Even as shoppers flock to the new IKEA on the 900 block of Market Street, the most prominent building on the block is headed for foreclosure, a cautionary tale of San Francisco’s famously topsy-turvy rush-in and rush-out economy.
Having bought the building for $62 million at the height of Mid-Market Street’s tech-fired renaissance, the owners Bridgeton Holdings have defaulted on a $45 million loan tied to 995 Market St., a 16-story, 90,000 square foot office building that anchors the corner of Sixth and Market, according to market sources.
The investor is more than 30 days delinquent on a $45 million loan, according to Morningstar, which cited servicer commentary. The loan, originated by LStar Capital Finance, is now under special servicing.
“The borrower has stated they will not be making any more payments,” special servicer Hudson Advisors said in an August note, according to Morningstar.
For those who have followed the ups and downs of Central Market Street over the past two decades, the trajectory of 995 Market St. is especially heart-wrenching.
In 2002 the tower was mostly vacant and its exterior was falling apart, with so many heavy, metal panels crashing down to the sidewalk below that the Department of Building Inspection issued a half dozen notices of violation.
By 2013, however, as companies like Twitter started moving into Mid-Market, the building had attracted Burning Man parent company Black Rock City as an anchor tenant and had sold for $16.4 million to Long Market Property Partners, who put another $18 million into it during a full renovation.
The investment paid off: Long Market leased 75% of the building to WeWork, inked a deal with CVS for the groundfloor, and in February of 2012 sold it for $62 million.
Now WeWork has terminated its lease and CVS is long gone, having closed its shop because of rampant theft and unsafe conditions of the street.
The imminent foreclosure means that it’s likely that the building will remain mostly vacant — which will make it hard for the numerous shuttered storefronts on the block to attract tenants, even with IKEA drawing lines of shoppers, according to Tenderloin Housing Clinic Executive Randy Shaw.
“The vacancy of that 16 story building is killing retail in the entire geographical area,” said Shaw. “It’s devastating to the entire Mid-Market recovery.”
Given that buildings in the heart of the financial district have sold for about $200 a square foot in recent months, it’s likely that 995 Market St. is worth less than $100, or 80% less than the 2013 price, according to some brokers.
CBRE commercial real estate broker Kyle Kovac, who was part of the team that brokered the sale of the building in 2016, said the fate of 995 Market will be shaped by whether the city is able to get a grip on the drug dealing and trash-strewn encampments that tend to proliferate in the alleys and on the corners in that neighborhood.
“The Mid-Market has faced more challenges than any other submarket in the city since the arrival of the pandemic,” said Kovac. “Significant policy changes from City Hall will be necessary from City Hall in order to fuel its recovery.”
While the departure of WeWork has left it more than 80% vacant, the structure itself is in great shape. Long Market, the group that sold it in 2016, put about $200 a square foot into its renovation and tenant improvements. It’s also possible that the 16-story tower — which has 4,000 square foot floor plates, great views and ample natural light — could be a candidate for a residential conversion.
“The building looks better now than it has since I have been in San Francisco,” said Shaw, who has worked in the Tenderloin since 1980. “The question is: How do we get it occupied?”
Long Market Property partner Justin Shapiro, who renovated the building and brought in WeWork, said he wouldn’t write off the structure — or the neighborhood. He and his partners recently paid $17.6 million for 40 Jessie St. — a 50,000 square foot historic building a block from 995 Market St. — and “continue to look for similar buying opportunities as believers in the San Francisco office market long term.”
He said, “The news about struggling assets in this downturn is unfortunate but we feel this is the moment now for patient capital to reinvest in the City.”
40 Jessie St. in San Francisco sits behind the school's main Mission Street campus.
Office building sales have become a rare thing in San Francisco these days, but a small downtown property near Salesforce Park traded hands last week.
Long Market Property Partners, a real estate investment company based in San Francisco, closed Friday on its purchase of 40 Jessie St., a 48,500-square-foot building. The seller, Golden Gate University, listed the building last fall.
Long Market paid $17.6 million, or roughly $362 per square foot, for the Financial District property in partnership with DRA Advisors, public records show.
The building, which sits in an alley behind GGU's Mission Street campus, once housed GGU's Student Services Center.
Long Market said in a statement that 40 Jessie is fully leased and was recently renovated. The buyer described the property as a "research and development office building in the heart of San Francisco's Transbay neighborhood."
"We are excited to invest in a building that offers this unique combination of laboratory and office space in a prime downtown San Francisco location," said Justin Shapiro, a principal at Long Market, who added that its existing improvements are "well-suited to the current climate in San Francisco, where older office inventory is being re-imagined for more modern tenant uses."
"We believe that this building is unique within downtown San Francisco and will be a formula others will follow in the coming years as older office assets are repurposed," Shapiro said.
GGU did not immediately respond to a message seeking comment on Wednesday. I first reported last year that the university listed 40 Jessie and its larger Financial District campus at 536 Mission St. for sale. That 210,000-square-feet building has been occupied by GGU since 1964. Both buildings are located within a block of Salesforce Tower; Eastdil Secured is handling the property listings for GGU. There's no word yet on the status of the other dispositions.
At the time, GGU President David Fike told me that the effort to sell the properties stems from a continued shift to hybrid and remote learning, though Fike said the private nonprofit university will remain in San Francisco.
GGU, which traces its roots to the early 1850s, offers undergrad and graduate degrees in professional careers such as accounting, taxation, law and business. It has total enrollment of 3,387, according to its website.
SAN FRANCISCO, March 20, 2023 – JLL Capital Markets announced today that it has closed the sale of 25 Orinda Way, a boutique, Class A, office building located in the San Francisco suburb of Orinda, California.
JLL represented the seller, Long Market Property Partners. Volwood Management acquired the asset.
Built in 1974 and renovated in 2018, the three-story 25 Orinda Way is currently 91% leased and serves a diverse mix of tenants in professional and medical services, biotech and public utilities. The building features exposed brick and timber and upgraded HVAC and lighting.
Situated at 25 Orinda Way, the asset benefits from excellent proximity to nearby residential communities and area amenities along with a close commute to downtown Oakland and San Francisco.
The JLL Capital Markets team was led by Senior Director Erik Hanson, Senior Managing Director Rob Hielscher, Senior Director David Dokko, Managing Director Adam Lasoff, Associate Mike Matera and Analyst Caroline Reynolds. In addition, leasing advisory services were overseen by Knute Bucklew, Head of Agency Leasing for the Eastbay at JLL.
“Despite a time of uncertainty in the overall office market, we are continuing to see interest from investors pursuing high-quality assets in markets with strong demographics, abundant amenities and quality of life. Long Market Property Partners has executed on a thoughtful business plan with the asset and we are excited for new ownership’s opportunity for continued success,” said Hanson.
JLL Capital Markets group is a full-service global provider of capital solutions for real estate investors and occupiers. The group’s in-depth local market and global investor knowledge delivers the best-in-class solutions for clients — whether investment and sales advisory, debt advisory, equity advisory or a recapitalization. The firm has more than 3,000 Capital Markets specialists worldwide with offices in nearly 50 countries.
For more news, videos, and research resources on JLL, please visit our newsroom.
