By Jon Peterson
Walnut Creek-based Thomas Properties has put up for sale the 49,524 square foot office building located at 3100 Oak Road in Walnut Creek, according to sources familiar with the property. The seller is a tenant in this property.
The listing agent on the sale is Newmark Cornish & Carey. This company declined to comment on what the potential sales price might be on a per square foot basis.
“Thomas Properties was the original development of this property when it was constructed in 1987. They believe the time is right for a sale give the current demand for real estate near a BART station from both owner and tenant perspective,” said Forrest Gherlone, a senior managing director with Newmark Cornish & Carey. He and several other people are involved in the sale. This includes Mike Zylstra, senior managing director, and Grant Lammersen, vice chairman and co-head of Commercial Capital Markets Northern California.
The expectation is the property will attract a few different buyer groups. “I would think that the capital sources interested in the property would be value-add investors or 1031 exchange buyers. The size of the property might not be large enough for many institutional investors,” said Gherlone.
The property’s location does make it attractive. The Class A building stands two blocks from the Pleasant Hill BART station. Many tenants favor this kind of location. Around 80 percent of the new tenants to the North 680 corridor have moved adjacent to a BART station over the past 24 months, as stated by sources that track this information.
3100 Oak Road has a very strong re-leasing potential. A total of 63 percent of the property’s existing tenants will come up for renewal in the next 36 months. The current weighted average rent in the property is around 40 percent below where market rents are, according to estimates.
The office building is now 94.2 percent leased to 17 tenants with no single tenant accounting for more than 13 percent of the total square footage of the property. The breakdown of the kinds of tenants in the property are 22.2 percent finance, 18.8 percent healthcare, 14.8 percent legal, 13.1 percent insurance, 12.5 percent consulting, 9.6 percent accounting, 4.9 percent real estate and 4.2 percent government.
The Walnut Creek Class A office market is one that tenants see as a lower price alternative to San Francisco and Oakland. Average asking rents in Walnut Creek are currently 41 percent lower than in San Francisco, and 22 percent less than in Oakland, according to industry sources that track this information.