commercial real estate

Marriott City Center in Oakland Sells for $84MM

By Jon Peterson

San Jose-based DiNapoli Capital Partners and New York-based Apollo has paid $84 million to acquire the 489-room Marriott City Center hotel in downtown Oakland, according to several sources that track hotel sales.

Heather Turner, a managing director for DiNapoli in its El Segundo regional office, did not respond to phone calls seeking comment for this story. A company official stated that she worked on the transaction for the firm.

This trade is one of the biggest hotel asset trades in Oakland in recent times. “This deal represents the first major hotel property in Oakland to be sold in some time. I think it reflects that investors are taking a fresh look at the city based on its improving lodging market and also because it’s been difficult to acquire assets in San Francisco,” says Mark McDermott, senior vice president of CBRE Hotels in its San Francisco office.

The deal also points to a significant difference in the price points for hotel sales in the two markets. The sale of the property in Oakland comes in at $171,000 per room. Many of the hotel sales in San Francisco over the past couple of years have been at $500,000 per room or higher. There is a deal pending for the 158-room Mandarin Oriental San Francisco hotel that would create a new record price of around $1 million per room. New York-based Loews Hotels & Resorts is the buyer.

There also is a difference in the two markets from an occupancy standpoint. “The hotel market in Oakland is performing well, but not quite as strongly as the San Francisco market. According to our PKF Consulting division, 2014 vacancy for hotels in Oakland/East Bay was 79 percent versus 87 percent in San Francisco,” said McDermott.

The seller of Marriott City Center is Los Angeles-based CIM Group. A company representative did not return phone calls seeking comment for this story. According to a prepared statement by the seller, it had acquired the Oakland property in 2007. It represented the firm’s first asset acquisition in downtown Oakland.

There is a feeling that there is enough activity in the Oakland market that development of new properties might not be too far off. “The hotel market in Oakland for the first time in a long time is attracting enough investor interest where development might be a possibility in the near future,” said McDermott.



Bentall Kennedy Places 600 California in San Francisco Under Contract

Posted on November 4, 2014 by publisher in CommercialFinanceINDUSTRY news

By Jon Peterson

Seattle-based Bentall Kennedy has put under contract the purchase of the 358,590 square foot 600 California Street office building in San Francisco for around $600 per square foot or $215.1 million, according to sources aware of the transaction.

Bentall Kennedy has not responded to phone calls and e-mails seeking comment for this story.

The seller of the property is New York City-based Clarion Partners. The Los Angeles office of the real estate manager also declined to comment when contacted for this article.

The property is being sold as an off-market deal, and the transaction between the two parties has not yet closed.

This deal will earn Clarion a significant profit on the sale should the current pricing hold. The real estate manager had acquired the property for $180 million or $502 per square foot in July of 2012. This situation is considered a short-term hold according to industrial standards. Most institutional investors hold on to properties for a three- to seven-year time period.

600 California is a 358,590 square foot office building. The 22-story property was initially developed in 1992 and completed in 1994.

The property is located within the North Financial District sub-market of the San Francisco office market. The sale of 600 California will be the second major office building in the sub-market to be near a sale. The Rockpoint Group is in the process of paying $650 per square foot or $307 million for 275 Battery Street.

The North Financial District area is the largest sub-market for office buildings in San Francisco, according to the 3rd quarter research & forecast report prepared by the San Francisco office of Colliers International. Its 116 buildings and 28.4 million square feet of space account for 28.4 percent of all the office space in San Francisco.

This submarket remains very tight. Colliers stated in its report that the vacancy was at 7.9 percent and was unchanged from the second to the third quarter.



UC Regents Plans to Buy 1111 Broadway in Oakland for Approximately $215MM

Posted on November 17, 2014 by publisher in CommercialFinanceINDUSTRY news

By Jon Peterson


The Office of the University of California Regents is planning to pay approximately $380 per square foot or $215.1 million to acquire the 566,168 square foot 1111 Broadway office building in downtown Oakland, according to sources familiar with the property.

A representative of the office of the chief investment officer for the UC Regents did respond in an e-mail that the university hopes to acquire the property and that the deal has not closed yet. The email stated that the buyer was not in a position to discuss any pricing details.

This sale would result in a big profit for San Francisco-based Ellis Partners. Ellis, with the help of a financial partner, had acquired the property for $158 million or $279 per square foot in November of 2013. Jim Ellis, managing principal with Ellis Partners, declined to comment in an email when contacted for this story.

The UC Regents sees 1111 Broadway as a core asset. The potential buyer stated in an e-mail that it considers the property to be a core asset due to its proximity to the core of downtown Oakland, giving it exceptional conveniences to restaurants, retail and hotel amenities, as well as outstanding accessibility to BART, multiple bus lines and highways 980 and 880. Over the years of various ownerships, the building has been maintained to the highest institutional standards and has historically commanded the highest rents in its submarket.

The UC Regents believes in the Oakland office building market. It stated in an e-mail that Oakland as a city is poised for significant near term rent growth and strong absorption if the city continues to thrive and drive economic expansion.

1111 Broadway, which was first developed in 1990, is now 96 percent leased. Major tenants in the property include Wendell, Rosen, Black & Dean, GT Nexus and FEMA. The University of California also occupies a floor in the building. The asset is a LEED certified gold office tower.

This property could become part of UC Regents existing real estate portfolio now valued at $3.5 billion, according to an e-mail from the investor. This portfolio includes a mixture of core, value-add and opportunistic private real estate it has invested in the United States and around the world.