About Long Market Property Partners, LLC
Long Market Property Partners is a privately held real estate company that takes a hands-on approach to owning and operating real estate. The company seeks investments that allow it to leverage experience in capital markets, leasing, property management, capital improvements and tenant relationships to mitigate risk and deliver exceptional returns to investors.
The principals of Long Market have a track record acquiring and repositioning office and retail assets across multiple west coast markets and bring a thoughtful blend of both institutional and entrepreneurial strategies to each investment.
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $20.9 billion, operations in over 80 countries and a global workforce of more than 103,000 as of December 31, 2022. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated.
The investor purchased a 22,043-square-foot research and development property in Berkeley, California, to convert into a life science use.
Long Market Property Partners has acquired a 22,043-square-foot research and development property at 1440 4th St. in Berkeley, California, with plans to convert the property into a life science use. The investor secured $9.75 million in financing to purchase and reposition the asset.
The property was built in 1948 as a warehouse facility, but it is currently an obsolete single-story property with 18-foot clear heights. It also has unique architectural features like polished concrete floors and high wood barrel truss ceilings as well as 32 parking spaces. Long Market will make improvements to the property to make it more appealing to life science users, which are hungry for supply in the Bay Area.
There is tremendous demand in the Berkeley Area for life science product. The San Francisco area continues to be a top market for life sciences. It is one of the three legacy markets, along with Boston and San Diego, where industry clusters are most long standing, and where a vast inventory of lab properties already exist. Those three markets continuing to rank as the top life science hubs nationally, according to research from JLL.
The market activity is so strong that it has spilled into surrounding submarkets. Emeryville, for example, is becoming an emerging life science hub. With proximity to San Francisco and Silicon Valley, which have a low vacancy rate of 5.7%, Emeryville is attracting biotech and life science companies looking for quality, available space. More than 150 biotech companies are already located in Emeryville, including Novartis, Bayer Healthcare, Amyris and Zymergen.
Long Market’s Berkeley property is well located to take advantage of the demand. It is near highly educated labor and UC Berkeley and a pool of life science employers. In addition, the property is near US-80 and rail service at both the North Berkeley BART station and the Berkeley Amtrack Station, as well as retail and entertainment amenities.
Long Market secured a three-year through Ready Capital for the purchase. Jordan Angel, a managing director on JLL’s capital markets debt team, led the borrowers representation to secure the funds.
(EDITOR’S NOTE: According to public property documents and reporting by The Mercury News, the property traded in an all-cash transaction for $33 million. The buyer is TRC Retail.)
Concord, CA – A rare sale of an entire city block of urban retail has traded in the heart of downtown Concord, CA, one of the San Francisco Bay Area’s strongest growth markets. Commonly known as The Shops at Todos Santos Plaza, the property is comprised of 15 retail and restaurant tenants immediately adjacent to the historic downtown Concord square.
The seller, a partnership between Paragon Commercial Group and Long Market Property Partners, had recently completed a redevelopment of the property which was 100% leased at the time of the sale to a strong lineup of daily needs and restaurant tenants.
“This was a bittersweet sale for our team. It is a prestigious property and we strongly believe in the continued growth fundamentals of this location,” said Justin Shapiro, principal at Long Market Property Partners, based in San Francisco.”
“The retail momentum for urban street retail in this corridor will continue to strengthen making this a key market for retailers expanding in the east bay,” added Patrick McGaughey, Director of Investments for Paragon Commercial Groups Northern California office.
The seller was represented by NKF Vice Chairman Nicholas Bicardo, Managing Director Brandon Rogoff, and Senior Managing Directors Forest Gherlone and Mike Zystra.
“Todos Santos represented an opportunity for only the second time in over 100 years to acquire this entire city block in an urban market that is experiencing tremendous growth”, said Bicardo. The Property is also located within walking distance to BART and is occupied by “daily needs tenants” with favorable lease economics offering strong NOI growth over the next ten years.”
Chipotle Mexican Grill opened its 2,500th restaurant at The Shops at Todos Santos in Concord, CA. The downtown retail center underwent a renovation and improvement program by Long Market Property Partners’ and Paragon Commercial Group.
That encompassed adding several restaurants, including Ramen 101, Burgerim and Fire Wings. The block-wide property is located directly across from Todos Santos Plaza, Concord’s primary entertainment and social hub, and is three blocks from the Concord BART Station.
Tabassum Zalotrawala, who recently joined Chipotle as chief development officer, says, “The opening of Chipotle’s 2,500th restaurant is a milestone and a testament to our great growth trajectory. I feel lucky to have come on board during such an exciting time for the company, and am thrilled to continue working with the team to develop new ideas that reinforce growth, and increase access and convenience for our guests.”
The Newport Beach, CA-based quick serve restaurant plans to open 140 to 155 new restaurants this year.
NKF Capital Markets has brokered the $49 million sale of 939 Ellis Street, a seven-story, 87,190-rentable square-foot office property with 53 parking stalls in the up-and-coming Van Ness Corridor of San Francisco. The property, built in 1961, recently underwent a major renovation by the seller with base building improvements providing a blank canvas for prospective tenants to create their own identity.
NKF Capital Markets’ San Francisco investment team of Executive Managing Directors Kyle Kovac, Michael Taquino and Daniel Cressman and Associate Director Mandy Lee represented the seller, a joint venture of Seattle-based Columbia Pacific Advisors and San Francisco-based Long Market Property Partners. The buyer, The Seavest Investment Group, assisted by Meridian, represented itself.
939 Ellis Street is an institutional-quality building featuring a 4,460-square-foot patio roof deck, unobstructed views of downtown San Francisco, spacious meeting spaces, and structured parking garage with first level parking.
Some of the key drivers for the growth of the Van Ness Corridor include: more than 9,000 residential units either under construction, approved, or proposed along Van Ness Avenue and in adjacent submarkets; California Pacific Medical Center’s (CPMC) new state-of-the-art hospital at Van Ness and Geary (less than three blocks from 939 Ellis); and the nearby transit with MUNI bus lines, BART, and the future Van Ness Bus Rapid Transit providing access to the entire Bay Area.
The Shops at Todos Santos, Concord Four new eateries are coming to a new Shops at Todos Santos development at the corner of Salvio St. and Galindo St. in Concord where La Sen Bistro and Concord Jewelers used to be:
(EDITOR’S NOTE: The seller of the property was Long Market Property Partners, which had owned the building since July of 2015. Long Market had paid $10.1 million, or $210 per square foot, to acquire the 3-building office and R&D campus.)
48,000 SF Office and R&D Campus Located Near the University of California at Berkeley
Berkeley, Calif., March 1, 2018 – Thor Equities, a global leader in urban real estate development, leasing and management, has closed on the acquisition of 600 Bancroft Way in Berkeley, California for $17.5 million, company executives announced today.
The property is comprised of three buildings totaling more than 48,000 square feet of office and R&D space. Tenants in the mostly occupied space include Bonneville Labs, Lifelong Medical Care, Blue Current, and Lumiphore. Overlooking San Francisco Bay and the Golden Gate Bridge, the 2.9-acre waterfront parcel also features a furnished outdoor courtyard, and direct access to the adjacent Aquatic Park featuring a playground, rowing, hiking and picnic areas.
“Berkeley is an ideal location for office and R&D space due to its proximity to the University of California and numerous life science companies, along with easy transportation access to the entire Bay Area,” said Joseph Sitt, CEO of Thor Equities.
