There are more than three times as many AI companies (825) in the Bay Area as the next most concentrated market, New York City, with 237.

Even more so, Cushman & Wakefield anticipates a 200 percent growth for GenAI companies over the next two years in the Bay Area. In its latest report, AI Genesis | The Role of Generative AI in Transforming Bay Area CRE, Cushman & Wakefield broadly defines AI and includes semiconductor companies and other tech companies deploying AI.

Last year, 82 percent of global Gen AI venture capital landed in San Francisco.

Robert Sammons, Cushman & Wakefield senior research director and co-author of the report, told Commercial Property Executive that what had primarily started in San Francisco proper has spread more recently across the Bay Area region.

“Silicon Valley is certainly in the spotlight, largely because of AI divisions at the Big Tech players that are headquartered there, but also increasingly because of standalone AI companies popping up in the area,” Sammons said.

Given the depth of tech talent in the Bay Area, the focus will likely remain within the region, he anticipates. “However, like most tech sectors in the past, the GenAI phenomenon will likely spread to other markets as well—we already see that in major global cities such as New York and London. Thus far, it’s the search for talent leading that charge, but in the future, it could be about cost savings.”

READ ALSO: Why AI Firms Are Taking a Measured Approach to Office Leasing

Sammons said what surprised him most about the report was the sheer number of GenAI companies based in the Bay Area region—from the very early seed stage to the later stage to divisions of Big Tech.

“It’s still overwhelmingly a Bay Area phenomenon,” he said. “Also surprising was that there was more GenAI leasing activity in Silicon Valley than in San Francisco in 2024 as well as more unique job postings in Silicon Valley than in San Francisco in 2024.”

An office market rebound

The concentration of artificial intelligence companies in the San Francisco Bay Area is helping drive a market rebound, being a catalyst to lift the region of its real estate downturn, according to Avison Young VP Tyler Paratte, based in the San Francisco office.

“The correlation between companies receiving funding and leasing office space has drastically improved, leading to increased office attendance, revitalizing downtown cores and creating expanded opportunities for adjacent industries as these companies grow.”

Paratte said San Francisco has historically been a boom or bust market, heavily dependent on the technology industry.

“Not only does the data show the market is recovering, but there’s also a shared sentiment of being on the precipice of a boom, with AI being the engine that renewed momentum in the Bay Area,” he said.

AI firms’ leasing activity

JLL also sees a heavy influx of AI-based companies. Its data focuses on firms dedicated to the AI vertical. According to Chris Pham, JLL senior analyst, the Bay Area’s dominance in AI is echoed in JLL’s research in leasing activity and job posting trends.

He told CPE that new AI deals in the Bay Area comprise nearly 40 percent of the AI deal count this year, primarily from new startups. San Francisco alone saw 30 percent of the deal count last year from AI startups. Monthly AI job postings have nearly doubled year-over-year as companies emphasize AI positions.

He said AI companies occupy different property types beyond just office space, which accounts for 49 percent of leasing activity. Lab space accounts for 23 percent, flex space for 10 percent and industrial for 18 percent.

“AI is centered mainly in the Bay Area, eclipsing all U.S. and global markets for several reasons, including that it has the highest location quotient for AI in the U.S. at 9.5 (meaning AI talent is 9.5x more concentrated compared to the national average).

The Bay Area has 20.2 percent of U.S. AI talent, far ahead of Seattle (9 percent) and New York City (7 percent). The Bay Area is also near major AI research institutions, innovation companies and venture capital.

“[The Bay Area] has a strong talent pipeline from local universities, including UC-Berkeley and Stanford which are among the top 5 institutions for AI graduates,” Pham said.

The Bay Area has been a proving ground for tech startups for more than 30 years, so we’re excited to see the growing demand for AI, Katy Redmond, JLL senior managing & tech sector lead of leasing advisory, told CPE.

“This growth is a leading indicator for optimism for other AI hub markets for startups and innovation, such as New York City, Seattle and Washington, D.C.,” she said.

In 2024, AI companies leased 420,000 square feet in New York City, including new secondary offices opened by San Francisco-based startups.

The post How Generative AI Is Reshaping Bay Area CRE appeared first on Commercial Property Executive.

Brixton Capital has purchased Washington Square, a 215,506-square-foot shopping center in Petaluma, Calif., for $67.5 million. Paragon Commercial Group sold the asset in a transaction arranged by JLL.

Paragon had acquired the retail center from Fulcrum back in 2021 for $56.2 million, according to CommercialEdge data, with the help of a $34.2 million loan provided by Zions Bank.

Built in 1971 and renovated in 1996, Washington occupies some 20 acres at 301 S. McDowell Blvd. The new owner intends to upgrade the shopping center by improving the parking facilities, replacing the roofs, repainting the exterior and upgrading the HVAC systems. Brixton also plans to enhance the façade, renovate the landscaping and install new signage.

READ ALSO: What’s in Store for Retail in 2025?

The Safeway-anchored center boasts a diverse mix of regional and national tenants such as Staples, Panda Express, Harbor Freight Tools, Planet Fitness, Five Below, GameStop, Bank of America, Marin Health and Hallmark, among others. At the time of the sale, the property was 99 percent leased.

Washington Square is considered to be among the top 3 percent of U.S. neighborhood shopping centers based on annual visits and the busiest center within a 15-mile radius, according to JLL. The firm’s Managing Directors Bryan Ley and Eric Kathrein and Director Warren McClean brokered the transaction on behalf of Paragon.

