By Jon Peterson
San Rafael-based Wareham Development has started construction on a new 260,000 square feet spec development project in Emeryville called EmeryStation West. The project could end up being a mixture lab, life sciences or traditional office space—most of it will depend on the interest the developer gets from potential tenants that the project attracts.
Several factors have influenced the developer to kick off the construction in Emeryville at this point in time, but availability is probably the strongest reason. “For the kind of space we are planning for, there is really little or no vacancy in Emeryville. Our portfolio in this market is a good example of this. The portfolio of assets that we now own in that market are 99 percent occupied, and we think there is good tenant demand for additional space,” says Geoffrey Sears, a partner with Wareham.
Another indicator of the tenant demand has been a steady increase in rents in that market over the past 12 months. “Rents in Emeryville have increased by 20 percent during that time frame. This has happened as more tenants are looking for space in that market and not much new development is happening,” said Sears.
The total development cost of the property would be in the neighborhood of $150 million, according to sources familiar with the project. A major equity investor in the development is PGIM Real Estate, formerly known as Prudential Real Estate Investors. This real estate investment firm declined to comment when contacted for this story. Wareham and PGIM have a long and successful investment relationship, and the long-range plan for this asset is to put a conservative amount of leverage on the project. Sears declined to specify the exact amount of that leverage.
The project should be completed by sometime in early 2018. The leasing efforts of the project will be done through the San Francisco office of Kidder Matthews. Tim Mason, a senior vice president with the company, will be one of the leasing agents in the project. The expectation is that the project will attract a variety of tenants, which could include companies that are currently located in Emeryville as well as firms that are looking to move from San Francisco and other parts of the region.