In addition to the University of California and the Lawrence Berkeley National Laboratory, the property is close to a number of green technology, biotechnology research and pharmaceutical companies such as Bayer Healthcare, Novartis, Grifols and Siemens.
600 Bancroft Way is near Interstate 80 and public transit systems. Numerous coffee shops, restaurants and retail shops are also within easy walking distance including Apple, Anthropologie and Madewell.
Thor Equities owns a number of properties throughout California including 634 Second St., 152 Geary St. and 444 Jackson St. in San Francisco; 145 N. Robertson Blvd., 142 S. Robertson Blvd. and 900 S. Santa Fe Ave. in Los Angeles; 19000 Homestead Road in Cupertino; 385 17th St. in Oakland; and the recently acquired 130-150 Shoreline Dr. in Redwood City.
About Thor Equities
Thor Equities is a leader in the development, leasing and management of commercial, residential, retail, hotel and mixed-use assets in premier urban locations worldwide. The company maximizes returns for investors by recognizing a property’s potential, reducing operating expenses, increasing tenant satisfaction, and leveraging market trends to maintain a long-term competitive edge. Thor Equities is also the exclusive representative of global retailers through Thor Retail Advisors, a premier leasing agent for marquee properties worldwide. For more information, visit www.thorequities.com.
Concord, CA (December 18, 2017) — San Francisco-based Long Market Property Partners, LLC today announced the $8.7 million purchase of Civic Executive Park at 1470 Civic Court in Concord, CA. A private seller sold the property to Long Market through Beckett Capital.
"The acquisition of Civic Executive Park was a unique opportunity to acquire a well-located Class B office building in a City on the verge of major growth over the next ten plus years. The property has been well kept by the prior owners, but also has the potential for cosmetic upgrades that will solidify this asset as one of the best Class B buildings in the market.” said Justin Shapiro of Long Market Property Partners."
Comprised of more than 51,000 square feet of office space on 3 floors, Civic Executive Park, is centrally located off of three major highway arterials and is close to amenities such as Todos Santos Plaza, Sun Valley Mall, Willows Shopping Center and the recently developed Veranda mixed use retail project.
The purchase of 1470 Civic Court marks the second acquisition Long Market Property Partners has recently been associated with in Concord, having also purchased the retail Shops at Todos Santos through a separate affiliate in late 2016.
About Long Market Property Partners, LLC
Long Market Property Partners is a privately held real estate company that takes a hands-on approach to owning and operating real estate. We seek investments that allow us to leverage our experience in leasing, property management, capital improvements and tenant relationships to mitigate risk and deliver exceptional returns to investors. The principals of Long Market have a track record acquiring and repositioning office and retail assets across multiple west coast markets and bring a thoughtful blend of both institutional and entrepreneurial strategies to each investment.
Beckett Capital is a boutique commercial real estate services firm specializing in urban redevelopment and repositioning opportunities in the San Francisco Bay Area. It concentrates on disposition and acquisition strategies for clients that focus on ground-up residential, mixed-use, hotel and office product.
The most populous city in Contra Costa County, Concord might be known for its open spaces, relatively affordable real estate and scorching summers, but if the city’s economic development trends continue, it could known for something else: High tech firms, new development projects and trendy restaurants. It looks as if Concord could be the new Walnut Creek.
“The big story is the growth,” said Pedro Garcia, an economic development specialist for Concord. “We have seen the demand for office and housing space increase significantly. The city is taking advantage of its core strengths, including competitive prices, location and transit, like our two BART stations.”
That growth has taken the form of a number of new development projects and more businesses moving to Concord, including The Veranda, a $100 million, 375,000-square-foot retail development schedule to open in the fall; more apartment units by the Concord BART station; more restaurants moving into downtown Concord; and the largest East Bay office lease of 2016. This is in addition to the proposed redevelopment of the decommissioned Concord Naval Weapons Station by Fivepoint, which will add over 12,000 homes and 6.1 million square feet of commercial space over the coming decades.
In addition to Lennar, Legacy Partners and SyRES are bullish on housing in Concord. The developers are building a 134-unit apartment building near Concord BART station. An adjoining parcel has plans for 180 additional units. Other housing projects include Nicholson Development Properties’ Concord Village proposal for 231 units near BART and Argent Concord LLC’s proposal for 171 units at 2400 Willow Pass Road.
The city’s relative affordability is drawing residents and office tenants to Concord. In May, office lease rates averaged $22.32 per square foot, according to listings on LoopNet. Home prices are also attracting workers: The median list price for a home in Concord is $548,400, or $350 per square foot, compared to $1,189,100 at $497 per square foot in San Francisco, according to Zillow data from April 2017. Renting is also cheaper in Concord, with the median at $2,272, nearly $1,200 less than San Francisco.
This spring, Concord welcomed its first high-tech firm, Honor HomeCare, a digital health startup focused on seniors. After raising $42 million in Series B funding, the company opened an office near Todos Santos Plaza. A year ago, it also welcomed JetSuiteX, which offers public charter flights from the East Bay to Burbank and Las Vegas.
Traditional businesses are also coming to Concord. Wells Fargo is centralizing its existing East Bay offices, bringing 2,200 employees to 285,000 square feet in Swift Plaza, the East Bay’s biggest lease of 2016. Meanwhile, the Veranda retail project expects to have a positive economic impact.
“Our project will provide at least another $3 million a year in benefits to the community in terms of sales tax and property tax,” CenterCal CEO Fred Bruning told the Business Times in June 2016.
City officials have expressed concern that the new project will cannibalize tenants from existing retail locations, but for now, business at the nearby Sun Valley Mall is strong.
“Occupancy was at an all-time high last year,” said Kim Trupiano, marketing sponsorship director at Sun Valley.
In part, Concord is booming now because the rest of the Bay Area has already exploded.
“The trends go Silicon Valley to San Francisco, to Oakland, then Walnut Creek, then Concord,” said Garcia.
The hot new thing
Concord has seen an increasing amount of development and business move into town, especially in the past year.
April 2016: Wells Fargo signs an eight-year lease at Swift Plaza for 282,238 square feet that 2,200 employees are expected to work at.
August 2016: Legacy Partners and SyRES acquire 134-unit apartment building near Concord BART station. An adjoining parcel has plans for 180 additional units.
November 2016: Long Market Property Partners and Paragon Commercial Group purchase Todos Santos, more than 40,000 square feet of retail spread over 2 acres.
Four restaurants move into downtown Concord.
April 2017: Six Flags Corp. takes over operation of Waterworld California.
Fall 2017: The Veranda’s $100 million retail center and $5 million park are scheduled to open.
3-Story, 27,088 Sq Ft Building
Orinda, CA – January 18, 2017 – Cushman & Wakefield has acted as the exclusive advisor on the sale of the Vintage Office Building at 25 Orinda Way, a 3 – story, 27,088 Square Foot, office building. The seller was Sleepy Hollow Investment Company, who sold the East Bay asset to Long Market Property Partners. The $8,450,000 sale was part of Sleepy Hollow Investment Company’s recent Bay Area Portfolio sale, and was one of 14 buildings involved.
Leading the advisory team for the seller on behalf of Cushman & Wakefield’s Capital Markets were Eric Fox, Michael Speers, and Steve Hermann. Local market advisory was provided by Cushman & Wakefield’s Whiff Collins.
