By Jon Peterson
Miami-based Market Street Real Estate Partners has placed on the market for sale the 42,282 square foot The Commons @ Jack London Square office building complex in Oakland. The potential sales price on the building could be around $18 million, according to sources familiar with the sale of the asset.
The asset involved here has three structurally combined properties located at 140 and 160 Franklin Street and 384 Embarcadero West. The listing agent on the sale is the San Francisco office NKF Capital Markets, and the people involved in the sale are Michael Taquino, Kyle Kovac and Daniel Cressman, all executive managing directors with the firm, and Mandy Lee, who is a director. NKF declined to comment when contacted for this story.
Market Street has owned the asset since November 2015, when the real estate firm paid $11.5 million for the property, according to public records. The plan is for offers to come in around the end of September with a closing to occur sometime before the end of the year. Potential buyer groups could include local operating partners, private capital sources or 1031 Exchange buyers.
Should the sale come in at about $18 million, it would represent a pricing level still well below replacement cost. This pricing would be near $425 per square foot, and replacement cost for office buildings in Oakland is now at $800 per square foot, according to sources that track this information in the Oakland market.
There will be some ways that the new owner could add value to the asset going forward. While the buildings are currently 86 percent leased, some of the empty space could be leased up. Also, the asset has in-place rents that are 20 percent below market, and just over half of in-place occupancy will be expiring in the next two years.
Another source of income for the property is a dedicated 75-space surface parking lot at Webster and 2nd Streets, which is half a block away and directly serves tenants and provides stable income to the property. This parking operation is on a long-term ground lease owned by the State of California Department of Transportation that can be extended until 2049.
The Commons has a diverse tenant base that includes healthcare, technology and law firms. The stable anchor tenant for the property is Concentra, one of the nation’s largest urgent care providers. This company has been in the property since 2004 and it takes up 29 percent of the asset on its first and third floors.