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May 20, 2014
Moody's Big Lease?
We have the word on the biggest S.F. tenant wanting to make the jump across the Bay as of late: Moody's (we are guessing their credit score is OK enough to qualify for a new lease... we'll have to ask Standards & Poor's).
Sources tell us the ratings agency has an LOI to lease 80k SF in Oakland's 1221 Broadway, aka the Clorox Building, and will vacate the Orrick Building at 405 Howard (at least it's already used to being around sterile types). The reasoning for the exodus out of the city is the same one we keep hearing: rents are just too darn high. Pair that problem with larger blocks becoming very scarce and it's a no-brainer more S.F. tenants are considering Oakland space on the BART line for just $36/SF. The savings can be huge and many of the employees live in the East Bay, so it makes looking at that market an easy decision, one broker tells us.
Westcore bought the 24-story tower in late 2012 from the cleaning company, whose HQ still occupies over half of the 520k SF building. Cushman was hired soon after the purchase to market a big chunk of space up for grabs inside. (Now JLL reps the building and Cushman reps Moody's.) The potential move is still a ways away; Moody's downtown S.F. lease doesn't expire until mid-2015. The LEED Platinum building built in 1976 sits on the corner of 12th and Broadway in the heart of Oakland's City Center. Sources say Moody's is one of a few tenants working on deals in the building.
Lee & Associates' Home Run Month
Dave McCarty (a former pro baseball player we profiled back in April) and the 15 other brokers in Lee & Associates' Oakland office are on a winning streak this spring. Since May 1, the firm has done at least four sizable deals in East Bay. Last week Terreno Realty Corp, a notoriously quiet buyer in the Bay Area, closed on a 130k SF industrial site in San Leandro as an investment deal at 2054-2070 Burroughs Ave. Also in San Leandro, Lee & Associates repped buyer K.I.S. in the purchase of a 13k SF industrial building at 591 Montague St. Lee also repped landlord Cabot Properties in a 81k SF, 47-month industrial lease renewal with Celestica LLC at 40737 Encyclopedia Cir in Fremont.
Lee & Associates' managing principal Craig Hagglund (pictured with CEO Jeff Rinkov) hopes momentum continues on the sales and leasing sides. Craig just teamed up with Dave to rep Visual Supply Co (VSCO) for their new 24k SF HQ lease at 1500 Broadway in Oakland. The building, which was built in 1923, sits blocks from BART in the emerging Uptown neighborhood. VSCO co-founder and CEO Joel Flory wanted to stay in Oakland because it's got his favorite art galleries, museums, restaurants, and the A's call Oakland home (FYI: Dave used to play for them). The new office will act as a multi-purpose workspace, with an art gallery (also if you work there they might consider putting your art on the refrigerator), multiple meeting areas, outdoor deck, and flexible workstations. This month the company closed on a $40M Series A round of financing.
Activity this spring has been brisk, Dave tells us, and Lee is seeing a lot more S.F. companies looking for space in the East Bay. He expects that to continue throughout the rest of the year as more deals get inked. East Bay sales have really picked up, he says, but the problem is there's not enough inventory. (They're scoopin' 'em up faster than they can be produced, it's like trying to feed a seal.) A 8,300 SF brick and timber building at 130 Webster in Jack London Square hit the market this spring for a whopping $300/SF, and he hears the deal is in escrow. In April Lee took an office condo out to market for $2.2M (pictured). The 7,300 SF unit at 283 4th sits in the old Allied Paper Building, and the ground-floor unit has great natural light and could go the retail or office route. The creative open concrete building, which boasts 18-foot ceilings, has had decent tour activity so far, Dave says.
Mission's New Retail Corner
How fitting it is to learn about a hot incoming retail property during ICSC week. We found out the Mission's 3140 16th St just sold to a private investor for $8.7M. Its underperforming life as an old auto body shop wasn't the best use for that street, says Urban Group's Louis Cornejo, who repped the seller (the city wanted the property to go the retail route anyway). The 16th Street strip has transformed big time over the years to welcome more foot traffic (as opposed to the wheel traffic that would utilize a body shop), thanks to new food options like Thai and hipster staples like Kilowatt next door. The property has tremendous character with high ceilings and is a real gem for that corner, Louis tells us. At 20k SF, it could easily house four or five stores, he guesses. Stay tuned for more Mission news later this week.
Day 3: ICSC
Chicago Title VP Bruce Carlson just sent us this shot from the convention center floor (which we believe counts as a selfie). Today's the last day of the ICSC showcase, and he and many others are starting the trek home. Last night was SD Deacon's 29th Survivors Dinner at Benihana, an annual conference tradition attended by some heavy hitters from the Western US. (ICSC is all about survival of the fittest; some are still recovering from Eastdil's big soiree at the Hyde in the Bellagio Sunday night and gearing up for Colliers' closing party tonight.)
Bruce is flanked here by Regency Centers SVP of investments Pete Knoedler, Transwestern managing director Edward Del Beccaro, independent developer Ryan Nickelson, and Merlone Geier managing director Greg Geertsen.