San Mateo County Buys 208,000-SF Offices for $40M

SAN CARLOS, CA-The County of San Mateo has acquired the 208,000-square-foot Circle Star office complex from a joint venture of Emeryville-based Harvest Properties and Invesco Real Estate for $40 million. John Winther, founder and managing partner of Harvest Properties, describes the complex as a distressed asset that was vacant at the time of the sale.

In June 2010 Harvest Properties and Invesco bought the mortgage note on the two-building, class A office complex, which is at 1 and 2 Circle Star Way and includes a three-story parking garage with 400 spaces. The Harvest-Invesco partnership negotiated a deed in lieu with the borrower and took title in October 2010.

Acquisition of the property "enables the county to implement many of the recommendations in a draft facility master plan," according to an agenda from the San Mateo Board of Supervisors. The board said that, in the near term, the property provides interim space during renovation and replacement of other buildings housing county office space.

"On a long-term basis, the acquisition will enable the county to meet the master plan recommendation to eliminate a variety of costly leases in favor of occupying owned facilities," the board said. The projected cost of stabilized occupancy for the property is $2.25 to $2.35 per square foot per month, which is less than the current market for comparable office rents, according to county documents.

The sale of the San Carlos property to the county follows another office building sale by Harvest with partner Equity Office Properties in January. In that deal, Harvest sold a 255,000 square-foot headquarter campus and four-story parking structure in Walnut Creek to the California State Automobile Association, a property it originally developed as a build-to-suit for the company, which was completed in July 2009. Terms of that sale were undisclosed, but sources told GlobeSt.com at the time that it was a $128 million transaction.