By Jon Peterson
Glendale, Calif.-based PS Business Parks has paid $60.5 million to acquire the 340,000 square foot Bayshore Corporate Center office building in San Mateo.
The eight-building office park was sold by a private seller. It was represented in the transaction by the Palo Alto office of Jones Lang LaSalle. The brokers on the deal were Eric Doyle managing director, Will Connors, executive vice president and Nicole Zanghi, vice president. They did not respond to phone calls seeking comment for the story.
“This property is in an excellent location giving that it has frontage along Highway 101 and is near Highway 92 as well. The asset is near public transportation as it’s a 10-minute walk to a Caltrain station. We also believe its centrally located near good housing and is close to financial and venture capital firms,” said Dick Scott, a divisional vice president for PS Business Parks. He works out of the company’s regional office in Santa Clara.
This is a major acquisition for PS Business Parks. “While we own assets in other nearby markets in places like South San Francisco and Burlingame, the deal in San Mateo is a significant beachfront for our company,” said Scott.
The buyer sees that the property fits in well with its overall investment strategy. “We are a value-added investor. We think that there is room for us to lease up the empty space in this building and that is what we will be doing with the property in the near future,” said Scott. At closing the property was 81.8 percent occupied.
The transaction was conducted on an all-cash basis, and PS Business Parks declined to comment on the cap rate on this deal.
The current occupancy for office buildings in San Mateo County suggest that Bayshore Corporate Center has underperformed. According to the Cassidy Turley Commercial Real Estate Services office market report for fourth quarter 2013, the vacancy is now at 14.1 percent. This figure changed only slightly over the past year. Vacancy was at 14.2 percent for the fourth quarter of 2012.
Rental rate growth for office space in San Mateo has been among the strongest in the country. Cassidy Turley stated in a report that San Mateo County had the eighth best rental rate growth in 2013 in the nation at 4.9 percent.
PS Business Parks will continue to look for new investment opportunities. The company would like to buy additional flex, office and industrial space in the greater San Francisco Bay Area.