“The Vintage Office Building offered an immediate upside investment opportunity with below market rents and 80% near-term rollover,” stated Michael Speers, Executive Director, Cushman & Wakefield. “Long Market Property Partners was an ideal buyer with investor capital that could tolerate rollover risk to capitalize on rising rental rates,” Speers added.
“We are delighted to join the Downtown Orinda community through the purchase of 25 Orinda Way,” stated Justin Shapiro, Principal of Long Market Property Partners. “The project is one of few office buildings in the surrounding areas that offer tenants both first class creative office finishes and close proximity to retail amenities and BART”.
25 Orinda Way is located in the heart of one the East Bay’s most desirable and affluent residential communities. Its unique design features include creative brick and timber spaces and abundant interior and exterior glass.
About Cushman & Wakefield
Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live. Our 43,000 employees in more than 60 countries help investors optimize the value of their real estate by combining our global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $5 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.
About Long Market Property Partners, LLC
Long Market Property Partners, LLC is a privately held real estate company that takes a hands-on approach to owning and operating real estate. We seek investments that allow us to leverage our experience in leasing, property management, capital improvements and tenant relationships to mitigate risk and deliver exceptional returns to investors. The principals of Long Market have a track record acquiring and repositioning office and retail assets across multiple west coast markets and bring a thoughtful blend of both institutional and entrepreneurial strategies to each investment. To learn more visit www.longmarketre.com.
Sleepy Hollow Investment Co. has sold a 14-building Bay Area office portfolio for $130 million.
The buildings, totaling 661,319 square feet of office space, are located in the East Bay, Sonoma County and Santa Clara. Five different buyers purchased the buildings: Eagle Canyon Capital, Square I, STG Group, Long Market Property Partners, and the Lindsey family trust. The portfolio sale, which closed last year, was among the largest transactions by square footage in the Bay Area. The properties are 92 percent occupied and include 132 tenants. Brokers Eric Fox, Michael Speers and Steve Hermann of Cushman & Wakefield represented the seller in the deal. Whiff Collins of Cushman was also an adviser on the transaction.
"I'm very proud of a terrific 25 year run with this portfolio for my investors and my team. We achieved incredible returns despite several difficult market cycles, and we thrived in multiple locations. Our tenure culminated in a timely exit, with a great execution by the Cushman team to quality buyers who will do a wonderful job with these great properties going forward," said Adam Henderson, CEO of Pleasant Hill-based Sleepy Hollow Investment Co. in a statement.
Speers said that the properties traded between $145 to $325 per square foot. The buildings have an average rent around $25 per square foot, about 15 percent below market rate, he said. Tenants include financial firms, law firms and insurance companies. Both a single buyer for the portfolio and multiple buyers were considered for the properties. Multiple buyers were ultimately seen as a better choice for both risk and pricing.
“Marketing a geographically diverse portfolio required our team to access both institutional and private capital markets. The marketing team’s ability to expand the buyer pool mitigated transaction risk and increased value,” Fox said in a statement.
Speers said that the Bay Area's strong economy continues to draw investors, but they are more careful given the duration of the current growth period. "Buyers are being more selective in what they pursue," he said. "The leasing market is still strong." The buildings sold include:
6375, 6377, 6379 Clark Avenue, Dublin, sold to Square I for a total of $10 million
6465-6557 Sierra Lane, Dublin, sold to Square I for $13.3 million
25 Orinda Way, Orinda, sold to Long Market Property Partners for $8.4 million
2300 Contra Costa Blvd., Pleasant Hill, sold to Eagle Canyon Capital for $24.5 million
18 Crow Canyon Court, San Ramon, sold to Eagle Canyon Capital for $10.6 million
2355 San Ramon Valley Blvd., San Ramon, sold to Eagle Canyon Capital for $2.9 million
2333 San Ramon Valley Blvd., San Ramon, sold to Eagle Canyon Capital for $9.2 million
3510 Unocal Place, Santa Rosa, sold to STG Group for $9.4 million
3140 Alfred Street, Santa Clara, sold to the Lindsey family trust for $9 million
1600 Riviera Avenue, Walnut Creek, sold to Eagle Canyon Capital for $32 million
Concord, CA (November 7, 2016) — Newmark Cornish & Carey today announced the sale of the Shops at Todos Santos, a full city block of retail in the heart of downtown Concord, California. A private family sold the property to a partnership between San Francisco-based, Long Market Property Partners, LLC and prolific retail development firm Paragon Commercial Group, LLC.
“For Long Market and Paragon, the Shops at Todos Santos represented a unique opportunity to acquire a full city block in a prime downtown growth retail market with potential for upgrades that will solidify this asset as the dominant retail destination in downtown Concord,” said Justin Shapiro of Long Market Property Partners.
Paragon Commercial Group’s Director of Investments for Northern California, Patrick McGaughey, further commented, “We are excited to work with the City of Concord to augment the wonderful improvements they have already made to the downtown corridor. This property has always been one of the main community gathering areas in the city and we will be investing additional capital to ensure it remains a long-term point of pride for the city and the community.”
The family originally purchased a portion of the site in 1901 to open Concord’s first bank and aggregated the remainder of the block over time. Bordered by Mt. Diablo Street, Willow Pass Road, Galindo Street and Salvio Street, the property directly fronts on Todos Santos Plaza, Concord’s primary entertainment and social hub located just two blocks from the downtown Concord BART station.
Comprised of more than 40,000 square feet of retail space on 2.15 acres, the Shops at Todos Santos is currently 100 percent occupied by 15 local, regional and national tenants including Peet’s Coffee™, The Old Spaghetti Factory, CREAM Inc., Capriotti’s, Bollinger Nail Salon, Naan ’n’ Curry, Half Price Books and Chevron Corporation.
“Considering the infill location and future development potential, the offering generated significant interest within the investment community,” said Forrest Gherlone, a Newmark Cornish & Carey senior managing director who handled the disposition together with Mike Zylstra, Keith Marr and Zachary LeBeouf. Gherlone added, “Downtown Concord is experiencing a renaissance, with multiple large multi-family developments underway, and this block of truly irreplaceable real estate is located at the epicenter of this activity.”
About Newmark Cornish & Carey A dominant regional real estate force since 1935, Newmark Cornish & Carey has an expansive reach as part of Newmark Grubb Knight Frank, one of the world’s leading commercial real estate advisory firms. Regionally, Newmark Cornish & Carey has more than 280 agents in 13 strategically located offices throughout Northern California, creating a powerful platform from which to deliver superior services locally, while upholding its core values of integrity and knowledge. For further information, visit www.newmarkccarey.com.
About Newmark Grubb Knight Frank Newmark Grubb Knight Frank is one of the world’s leading commercial real estate advisory firms. Together with London-based partner Knight Frank and independently-owned offices, NGKF’s 14,100 professionals operate from more than 400 offices in established and emerging property markets on six continents.
With roots dating back to 1929, NGKF’s strong foundation makes it one of the most trusted names in commercial real estate. NGKF’s full-service platform comprises BGC’s real estate services segment, offering commercial real estate tenants, landlords, investors and developers a wide range of services including leasing; capital markets services, including investment sales, debt placement, appraisal, and valuation services; commercial mortgage brokerage services; as well as corporate advisory services, consulting, project and development management, and property and corporate facilities management services. For further information, visit www.ngkf.com.
