UC Retirement Plan Buys Vacant Office Building in Berkeley for $30.125MM

University of California Retirement Plan, Berkeley, San Francisco, NDG Real Estate, JLL 2120 Berkeley Way

By Jon Peterson

The University of California Retirement Plan has closed on the acquisition of the vacant 45,471 square foot office building in Berkeley location at 2120 Berkeley Way. The purchase price was $30.125 million, or just over $662 per square foot, according to public records filed with the county.

The pension fund made this investment on a direct basis without the aid of any outside separate account manager. This is a rare event for most smaller pension funds, since they typically don’t have the investment staff or organization to be able to acquire real estate assets on their own. Funds like that usually prefer to work with managers for separate account investments.

The UC Retirement Plan through its UC Regents office did not respond to an email for this story. The seller of the office asset was NDG Real Estate, which has a San Francisco office on Van Ness Avenue. It had set a pricing guidance on the sale of the property as much as $30 million when the property was put up for sale in August of 2021, which The Registry reported earlier.

The seller had selected the San Francisco office of JLL capital markets to be the listing agent on the transaction. Those working on the sale were Erik Hanson and David Dokko, both senior directors, and Nick Deaver, associate. JLL declined to comment when contacted for this story.

There is a possibility that in the future new ownership will convert the property into a life science asset or keep it as an office building. In the past, the first three floors of the building had been the home for the UC Press Building. This part of the property had gone through a full renovation and seismic upgrade. The floors four through six were developed by the seller over the past couple of years. This asset sale represents one of a limited number of privately-owned new construction properties in Berkeley in the past 20 years.

2120 Berkeley Way is an office building that sits on 0.2 acres of land. It could be leased in the future to either single or multiple tenants. Firms that do business with UC Berkeley would make sense as possible tenants, since the property is located one block from the university’s campus.

The overall Berkeley office market had an 8.3 percent total vacancy at the end of 2021, according to data compiled by JLL. This market has a total inventory of 2.6 million square feet.

The UC Retirement Plan has plenty of room with its real estate portfolio to invest additional capital. Through September of 2021, the pension fund had a real estate portfolio valued at $4.3 billion, as stated by the investor in a board meeting document. This portfolio made up 4.8 percent of the pension fund’s $90.8 billion of total plan assets. The long-term targeted allocation for real estate is 7 percent. The breakdown of the real estate portfolio is 42 percent each for core and value-add assets, 13 percent for opportunistic properties and 3 percent in co-investments.

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