Hines and a joint venture partner have secured $159.3 million for Clearview Business Park, an office property in San Mateo. Square Mile Capital Management originated the loan, and noted the “blue-chip” sponsorship and improving office market fundamentals as reasons why the deal was attractive.
Hines acquired Clearview Business Park in 2018. The property is on 22 acres near major job centers in the Bay Area. It is currently occupied in part by GoPro for the firm’s corporate headquarters. Matt Haden of Eastdil Secured’s San Francisco office secured the funding on behalf of the borrower.
The San Francisco Bay Area was among the mostly badly impacted by the pandemic last year. At one point in time, the sublease supply in the market swelled a staggering 587% in 2020 compared to 2019, and ultimately accounted for more than 50% of the vacancy rate. Through the first quarter of the year, demand for sublease space was quiet. According to Robert Sammons of Cushman & Wakefield, there were 6.5 million square feet of tenants actively searching for space before the pandemic. Now, that figure has fallen to 4.5 million square feet with active tours underway. The demand is sluggish despite reduced prices. Sublease space asking rent going into 2021 at $67.59 per square foot on average with the direct asking rent at $80.09 price per square foot. This is an indicator of overall market leasing activity.
Despite the decline in activity and the sluggish start to the year, office owners are optimistic due to a recent upward turn in leasing activity. In the second quarter, office leasing activity totaled 1.1 million square feet, more than twice the previous quarter’s leasing activity, according to a market report from Savills. More than half—59%—of the leasing activity was for new locations, and 61.5% of the leases were signed by tech companies.
Despite the leasing activity, Savills called the market fundamentals “shaky at best.” The office vacancy rate is 26.3%, up from 13.5% in the second quarter 2020, and asking rents have fallen 8.5% to $72.55 per foot, down from $79.31 that same time last year.