By Meghan Hall
The San Francisco Peninsula continues to be a market of interest for investors, who are keen on picking up various types of office assets. In a transaction that just recently closed, GI Partners purchased a Class B office asset for $42.7 million, or about $524 per square foot, according to public documents. While the sale closed at the end of April, local documents were only recently updated to reflect the transaction and sales price.
The sellers of the property were New York City-based Thor Equities and Wafra, an investment firm, who originally purchased the property in early 2018. At the time, the pair of firms paid $58 million, or about $711 per square foot for the property, which they acquired from Rockpoint Group and Premia Capital. The joint venture between Rockpoint and Premia had owned the asset since June of 2014, when it paid $22.5 million for the property, according to public documents.
Located at 130-150 Shoreline Drive, the building was originally constructed in 1990 and totals just over 81,000 square feet. The lot totals 4.97 acres and includes 244 parking spaces, according to data from CommercialCafe.
The building is known as the Shoreline Science Center and is 100 percent leased to robotic endoscopy firm Auris Health, who uses the property for its headquarters as well as the firm’s primary research and development operations. The property was repositioned in 2017 and includes lab space for the development of bronchoscopy and therapeutic procedures, stated GI Partners in a release.
“We are excited to develop a relationship with Auris Health and expand our life science footprint in the San Francisco Bay Area. The acquisition of Shoreline Science Center represents our growing commitment to the life sciences industry,” commented John Sheputis, Managing Director at GI Partners and Head of Acquisitions for GI’s technology real estate investment programs. “Along with our long history of investing in data centers and other technology enabled real estate, our expanding life sciences real estate holdings reflect our belief in the underlying life sciences fundamentals. The Shoreline transaction also demonstrates the GI team’s ability to complete transactions in today’s very challenging economic environment.”
The sale of the property could be one of the bigger transactions on the Peninsula during the second quarter when compared with activity during Q1. According to a Cushman & Wakefield, there was only one property transaction greater than $100 million during the first quarter in San Mateo County: DivcoWest’s acquisition of an office property on Sand Hill Road for $610 million, or $2,048 per square foot. The other two large sales of the quarter were Summerhill Housings purchase of 30 Ingold Rd. for $35 million, and Premia Capital’s acquisition of 68 Willow Place for $31 million.
Currently, Redwood City has about 6.6 million square feet of office inventory and a vacancy rate of 4.2 percent. Asking rates for all classes at the end of the quarter sat at $5.72 per square foot. However, Cushman & Wakefield cautions that the economic trajectory of the region—which includes the health of real estate fundamentals—is largely unclear moving into the second quarter. The firm predicts that real GDP will decline drastically as cities work to flatten the curve, which will continue to impact real estate across the board.