NGKF is a part of BGC Partners, Inc., a leading global brokerage company servicing the financial and real estate markets. BGC’s common stock trades on the NASDAQ Global Select Market under the ticker symbol (NASDAQ: BGCP). BGC also has an outstanding bond issuance of Senior Notes due June 15, 2042, which trade on the New York Stock Exchange under the symbol (NYSE: BGCA). BGC Partners is led by Chairman and Chief Executive Officer Howard W. Lutnick. For more information, please visit www.bgcpartners.com.
About Long Market Property Partners, LLC Long Market Property Partners is a privately held real estate company that takes a hands-on approach to owning and operating real estate. We seek investments that allow us to leverage our experience in leasing, property management, capital improvements and tenant relationships to mitigate risk and deliver exceptional returns to investors. The principals of Long Market have a track record acquiring and repositioning office and retail assets across multiple west coast markets and bring a thoughtful blend of both institutional and entrepreneurial strategies to each investment.
About Paragon Commercial Group, LLC Paragon Commercial Group LLC was strategically formed by an institutional team of retail executives to capitalize on opportunistic investment into value-add acquisition and tenant-driven development opportunities. As a fully integrated retail development firm, with over 60 years of collective retail experience and a retail resume in excess of 12 million square feet of neighborhood and community centers, Paragon’s deep market knowledge and tenant relationships provide a constant grass roots pipeline of acquisition, development and redevelopment opportunities. Paragon enters into each development with the expectation of long-term ownership and therefore acquires and constructs only the highest quality retail product. This commitment to quality extends to each constituency involved in the development process including, investors, government agencies, lenders, property owners, tenants and clients.
Comprised of more than 40,000 square feet of retail space on over 2 acres, the Shops at Todos Santos is currently occupied by 15 local, regional and national tenants including Peet’s Coffee, The Old Spaghetti Factory, CREAM, Capriotti’s, Bollinger Nail Salon, Naan ’n’ Curry, Half Price Books and Chevron Corporation.
San Francisco-based real estate firm Long Market Property Partners and retail development firm Paragon Commercial Group have purchased the Shops at Todos Santos, a full city block of retail in downtown Concord, for an undisclosed amount.
Newmark Cornish & Carey brokered the deal, which included 12 parcels of fully-leased retail space across the street from Todos Santos Plaza, Concord's cultural center.
Comprised of more than 40,000 square feet of retail space on over 2 acres, the Shops at Todos Santos is currently occupied by 15 local, regional and national tenants including Peet’s Coffee, The Old Spaghetti Factory, CREAM, Capriotti’s, Bollinger Nail Salon, Naan ’n’ Curry, Half Price Books and Chevron Corporation.
"It is a unique opportunity to get a full city block, and this is well-positioned for growth over the longterm," said Forrest Gherlone, a Newmark Cornish & Carey senior managing director. “Downtown Concord is experiencing a renaissance, with multiple large multi-family developments underway, and this block of truly irreplaceable real estate is located at the epicenter of this activity.”
As of now, Long Market and Paragon have no definitive plans for expanding or renovating the property, but the potential is there. The block is zoned for mixed-use, so the new owners could potentially build housing and office space as well as more retail.
"We were drawn to and inspired by the story of downtown Concord," said Justin Shapiro of Long Market. "There is a lot of flexibility with the site and our goal is to improve the project – maybe with some renovation and new tenants if vacancies arise – and drive foot traffic to the area."
The acquisition comes at a time of major growth for Concord. The city’s population grew 3 percent between 2010 and 2015 and is expected to grow 3.5 percent more by 2020. To accommodate the growing population, the city will soon get around 500 units of new housing between the Concord Village and Renaissance Square developments, both of which are expected to wrap up in the next year.
Concord's retail scene is also getting a makeover. A new 375,000-square-foot, $100 million shopping center is slated to take over the former Chevron office park, and Diamond Boulevard outside of the city’s downtown is seeing a boom in restaurant growth.
Just outside of Concord, the decommissioned Concord Naval Weapons Station is getting a $4 billion makeover in the form of 12,200 homes and 6.1 million square feet of commercial space, plus parks, utilities, schools and other facilities. Up to 30,000 people could eventually live there.
Since the implementation of the payroll tax exemption program in 2011, the Mid-Market neighborhood has become a stronghold for tech companies.Twitter, Uber, Square, Spotify, Dolby, Zendesk and Yammer have all set up shop there. In fact, in the past three years, more than 3 million square feet has been absorbed by new tenants there. Vacancy is currently just 1.6% and rental rates have increased by 40%. The influx of companies and workers precipitated the next stage of growth in Mid-Market. More than 7,000 residential units are currently under construction, approved or planned, while retail and hotel development is also active. One building in the thick of it, 995 Market Street, has sold to Bridgeton Holdings for $62 million. Long Market Property Partners and Columbia Pacific Advisors sold the building to Bridgeton, according to NGKF Capital Markets, part of Newmark Cornish & Carey.
“We are extremely pleased to have acquired this high-quality asset in downtown San Francisco’s Mid-Market District,” said Atit Jariwala, CEO of Bridgeton Holdings. “995 Market Street represents our third major San Francisco acquisition and we look forward to continuing to grow our portfolio in this vibrant city.”
The 15-story property has a commanding corner presence as the tallest building within a two-block radius offering 360-degree views of San Francisco. The office building is fully leased with collaborative co-working space leader, WeWork, occupying the majority of the space.
Justin Shapiro, principal of Long Market Property Partners, tells Globest.com: “From early on in our efforts to purchase the project, we felt that 995 Market could be renovated to become a unique office asset that both benefited from and contributed to a neighborhood burgeoning with revitalization of all asset classes including retail, hotel, residential and office. The fact that no one asset class is driving all this development really speaks to the mixed use nature of Mid-Market.”
In 2013, Long Market Property Partners and Columbia Pacific Advisors jointly purchased 995 Market Street and began a comprehensive redevelopment of the property which included significant base building upgrades, a seismic retrofit, exterior improvements and upgraded tenant finishes. Newly renovated, the property was well positioned to attract substantial interest from both domestic and international buyers.
“The successful renovation and repositioning of 995 Market is a key part of the turnaround of one of the fastest growing neighborhoods in San Francisco,” said Todd Seneker, managing director of real estate equity at Columbia Pacific Advisors.
Kyle Kovac, Newmark Cornish & Carey senior managing director, marketed the property for sale with Daniel Cressman, executive managing director, and Michael Taquino, senior managing director.
“995 Market Street is a prime example of the radical transformation that has taken place in the Mid-Market neighborhood over the past few years. Since 2012, more than $1 billion of commercial redevelopment has been invested into the area, creating the most dynamic submarket in San Francisco,” said Kovac.
Bridgeton is also set to open its San Francisco office this spring to focus on sourcing and executing investment opportunities on the West Coast. Akash Sharma, managing director, will head up the new office.
New York City-based Bridgeton Holdings has paid $62 million to acquire the office building in San Francisco located at 995 Market Street. The price per square foot for the 91,308 square foot property comes in at $681.
