By Jon Peterson
San Francisco-based Swift Real Estate Partners has acquired the 253,000 square foot 1333 Broadway office building in Oakland for $115.4 million, or roughly $456 per square foot, according to sources that were familiar with the transaction. The real estate investor declined to comment on what it paid for the property. It was represented in the transaction by San Francisco-based law firm Orrick Herrington & Sutcliffe.
The seller of the property was Los Angeles-based CIM Group, which worked through the San Francisco office of HFF as the listing agent on the sale. The individual working on the deal for HFF was David Dokko.
“We are very bullish on the Oakland market. We believe there is strong tenant demand for space in the market, and we are kicking tires to look for additional investment opportunities in Oakland as well as the East Bay, San Francisco and the South Bay,” says Dave Copeland, a director for acquisitions and asset management for Swift. He covers the firm’s activities throughout the San Francisco Bay Area.
1333 Broadway will represent a marked to market opportunity for the new owner in the future. “Around 30 percent of the leases in the property will come up for renewal in the next three plus years. Current rents in the property are now 30 percent below market. This will give us the opportunity to add value to the asset in the future,” said Copeland.
The property is currently 95 percent leased, and its anchor tenant is Delta Dental. This company occupies roughly 40 percent of the property. Its lease is a long-term one that is not part of the property that will be coming up for renewal in the near term. Another office tenant in the property is Teecom, and there is a ground floor retail lease with Walgreens.
The location of 1333 Broadway was a large interest factor for Swift. “We are very close to the 12th Street BART station. This is important, [because] being close to public transportation is a big factor for us. Another element is that within three blocks there are new residential projects being developed totaling 1,500 units, and there also is ground floor retail being added to the area, as well,” said Copeland.
This building is the only office building asset in the Oakland market that Swift currently owns. It has owned other Oakland assets in the past, which the company has since sold. Swift bought the property for its commingled fund, Swift Real Estate Partners Fund II. The Oakland office markets remains a tight one with current vacancies in the range of 5 percent to 7 percent.