X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

NOVATO, CA-A Disney-type ending is in sight for Michael Barker’s $150-million Hamilton Landing project. Next year, 10 years after acquiring a 28-acre piece of the former military base here, his company Barker Pacific will break ground on the final stage of the redevelopment, a new 58,000-sf, environmentally friendly office building at the entrance to the property, which is home to seven historic airplane hangars totaling 400,000 sf.

Thanks to a long-rumored and recently consummated lease, the only two hangars that hadn’t been renovated are well on their way to becoming the new home of ImageMovers Digital, a 3-D animation film studio that became part of Disney in February. With ImageMovers’ long-term lease for the two 60,000-sf hangars and the rest of the project filling up in 2006, Barker is confident about the final stage of development.

“The project is fully entitled so all we have to do is design review; we should be underway around mid-year [2008],” Barker tells GlobeSt.com. “We’re prepared to go forward without any signed tenants but we expect there will be some preleasing. Several existing tenants have expressed a desire to expand, which is why we felt it was important to get this underway as soon as possible.”

Hamilton Landing is part of the former Hamilton Air Force Base that Barker Pacific has turned into a hip home base for a variety of companies. In addition to ImageMovers, which is about to start production of its first feature film, “A Christmas Carol” starring Jim Carrey as Ebenezer Scrooge, other firms occupying the high-ceiling hangar space include video game makers Activision Publishing, Take Two Interactive and Nihilistic Software, and a division of Sony Imageworks.

“Hamilton is such a unique project it has become a very cool place to be for a lot of tenants, especially the creative types of fields,” Barker says. “There is strong employee interest in being in this type of environment.”

Backing that up, whenever there has been even a small availability this year, there has been a new tenant looking to come in, keeping the hangars 100% leased. Beyond the region’s digital arts center crowd, tenants include Oracle; retailer Smith & Hawken; shoe company Birkenstock; and Dragnet Solutions, a provider of biometric security systems for financial institutions.

Barker is not surprised by the demand space in the project, only that its stabilization has been a decade in the making. “It took a little longer than we expected,” he says. “We had a slow time after the dot-com bust.”

After acquiring the old abandoned hangars in 1998, it took Barker several months to decide what it wanted to do with the property. “We had the option of tearing the hangars down but I wanted to work with them,” Barker told GlobeSt.com earlier this year. “It was the more expensive option but we felt like in the end renovated historic structures would be more valuable and that the leasing activity would be such that it would be worth it.”

The first hangar was slated for speculative renovation when Smith & Hawken decided to lease much of it for its headquarters. “We did that first building as a test and were very fortunate to attract them,” Barker said. “They were the perfect lead tenant for this project because of the image they brought. They did a bang-up job on their space; we still show it during tours.”

By the time the building was completed in May 2000 it was fully leased, prompting Barker to kick off the renovation of three additional hangars on a speculative basis. Then came calling the dot-com bust and the recession.

In 2003, to get things rolling again, Barker Pacific took on an equity partner, Prudential Real Estate Investors. The renovation of the second, third and fourth hangars was completed in late 2003. Shortly thereafter, Barker Pacific sold two of three San Francisco buildings it owned and occupied and moved its headquarters into one of the three hangars.

Leasing began to pick up in 2005. The Marin Community Library opened a branch at the development and the YMCA opened a new gymnasium. “At that point we were creating more than just office space, we were creating a community destination,” Barkers said. “We also added a café and a dry cleaner.”

In 2006, Take Two Interactive, Birkenstock, Oracle, and Sony Imageworks signed on for hangar space. Come February 2007, there was only 1,200 sf available at Hamilton Landing’s then 286,000 sf of finished hangar space. A few months later, an insurance firm let its lease in Hangar 4 run dry after being acquired by another company. Another Hamilton landing tenant, Marin IPA, used the availability to downsize from a larger space in Hangar 4, opening up the 12,000-sf space for Activision’s Toys for Bob division, which signed on in June. A few months after that, another tenant vacated but was quickly backfilled by Dragnet Solutions, which leased 9,600 sf in October.

Around the same time Activision signed on, word began to leak about Disney’s interest in the two hangars that had not yet been renovated. Local sources told GlobeSt.com that negotiations were under way. Barker Pacific was mum on the subject.

In November, a Disney executive acknowledged its plans to relocate ImageMovers to Hamilton Landing to a local reporter. Last week, apparently still under a confidentiality agreement, Barker Pacific announced the leasing the hangars to “a major corporation.”

The hangars are slated to be ready for Disney to personalize in October 2008. Michael Barker declined to reveal the length of the lease or the negotiated lease rate, but did say that Disney is making a significant investment in the space and that the lease includes extension options.

“It’s a significant commitment on the part of the tenant as far as what’s being put into the building,” he says. “There will be significant upgrades and special features being installed for their very high tech and specialized use; they have some very high-tech type of equipment for their production space.”

While class A asking rents in Downtown San Francisco are upwards of $50 per sf per year, the most recent asking rents at Hamilton range were in the mid-$30s per sf, though Disney may be getting a bulk discount for becoming the development’s largest tenant. Six months ago, negotiated full-service lease rates were ranging between $30 and $35 per sf, Barker said, up from the mid $20s in 2003. Brokers Brian Eisberg, Haden Ongaro and Mark Carrington of Orion Partners Ltd. have the leasing assignment for Hamilton Landing.

In addition to the unique hangar space and relatively inexpensive lease rate, Disney also may have selected the region in general for its talent. San Rafael-based Ice Blink Studios, which did production work for “Beowulf,” is reportedly being folded into ImageMovers.

The total development cost of Hamilton Landing is approximately $150 million, including the cost to renovate the two remaining hangars and develop the new building at the entrance. Barker-Pacific’s investments have included a mix of longer-term and shorter-term holds. It’s unclear in which category Hamilton landing will end up. A sale or a recapitalization is likely in the next few years, however, because PREI typically only holds investments for between three and seven years before it liquidates the asset in order to pay off investors.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.