“We are extremely pleased to have acquired this high quality asset in downtown San Francisco’s Mid-Market District. 995 Market represents our third major San Francisco acquisition, and we look forward to growing our portfolio in this vibrant city,” says Atit Jariwala, chief executive officer for Bridgeton Holdings in a prepared statement.
The investor is now planning to open a new regional office in San Francisco this spring; the exact location hasn’t been established yet. This office will focus on the sourcing and executing investment opportunities on the West Coast. Akash Sharma, a managing director with the company, will head up the office.
The seller of 995 Market was Long Market Property Partners and Columbia Pacific Advisors. The sale of the asset was done with the assistance of NGKF Capital Markets, part of Newmark Cornish & Carey.
“The sale attracted both domestic and international capital sources looking for a stabilized asset to own in San Francisco,” says Kyle Kovac, senior managing director for Newmark Cornish & Carey in its San Francisco office. He marketed the property for sale along with Daniel Cressman, executive managing director, and Michael Taquino, senior managing director.
“From day one we believed that with the right capital plan and vision, 995 Market had the potential to be one of the premier office assets in its neighborhood,” said Justin Shapiro, principal of Long Market Property Partners in a statement.
The property is now 100 percent occupied. The main tenant in the property is WeWork, which signed a 70,000 square foot lease in 2014 that runs for 12 years. Another major tenant is CVS Healthcare. According to the offering document for the property, average rents in the property are $15 below current market rents, and around 12,000 square feet of the space is significantly below market rates.
995 Market is located with the Mid-Market sub-market in San Francisco. This part of the city has seen a strong amount of leasing activity over past few years. During the last 36 months, over three million square feet of leases have been completed in the sub-market and rental rates have increased by 40 percent. The rental rate growth is not over. Rental rates in Mid-Market are still 30 percent below the peak levels reached in 2000, leaving room for additional growth.
The sub-market has also seen a great deal of re-development capital come into the area. “995 Market is a prime example of the radical transformation that has taken place in the Mid-Market neighborhood over the past few years. Since 2012, more than $1 billion of commercial redevelopment has been invested in the area, creating the most dynamic sub-market in San Francisco,” said Kovac.
Bridgeton Holdings now owns three assets in San Francisco. The other two are 3180 18th Street and 300 Third Street.
Berkeley, CA — Long Market Property Partners today announced the acquisition of 600-626 Bancroft Way in Berkeley, CA, a picturesque 48,000 square foot, 3-building office and R&D campus. The property abuts Aquatic Park in West Berkeley with views of both the Berkeley Marina and San Francisco skyline in the distance. The eclectic West Berkeley market is home to numerous bio-technology companies along with several notable multi-family developments in addition to the prominent 4th Street retail corridor.
The property was acquired by Long Market Property Partners with the goal of continuing to provide quality office and R&D space for both large and small companies looking to make the Emeryville / West Berkeley market their home. According to Justin Shapiro, Principal of Long Market Property Partners.
“We are excited to be part of the growing West Berkeley market which is increasingly catering to biotechnology companies with a steady stream of ideas and innovation coming out of the University of California at Berkeley. It’s a project we feel will enjoy long term success given the serene setting on Aquatic Park lake coupled with the walkability to numerous shopping and dining options on 4th Street.”
John Norheim and Steve Smith of Norheim & Yost represented the seller, a private local holding company. Long Market Property Partners represented itself in the transaction. Steve Smith comments, “We’re thrilled to have the guys at Long Market involved with this dynamic West Berkeley community of property owners”
We’ve already told you Mid-Market is undergoing a massive transformation. Bisnow gathered a group of S.F. elite to tell us what separates the area from the rest of the city.
1. Unconventional Projects Tidewater Capital managing principal Craig Young told attendees of Bisnow’s Future of Mid-Market event at Hotel Nikko on Friday that his firm jumped on the unique opportunity to turn 1028 Market into a bustling food hall while the site goes through entitlements for 186 rental units. The shuttered billiards hall, vacant for seven years, was a source of negative energy for the neighborhood, but the demand for food options was definitely there (you have to walk six blocks to get a decent salad or sandwich), and companies like Zendesk were moving across the street, he says. It may be unconventional to invest in a building that will be torn down in a few years, but Craig says the benefits of creating a gathering place were worthwhile. Here’s a look at more projects that will transform Mid-Market.
2. Affordability Issues Tenderloin Neighborhood Development executive director Donald Falk says building more is not enough when it comes to dealing with S.F.’s affordable housing crisis. He says if we don’t find a way to maintain a 30% affordable balance, in 30 years we will be horrified by a city occupied exclusively by the rich. It’s important to make investments now to address displacement later on.
3. Offshore Money HFF associate director Adam Simon says just a few years ago you never would have heard “foreign capital” and “Mid-Market” in the same sentence. That’s changed big time, he says, citing last year’s trade of 1019 Market to Deutsche Bank. He revealed his team recently got the listing to sell 1390 Market.
4. Less Pressure Amy Cohen, the City’s point person from the Office of Economic and Workforce Development (OEWD), says the neighborhood isn’t experiencing the same challenges as the rest of S.F. (no-fault evictions have stayed the same but are up 2.5 times across the rest of the city). Since 2011, 20 buildings in the neighborhood that were vacant are now full. The big challenge during the boom the past two years, she says, is how to keep the momentum of Mid-Market development going.
5. Market Timing Essel Environmental Engineering & Consulting president Nik Lahiri, who moderated, asked Long Market Property Partners principal Daniel Goldberg what the landscape of Mid-Market looked like before it was a cool place to be. In 2001, Dan says, all foot traffic stopped at 5th and everyone kept calling it the next neighborhood to come (but it wasn’t coming). Fast forward to 2013 when he bought 995 Market, and Dan admits he was “late to the party.” The Warfield had already traded, Twitter was occupying, and the vision was already there.
6. Creative Ownership Don thinks the answer to the affordability crisis is nonprofit-owned housing—but it’s a long answer. It’s not going to provide relief tomorrow, he says, but it could protect tenants from the displacement we are seeing in the Mission and SoMa. There are groups like the AIDS Foundation, which has a long-term lease at 1035 Market and are positioned to maintain their home, whereas others with shorter-term leases are getting priced out of the market.
We’ve got the scoop on where the co-working giant is landing in S.F. next.
Bisnow‘s market sources tell us WeWork signed the 12-year lease for space at 995 Market. We were the first to tell you about the pending deal last month (we were also the first to report on its lease at 535 Mission last year). The company, co-founded by Adam Neumann, has been very active across the country as of late, including a giant 240k SF deal at 85 Broad St in NYC last month and a40k SF lease in Santa Monica in December. The 95k SF Midmarket building was originally constructed in 1907, but owners Long Market Property Partners are working to reposition the property. In fact, principal Daniel Goldberg just sent us a rendering of the planned reno (below).
The deal is definitely a reason why you’ll want to attend Bisnow‘s Future of MidMarket event March 13. Dan is a panelist but didn’t respond to a request for comment regarding the lease. Jeff Moeller, Peter Conte and Zac Monsees of DTZ repped WeWork on the deal but had no comment at this time. NY-based WeWork has 28 locations worldwide, with plans to grow by 50% by year’s end. It was recently reported to be worth around $6B.
San Francisco – Mid-Market is red-hot with office building rehabs, but will exposed ceilings and a roof deck be enough to lure a technology company a half-mile north on Van Ness Avenue?
