ROCKLIN, CA-Opus West has extracted from a 3.4-million-sf, 12-building multi-state portfolio offering a 450,000-sf class A office portfolio near Sacramento that it feels was being undervalued by potential buyers. “We didn’t feel any motivation to sell at a discount,” Don Little, head of the company’s Northern California operations, tells

Instead, Phoenix-based Opus West will continue to construct and lease up the Sacramento-area properties. The package includes Rocklin Corporate Center, which consists of two three-story, 109,000-sf buildings that will be completed at the end of the month; and two 120,000-sf buildings, one built and one not, at Gateway Corporate Center, the office portion of its mixed-use development at Truxel Road and Interstate 80 in north Natomas.

Little says the one building at Gateway Corporate Center, completed in December, is 40% leased to three tenants while the brand new Rocklin development has just signed its first tenant, RHL Design Group, to an 8,600-sf lease. The asking lease rate for the Gateway building is in the range of $2.30 per sf to $2.35 per sf per month, full service, and the asking rate for the Rocklin buildings are “a little bit more,” Little says. The rates assume at least a five-year lease and a tenant improvement allowance of between $35 per sf and $40 per sf.

Including the Sacramento properties, the multi-state portfolio Opus West put up for sale included a dozen buildings in California, Arizona and Texas. Some of the buildings were finished and leased, others were finished and had limited leasing, others were under construction and still others were approved but not yet built.

Little says Opus West received a “very robust” response from the capital markets but that in some cases, as with the Sacramento properties, “the pricing to us was not compelling.” In explaining the situation, Little says there is a new caution in the marketplace–both on the equity side and on the debt side–that he believes had a bearing on the capital markets’ response to the offering. Offers for other individual assets in the portfolio offering are still being evaluated on a case-by-case basis, he says.

“Cap rates have gone down so low and pricing so high on leased assets over the last 24 months that the capital markets have been buying empty buildings, preferring to take some leasing risk to achieve better returns,” Little says. “I think there is some new caution now as to leasing risk while investors and lenders try to gauge the direction of the market.”

The Rocklin office market is one of the busiest in the Sacramento region from a development standpoint and is also one of the smallest. As a result, it’s also sporting one of the region’s highest vacancy rates. The brokerage firm Cornish & Carey tracks 75 buildings there totaling 1.5 million sf, the vast majority of which is not class A office space. Vacancy at the end of the third quarter was slightly more than 366,000 sf or 23.5%, up 220 basis points since the end of June, with more than 600,000 sf still under construction. The average asking lease rate stands at about $1.70 per sf per month.

In the North Natomas area, C&C tracks 112 buildings totaling more than 3.65 million sf. The vacancy rate there is 679,000 sf or about 18.6%, up 70 basis points from the end of June. About 152,000 sf remains under construction in the submarket, according to C&C’s third quarter report.

In addition its existing properties here, Opus has future development plans in the Sacramento region. In October, it received approval from the Rocklin Planning Commission for three buildings totaling 400,000 sf near West Oaks Boulevard and Stanford Ranch Road. The City Council is expected to vote on the project before the end of the year. “The Roseville-Rocklin submarket is still one of the most compelling in terms of household incomes, college degrees and unemployment,” Little says.

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