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SAN MATEO, CA-San Mateo Executive Park, a vacant 270,000-sf office campus here has changed hands for $86 million or $318 per sf. A partnership of Lowe Enterprises and O’Connor Capital Partners acquired the six-building park from Interland Cos. Neither company would confirm the sale price, which was provided to GlobeSt.com by a local source familiar with the transaction.

San Mateo Executive Park sits on 23 acres at the intersection of Highway 92 and West Hillsdale Boulevard, a hilltop site in northwest San Mateo that overlooks San Francisco Bay. The new owners plan to spend another $16 million modernizing the facility to class A standards and converting a data storage building to office space.

The six-building development was previously the regional headquarters for VISA, which relocated between 2002 and 2004 to new digs in Foster City. The property was tied up with a homebuilder for some time after VISA left but the would-be buyer could not attain the density it necessary to make the project pencil. When it came back to market, it attracted a couple of dozen office investors instead of condominium developers.

Five of the six buildings range from 38,0000 sf to 67,000 sf, the other is 9,000 sf. One of the buildings is a 38,000-sf data storage facility that will be converted to office with the addition of a new glass curtain wall. Other small buildings that served the data center will be removed to create additional parking. All building systems will be upgrades, exteriors will be modified, and lobbies will be refinished with stone and wood.

Lowe Enterprises Real Estate Group SVP Mike Sanford says the Peninsula area office market, which hasn’t seen new construction for the past five years, is steadily improving, with rising demand for large blocks of space. Given the size of the buildings, the development lends itself to both a single user and multiple single-building users, he says.

The project is expected to get under way in the next month of two. O’Connor Capital Partners principal O’Connor Capital Partners principal Marty Caverly says the partnership will be able to complete the renovation and accommodate tenancy within 12 months. The result will be a big block of space coming to market well ahead of projected ground-up developments that are in the pipeline, he says.

Given recent comparable rental rates ranging from $3.45 per sf to more than $4 per sf, the asking rent for the renovated San Mateo Executive Park will be “north of $4 per sf,” Sanford says. Looking further out, Sanford says the site has room for additional development but that such a project is made more complex because the unused portion of the site has steep topography.

Lowe has engaged Korth Sunseri Hagey Architects for the property’s new design and The Guzzardo Partnership for landscape design. BCCI Construction has provided pre-construction services for the construction project.

O’Connor Capital Partners is a privately held, independent real estate investment firm focused on principal investing through private equity funds. Lowe is a Los Angeles based, real estate investment, development and management firm.

In San Francisco’ Mission Bay Area, Lowe is under construction on a 300,000-sf building that will be ready for occupancy in early 2008. Also, on assignment for Aegon, Lowe is spearheading the entitlement of a residential high-rise located adjacent to the landmark Transamerica Pyramid.

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