The seven-story 939 Ellis St. will begin leasing next month for 90,000 square feet of refurbished office space in what is the current home of the Bay Area Air Quality Management District. The district plans to occupy the building through 2015.
Long Market Property Partners, which bought the 116,000-square-foot building last spring from the district in a joint venture with Columbia Pacific Partners, had said they envisioned senior housing on the site. Now, they’re diving into the weakest office submarket in the city, but think they could be a bargain for a company that needs to expand in San Francisco by the start of 2016.
“We’re going to be the cheap alternative. We are a secondary location, we understand that,” said DTZ senior vice president Jeffrey Moeller, who is brokering the building.
The Civic Center-Van Ness office submarket had the highest Class A vacancy rate (11.2 percent) and lowest asking rate ($50.38 a square foot) in the city last quarter, according to research by CBRE.
The Ellis Street building, on the edge of Civic Center and Western Addition neighborhoods, also won’t have Muni and BART stations nearby, but a new bus-rapid-transit system is on the way. (Moeller said there will be plenty of parking, though.)
Moeller said the submarket will soon turn into a “relief valve” for a marketplace heated up by technology tenants, which gobbled up 91 percent of the 3.6 million square feet of office space leased last year. That demand drove office rents up 14.2 percent last year, according to CBRE.
“There will be spillover from downtown (and) South of Market areas because there has to be. People won’t necessarily go to Oakland en masse because they still need to be located in San Francisco for business and employees,” Moeller said.
Real estate investors have also targeted old, Class C buildings for renovations lately now that companies like Uber, Twitter and Zendesk have sprouted in old Market Street offices.
A building that’s fully refurbished with new lobbies, elevators, HVAC and 11-foot ceilings could be alluring for a potential 939 Ellis St. tenant. A brochure for the building also pitches 90,000 square feet of “open plan office space” with “building signage available” at the front of the building.
Moeller said the developer hasn’t finalized a budget for renovations for the building, which was constructed in 1961.
Tech companies in the market for 70,000 to 100,000 square feet include GoPro, Castlight, Citrix, Advent Software and Marin Software, according to a market source who didn’t want to be identified.
Moeller said brokers aren’t just focusing on tech companies though. A medical company could be a good fit because California Pacific Medical Center will sit nearby, he said. Condo developments from Oyster Development and Trumark Urban are also in the works a few blocks away.
Long Market Property Partners and Columbia Pacific Partners bought the building for $16.4 million from Bay Area Air Quality Management, according to Real Capital Analytics. Long Market’s other main investment in the area is 995 Market St.
Todd Seneker, managing director of Columbia Pacific Advisors, told the Business Times in May that opportunities for the building ranged from “a strong office renovation opportunity to a change of use to senior housing, a segment that is underserved in downtown San Francisco.”
Oakland — DeRose & Appelbaum & Long Market Property Partners today announced the $8.4 million sale of 1918 Lakeshore Avenue in Oakland, CA. This 38 unit, six story apartment building is located along Lake Merritt with unobstructed views of both the lake and Oakland skyline.
The joint venture between the two firms bought 1918 Lakeshore in 2013 with the goal of leveraging the property’s unique frontage on Lake Merritt, which has recently been transformed through a multi-million dollar decade long overhaul. After maximizing the value of the building through a thoughtful capital improvement program, including the addition of a zip car hub, the property was better situated to benefit from the strength of the growing Oakland rental market. According to Santino DeRose, Principal of DeRose & Appelbaum, “We are thrilled with the performance of the asset which benefited greatly from the rising tide of the San Francisco apartment market. The timing of our acquisition coupled with basic building upgrades made for great value creation in a short investment period.”
The property was purchased by a private investor. The buyer was represented by Barry Bram of TRI Commercial and the seller represented by DeRose & Appelbaum.
Columbia Pacific Advisors, a Seattle-based investor, picked up 939 Ellis St. in San Francisco, a 116,000-square-foot office building on that site that could be redeveloped into senior housing. p
Bay Area Air Quality Management District is the seller in the deal and plans to occupy the building through 2015. Terms of the deal were not disclosed, but industry sources estimated the price was near $23 million or close to $200 per square foot.
“We are excited about our purchase of 939 Ellis St. at a compelling basis in a neighborhood that continues to evolve and thrive as a true mixed-use district,” said Todd Seneker, managing director of Columbia Pacific Advisors. “This investment offers multiple market opportunities that we will evaluate, ranging from a strong office renovation opportunity to a change of use to senior housing, a segment that is underserved in downtown San Francisco.”
The property is near the intersection of Ellis and Van Ness Avenue, an area near Cathedral Hill where buyers and developers have been busy lately. California Pacific Medical Center is underway on a $2 billion hospital rebuiild nearby.
The Business Times reported earlier this week on the sale of the KRON TV building at 1001 Van Ness to housing developers. Condo developments from Oyster Development and Trumark Urban are also in the works a few blocks away.
The 939 Ellis deal is the second in San Francisco for Columbia Pacific Advisors, which bought 995 Market St. in a joint venture with Long Market Property Partners in April 2013. Columbia Pacific Advisors manages more than manages $850 million worth of assets in a variety of investments.
“The Van Ness corridor, as much as its changing, has never been a major office market,” said Mike Taquino, a broker with Newmark Knight Frank Cornish & Carey Commercial. But, now that the Mid-Market office market near the intersection of Van Ness and Market has low vacancy and residential development is booming, Columbia Pacific Advisors has options for 939 Ellis.
Long Market Property Partners will help manage and lease the 939 Ellis property as well as explore the possibility of turning into senior housing.
Jeff Moeller, Peter Conte, and Zac Monsees of Cassidy Turley represented Columbia Pacific Advisors was represented and will stay on to handle leasing. BAAQMD was represented by Tom Christian and Ric Russell of Cassidy Turley
A JV between DeRose & Appelbaum and Long Market Property Partners snapped up 1918 Lakeshore Ave, a six-story, 38-unit apartment building located along Lake Merritt in Oakland. The building was constructed in 1926 and is 100% occupied (and, despite its age, ghost-free), with all rents below market, DeRose & Appelbaum principal Santino DeRose told us yesterday. The “tremendous gap” between San Francisco and Oakland rents should provide substantial opportunity for appreciation and value, he says.
The partners paid $5.5M for the property, which boasts views of both the lake and city skyline. A capital improvement program is in the works to preserve the building’s vintage character and capture rental upside as units turn over. (Although the ornate lobby, above, doesn’t look too shabby.)
Oakland — DeRose & Appelbaum & Long Market Property Partners today announced the $5.5 million acquisition of 1918 Lakeshore Avenue in Oakland, CA. This 38 unit, six story apartment building is located along Lake Merritt with unobstructed views of both the lake and Oakland skyline.
The asset was purchased in a joint venture between the two firms with the goal of leveraging the property’s unique frontage on Lake Merritt, which has recently been transformed through a multi-million dollar, decade long overhaul. Plans for the property are to implement a maintenance and capital improvement program to preserve the vintage character of the building and capture the rental upside as apartments turn over. According to Santino DeRose, Principal of DeRose & Appelbaum, “We are pleased to continue our pursuit of well-located Oakland assets. We believe that the tremendous gap that exists between San Francisco and Oakland rents provides us with substantial opportunity for growth, appreciation, and overall value.”
