Strong Interest for Uber’s Oakland Building as Bidding Pool Thins

Uber, Oakland, CIM Group, San Francisco, Newmark Knight Frank, Sears Building, Menlo Park, Lane Partners, Walton Street Capital, Ellis Partners,
Courtesy of Gensler/Steelblue

By Vladimir Bosanac

As Uber is looking to offload its property in Oakland, as many as 35 investors are working hard to help the ride-sharing company dispose of its asset.

Uber had announced plans in 2015 to open a new office in Oakland, and in the process purchased the under-development 1954 Telegraph Ave. building in Oakland, also known as the Sears building. The company paid $123.5 million, or roughly $325 per square foot, according to city documents, for the 380,000 square foot asset. The sellers at the time were Menlo Park-based Lane Partners and its partner, Chicago-based Walton Street Capital, which purchased the building just a year earlier for $24.2 million, or just over $63 per square foot.

When Uber announced that it would instead sell the property earlier this summer, there was much speculation about what impact that may have on the city of Oakland, and if Uber’s flight would trigger a depression of commercial property values in the city.

According to several sources with knowledge of the process, quite the opposite seems to be happening. The San Francisco office of Newmark Knight Frank, which is marketing the project for Uber, has received as many as 35 bids from interested parties looking to acquire the asset. According to two sources, that number will be reduced to about a dozen or so potential buyers in the ensuing days.

The targeted pricing is around $500 per square foot, which could bring the price of the property to $190 million. However, the sources say that the development is very complex, and it is not certain what level of improvements will be delivered in the property once its completed. This will likely add considerable time before the deal is closed and announced, stated the sources.

In the meantime, the office market in Oakland is measuring 7.1 percent vacancy, according to a second quarter of 2017 Kidder Mathews East Bay Office Market Report. The Oakland central business district reported 136,208 square feet of negative net absorption in the second quarter even as WeWork took over 81,000 square feet at 1111 Broadway, Solar Mosaic took down 29,299 square feet at 300 Lakeside Drive and Oracle moved 16,088 square feet at 1330 Broadway.

A few recent sales did push the pricing well into the $400s on a per square foot basis. Harvest Properties and KKR purchased 180 Grand in Oakland for $119.25 million or $428 per square foot from Ellis Partners. HP Investors and LNG Management bought 1700 Broadway for $13.3 million or $443, while Rubicon Point Partners sold the 172,273 square foot 505 14th Street and the 195,084 square foot 1300 Clay Street office buildings at around $435 per square foot or $159 million.

West Coast Commercial Real Estate News