Office Turnaround Price Signifies East Bay Recovery
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CONCORD, CA-As GlobeSt.com reported last week, San Francisco-based Swift Realty Partners has sold two office buildings at 2000 Clayton Rd. and 2001 Clayton Rd. in Concord Plaza here totaling 600,000 square feet to San Francisco-based DivcoWest for $94 million. GlobeSt.com has now learned that SRP spent $24 million in renovating the property over the last year after purchasing the entire Concord Plaza for $88 million, or $82 per square foot, in July 2011.
GlobeSt.com had previously reported on SRP’s original purchase of the property, which is now 100% leased to Bank of America. When SRP, an investment firm headed by former Equity Office Properties exec Christopher Peatross, acquired the four-building, 1.1-million-square-foot property—then called the Bank of America Technology Center—it was said to be the largest single office property sold in the San Francisco Bay area in the previous three or four years. The property included buildings of 380,000, 310,000, 210,000 and 200,000 square feet, with Bank of America occupying all of them except the 200,000-square-foot building, which was vacant. Bank of America still occupies 900,000 square feet in a leaseback deal.
During the 14 months that SRP has held the property, the firm made significant infrastructure improvements and gave it a new image, preparing it for its current sale to DivcoWest. The surprise comes with the price it sold for such a short time after it was purchased, which SRP executives feel is a testament to the recovery of the East Bay market.
“My partners and I are extremely pleased to have a result in such a short time frame,” Peatross tells GlobeSt.com. “Nevertheless, I think it’s a sign of the East Bay marketplace recovering to see a transaction of this size, this quality of a tenant and its commitment to the East Bay marketplace.”
Peatross adds that the market still has a long way to go, however, since buildings of this size and quality in the Concord market were selling for $300 per square foot in 2007—considerably more than the $157 per square foot that Concord Plaza just fetched. But selling half a property for more than what you paid for the whole thing a year later is an eye-opener.
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