About DeRose & Appelbaum DeRose & Appelbaum, Inc. is a San Francisco-based real estate company with commercial leasing, property management, and redevelopment/re-positioning expertise. Although focused on commercial infill redevelopment projects, with an emphasis on well-located, neglected, urban retail properties, DeRose & Appelbaum, Inc. avails itself of its resources and maintains the flexibility to invest opportunistically in all real estate asset classes. www.deroseappelbaum.com
About Long Market Property Partners Long Market Property Partners is a privately held real estate company that takes a deeply hands-on approach to owning and operating real estate. We seek investments that allow us to leverage our experience in leasing, property management, capital improvements and tenant relationships to mitigate risk and deliver superior returns to investors. The principals of Long Market have a track record acquiring and repositioning assets across multiple west coast markets and bring a thoughtful blend of both institutional and entrepreneurial strategies to each investment. www.longmarketre.com
It’s that time again—graduation days at schools, including higher ed in the CRE biz. Yesterday, we chatted with Justin Shapiro of San Francisco-based Long Market Property Partners, who graduated this month from the USC Dollinger Master of Real Estate Development (MRED) program.
Justin and a partner formed Long Market. The company, together with an equity partner out of Seattle, just closed on 995 Market St and is renovating and repositioning the office building. Justin, who graduated from Berkeley in 2001, has worked in the CRE industry in San Francisco for the past 12 years. He was interested in doing some entrepreneurial real estate ventures and enrolled in USC’s MRED program last June to sharpen his development skills, commuting between San Fran and LA for 11 months. (Wait, 11 months each way? The rumors about the 405 are true.)
SAN FRANCISCO-Those who follow @GlobeStcom on Twitter and @GlobeStLIVE may have seen a post teasing the announcement, but GlobeSt.com has learned that 995 Market St. in San Francisco has changed hands. The property was acquired by 995 Market Street SF Investment LLC, a joint venture between Columbia Pacific Advisors, based in Seattle and San Francisco-based Long Market Property Partners.
“We are excited to be purchasing this asset, especially in the midst of all the positive developments taking place in Mid-Market” Justin Shapiro, principal of Long Market Property Partners tells GlobeSt.com.
The 16-story office tower is located in the city’s mid-Market corridor on a prominent corner location at Sixth Street just steps from public transportation. Plans are to immediately implement a significant capital improvement program that includes renovating the interiors to appeal to creative and high tech tenants, according to Newmark Knight Frank Cornish & Carey Commercial capital group managing director Kyle Kovac, who represented the buyer with executive managing director Daniel Cressman and managing director Mike Taquino.
Kovac tells GlobeSt.com that “the building has a commanding presence on the corner of Sixth and Market Streets and is the tallest tower along the Mid-Market corridor.”
He explains that “995 Market St. represents one of the few remaining truly value-added investment prospects left in downtown San Francisco. The buyer was able to acquire the asset at a very attractive basis.”
While those involved couldn’t disclose pricing, the building reportedly sold for $17 million.
GlobeSt.com learns that New York City-based Mission Capital Advisors raised structured debt and equity from Seattle-based Columbia Pacific Advisors on behalf of Long Market Property Partners in order to close on the acquisition.
The long-neglected office building at Sixth and Market that houses Burning Man has sold for nearly $17 million, another example of institutional capital pouring into the Mid-Market neighborhood.
SF Investment LLC, a joint venture between Seattle-based Columbia Pacific Advisors and San Francisco-based Long Market Property Partners, has closed on the acquisition of 995 Market St. The price was just under $200 a square foot.
“We are excited to be purchasing this asset, especially in the midst of all the positive developments taking place in Mid-Market,” said Justin Shapiro, a partner with Long Market Property Partners.
The brokers were Kyle Kovac, Daniel Cressman and Mike Taquino of Newmark Knight Frank Cornish & Carey Commercial.
The buyer plans to immediately start a capital improvement program that includes renovating the interiors to appeal to creative and high-tech tenants, according to Kovac, who said, “995 Market St. represents one of the few remaining truly value-added investment prospects left in downtown San Francisco. The buyer was able to acquire the asset at a very attractive basis,” said Kovac.
More than $1 billion in capital has poured into Mid-Market, a neighborhood that has struggled with crime and vacant storefronts for decades. There are currently about 2,000 new residential units under construction in the neighborhood as well as new corporate headquarters for Yammer, Dolby, Twitter and Square.
“We are seeing tangible evidence of the Mid-Market transformation almost weekly with high-profile tenants, landlords and developers all committing to the neighborhood,” said Kovac. The building at 995 Market is about half-vacant. The anchor tenant is Black Rock City, the corporation behind the Burning Man Festival, which has 20,000 square feet.
The payroll tax exemption aimed at keeping Twitter in San Francisco won’t have much of a direct benefit for property owners other than Shorenstein Properties, which owns the 1 million-square-foot complex the micro-blogging firm is flocking to. But that doesn’t mean that other Mid-Market office landlords don’t love it.
The payroll tax break, which exempts new employees from the city’s 1.5 percent payroll tax, will be applied to 3.3 million square feet in 73 buildings along Market Street and the Tenderloin, according to Jones Lang LaSalle research.
But only a handful of those properties — seven buildings including Market Square, Fox Plaza and 1035 Market St. — are spacious enough to draw employers big enough to take advantage of the break. The payroll tax exemption only applies to companies with payrolls higher than $250,000 and only applies to employees hired after April 19 of this year, the day the Board of Supervisors passed the measure.
The exemption doesn’t apply to the 1 million-square-foot 1455 Market St. building, a data center Bank of America is likely to vacate in the next few years; nor does it cover the 350,000-square-foot 1275 Market St., which the State Comp Insurance Fund is moving out of this year. The buildings at 1145-1155 Market St., which the Public Utilities Commission will leave when it moves into its new headquarters on Golden Gate Avenue next year, is also not part of the tax break area.
The seven larger properties most impacted have about 1.3 million square feet of vacancy, two-thirds of which is at Market Square. The new law will ultimately help bring tenants to all the Mid-Market buildings, according to Justin Shapiro of Seligman Western Enterprise Ltd. Seligman Western owns 1035 Market St., a blue Class A building that was recently filled up after having been empty for five years. Shapiro said Twitter’s decision to migrate west along Market will have a similar impact to the one that Orrick, Herrington & Sutcliffe LLP had in 2005 when it abandoned the traditional financial district for Foundry Square, which at the time was not on the radar for most professional services firms.
“We are not directly impacted today because we are full and none of our tenants are projecting major growth,” he said. “But I think Twitter is going to expand the South of Market to Mid-Market and bring a lot of value to the Mid-Market.”
David Addington, who owns 982-988 Market St. and 1028 Market St., is attempting to sell commercial condominiums at 988 Market St., the historic Warfield building. None are in contract, he said, but interest has picked up since the Twitter negotiations became public.
“For us to get a little positive economic incentives for business to locate here doesn’t seem unreasonable given that we are providing the solution for so much else the city needs.”
In the long run, the attention the Twitter deal brought to the area can only be beneficial, he added.
“That these few blocks are being discussed on the front of the business pages more than any other blocks in the city means that people are thinking about it,” he said.