building located at 300 Lakeside Drive in Oakland, and that this property would serve as the company’s administrative headquarters moving forward. As The Registry had previously reported, this deal was subject to a number of certain conditions authorized by the United States Bankruptcy Court for the Northern District of California. 

If approved by the court, PG&E would commence its lease in the property on January 1, 2022, and the lease would expire after 34 years and eleven months following the commencement of the same. The property would also undergo some separation of the parcels, and the parcel containing the building could be acquired by PG&E for $892 million following this subdivision. That price would not be paid until 2023, according to the public document. 

This agreement also stipulates that PG&E would sell its current headquarters property in San Francisco, which is located at 77 Beale Street, 215 Market Street, 245 Market Street and 50 Main Street. 

Located at 300 Lakeside Drive in Oakland’s Uptown District, 300 Lakeside was formerly known as the Kaiser Center. It comprises a 28-story, approximately 845,000 square foot Class A office tower plus two low-rise retail/office buildings totaling approximately 130,000 square feet, including a new, three-level co-working facility. The tower features a unique mid-century modern design, with 29,000 square foot floor plates, high ceilings and unobstructed 360-degree views from nearly every floor in the building, including vistas of San Francisco Bay, the city and Lake Merritt, according to a statement from Swig.

The property’s 1,339-stall parking garage features an extensively landscaped, 3.5-acre rooftop garden that is a unique amenity for office users and the surrounding area. Situated on seven acres, 300 Lakeside is considered one of the Bay Area’s preeminent urban campuses and is just 1.5 blocks from the 19th Street BART station, providing excellent public transit access.

The main lobby of the tower has been renovated recently by a design team from Gensler, led by principal Matin Zargari.

San Francisco-based Swig had owned the property since 2005, when it acquired the asset with GMAC Commercial Holdings for around $190 million, according to published reports. Over the years, Swig and its capital partners, who have changed over time, were able to procure entitlements for an additional one million square feet. This would enable the new owner to expand the property significantly.

TMG has been an active player in the Oakland commercial real estate market, and it is currently working on developing an 875,000 square-foot, 28-story Telegraph Tower located at 2201 Broadway. The building, designed by Solomon Cordwell Buenz Architects, offers up to 37,000 square-foot floor plates with high ceilings and 11 ½ foot tall vision glass throughout. The tower features three outdoor terraces and 33 balconies totaling 30,000 square feet of outdoor space highlighted by an expansive 9,200-square-foot rooftop terrace and large private outdoor terraces on the sixth and eighteenth floors.

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