These investments are placed into a mixture of commingled funds and separate account investment strategies. The UC Regents manages a total investment portfolio value at around $91 billion. This includes retirement, endowment, working capital and defined contribution pension plans.



Salesforce set to buy 50 Fremont skyscraper in S.F.'s south financial district

Nov 11, 2014, 11:29am PST UPDATED: Nov 11, 2014, 4:14pm PST

Cory Weinberg

Reporter-San Francisco Business Times


Salesforce is set to buy the 50 Fremont office tower from TIAA-CREF, sources close to the deal told the Business Times.

The deal would continue to grow the San Francisco-based software company's real estate footprint. The company is the largest technology employer in San Francisco, with 4,000 employees in the city. Salesforce already leased about a half-million square feet of 50 Fremont in 2012, more than half of the 817,000-square-foot building. That $339 million, 18-year lease gave Salesforce first dibs to purchase the building — if TIAA-CREF decided to sell — or the right to buy in 2017.

The 43-story 50 Fremont is the ninth-largest office tower in San Francisco, according to Business Times research. Mellon Capital Management and Drinker Biddle & Reath LLP are also tenants.

It's not clear just yet how much Salesforce would pay for the building, and representatives for its broker Cushman & Wakefield did not immediately return requests for comment.

UPDATE: Salesforce to join exclusive real estate club with SoMa tower purchase

Salesforce has leased more space in the city than any other company in recent years. The company inked a deal in April to become the anchor tenant of what will be the city's largest building – the Salesforce Tower. That 714,000-square-foot lease is valued at $560 million over 15 and a half years, starting in 2017.

In 2012, Salesforce also leased 444,273 square feet in 350 Mission St., which is being built by Kilroy Realty Corp., and 235,733 square feet in Rincon Center.

The 50 Fremont potential purchase comes in a near-record year for San Francisco office sales. It's expected to be the second-biggest year for office purchases in the city's history, after 2007. About $5 billion worth of sales have already closed, according to CBRE, with about $6.7 billion expected in total this year.

Salesforce refused to comment on the deal. John Cornuke, who runs TIAA-CREF's asset management team, said "it's premature" to comment.

Cushman & Wakefield is representing Salesforce and CBRE is representing TIAA-CREF in the deal. 



Google signs 60-year, $1 billion NASA lease

By BRANDON BAILEY, AP Technology Writer on November 10, 2014

SAN FRANCISCO (AP) — Google has signed a long-term lease for part of a historic Navy air base, where it plans to renovate three massive hangars and use them for projects involving aviation, space exploration and robotics.

The giant Internet company will pay $1.16 billion in rent over 60 years for the property, which also includes a working air field, golf course and other buildings. The 1,000-acre site is part of the former Moffett Field Naval Air Station on the San Francisco Peninsula.

Google plans to invest more than $200 million to refurbish the hangars and add other improvements, including a museum or educational facility that will showcase the history of Moffett and Silicon Valley, according to a NASA statement. The agency said a Google subsidiary called Planetary Ventures LLC will use the hangars for "research, development, assembly and testing in the areas of space exploration, aviation, rover/robotics and other emerging technologies."

Google founders Larry Page and Sergey Brin have a well-known interest in aviation and space. The company has recently acquired several smaller firms that are working on satellite technology and robotics. But a Google spokesperson declined Monday to discuss specific plans for the property, which is located just a few miles from the company's main campus in Mountain View.

NASA plans to continue operating its Ames Research Center on the former Navy site. Google will take over operations at the runways and hangars, including a massive structure that was built to house dirigible-style Navy airships in the 1930s. NASA said the deal will save it $6.3 million in annual maintenance and operation costs.

Local officials praised Google's promise to restore the historic structure known as Hangar One, which is a San Francisco Bay Area landmark. U.S. Rep. Anna Eshoo, D-Palo Alto, called the lease agreement "a major win for our region."

Google already has a separate lease for another portion of the former air base, where it wants to build a second campus. Page and Brin have also used the Moffett runways for their collection of private jets, under another lease arrangement that's been criticized by some watchdog groups who say NASA gave the executives a sweetheart deal.


EMEA real estate investment set to rise in 2015, study shows


Three-quarters of EMEA property investors plan to increase their real estate weightings in the EMEA region next year.

Colliers International’s 2015 Global Investor Sentiment survey of 600 investors found that 78% of EMEA-based investors would look to increase their portfolios in the next 12 months.

The survey also found that 67% of global investors would also target EMEA.

Investors from Asia and US,, respectively expressed 30% and 28% preferences for investing in EMEA, while 71% of Canadian respondents plan to invest in EMEA in the next 12 months.

Colliers said sovereign wealth funds, private equity firms across the US, Canada, Latin America, Asia, Australasia, Europe and the Middle East gave their outlook at a global and regional level for 2015 and beyond.

Richard Divall, head of EMEA cross-border capital markets at Colliers International, said: “European institutions in particular have now started to show signs they are back and very competitive in core markets where Asian and North American capital has dominated over the past few years.

“Whilst London is the gateway to Europe, there are signs of this changing, with Asian capital now focusing not just on London, but tier-one cities in Europe including Munich, Frankfurt, Paris, Madrid and Rome.”

Colliers said EMEA investment volumes totalled €128bn at Q3, up 5% on the same period in 2013.


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