San Francisco’s retail scene

In the fourth quarter of 2024, San Francisco’s retail sales witnessed a 5.2 percent year-over-year increase, reflecting a strengthening local economy. The metro’s transaction volume for last year reached $190.1 million, up 3.7 percent from 2023’s figure of $183.3 million, according to a recent Cushman & Wakefield report.

In addition, San Francisco’s retail market recorded a positive net absorption of 65,700 square feet in Q4, following eight consecutive quarters of negative absorption, the report also shows. As a result, the metro’s overall retail vacancy rate dropped to 7.7 percent by the end of last year.

The post Brixton Capital Buys San Francisco Shopping Center for $68M appeared first on Commercial Property Executive.

Alexandria Real Estate Equities, Uber Technologies and basketball team Golden State Warriors have secured a $500 million refinancing loan for two office buildings in San Francisco that serve as Uber’s headquarters. The trophy duo encompasses 586,208 square feet in the Mission Bay neighborhood.

Goldman Sachs and Barclays provided the five-year, fixed-rate, single-asset, single-borrower CMBS note in a deal arranged by CBRE. To secure the loan, the joint venture made a down payment of $100 million on the existing debt, a $600 million financing package originated by JPMorgan Chase & Co. in 2020, public records show. Wells Fargo served as trustee.

READ ALSO: San Francisco Office Construction Rebounds Amid High Vacancy

Uber and Warriors each have a 45 percent stake in the two office buildings, while Alexandria owns the remaining 10 percent. The duo is at 1655 and 1725 Third St., next to the Chase Center arena and about 3 miles south of downtown San Francisco.

Completed in 2021, the 11-story buildings feature 45,911-square-foot floorplates, as well as LEED Gold certifications. Amenities consist of a café, a smoothie bar, as well as landscaped roof decks, to name a few.

Rounding up Uber’s Mission Bay campus are the office assets at 1455 and 1515 Third St., which measure a combined 486,600 square feet and bring the property’s total square footage to 1 million. Uber subleased these buildings to OpenAI in 2023.

CBRE Executive Vice Presidents Brad Zampa and Michael L. Walker arranged the financing on behalf of the venture. According to the firm’s research, the non-agency loan closings for banks rose to 43 percent in December, up from the 18 percent registered in September.

San Francisco’s office market sees better days

San Francisco’s office scene sees signs of improvement. Although the market’s vacancy rate rose 240 basis points year-over-year, landing at 34.2 percent in December, the last quarter of 2024 marked the first three-month period of positive absorption recorded since 2019, according to a report by Cushman & Wakefield.

This shift toward 2024’s tail-end spurred lending revival in the metro. In January, a joint venture between Bain Capital Real Estate and Phase 3 Real Estate Partners Inc. obtained $484 million to refinance a three-building life science complex totaling 566,661 square feet in Brisbane, Calif.

The post Uber JV Lands $500M for San Francisco HQ appeared first on Commercial Property Executive.

Retail Opportunity Investments Corp.’s shareholders have approved the proposed merger with Blackstone Real Estate Partners X. The all-cash deal, valued at about $4 billion, is expected to close this week.

ROIC and Blackstone affiliates had entered the merger agreement back in November, under which Blackstone would acquire all outstanding shares of ROIC’s common stock at $17.50 per share. The transaction represents a 34 percent premium over ROIC’s closing share price in July 2024.

The retail REIT‘s portfolio included 93 grocery-anchored properties totaling around 10.5 million square feet across Los Angeles, San Francisco, Seattle and Portland, Ore., at the end of September.

Blackstone’s interest in ROIC underscores the positive outlook of necessity-based, grocery-anchored retail. This type of assets will continue to draw attention from both investors and developers, according to Commercial Property Executive‘s 2025 retail outlook.

The Blackstone-ROIC merger, up close

Following the merger’s completion, ROIC will become a privately held entity under Blackstone’s management.

The deal will involve a two-phase process. First, Montana Merger Sub II LLC will merge with ROIC’s operating partnership, Retail Opportunity Investments Partnership LP, according to the Trading Calendar. Then, Montana Merger Sub I Inc. will merge with ROIC, which will remain under Blackstone’s control.

The agreement also includes measures for handling ROIC’s restricted stock awards and long-term incentive program units, ensuring that eligible employees receive fair compensation as the company undergoes a change in ownership.

However, the transaction might still be subject to change, the same source shows. Should a superior offer emerge, ROIC’s board has the right to accept the new proposal and pay Blackstone a $78 million termination fee. On the other hand, Blackstone has guaranteed a $239 million reverse termination fee if it fails to complete the deal under the terms of the agreement.

The post Blackstone’s $4B Retail Deal Gets Green Light appeared first on Commercial Property Executive.

The 226,000-square-foot transaction worth roughly $375 million closed in late December. It is one of the largest biosciences transactions in the Peninsula market and the largest new lease overall in San Mateo County, the San Francisco Business Times reported.

The deal comes at a time when the life science market in the Bay Area is struggling with job cuts and an industry slowdown.

WRNS Studio designed Elco Yards, which sits at the edge of downtown along the Caltrain corridor.

Cushman & Wakefield’s Ben Paul, Mike Courson, with Newmark, and Matt Germino, with CBRE, represented Chan Zuckerberg in lease negotiations. Paul will handle marketing.

CZI is an entity formed by Meta Platforms CEO Mark Zuckerberg and his wife, Priscilla Chan.

READ ALSO: Life Science Trends to Watch in 2025

The asset’s top-quality microscopes were a key reason for CZI’s decision, as they could help the company better understand how cancer cells influence tumor growth.

Lay of the land

IQHQ acquired Elco Yards from Greystar in November 2021. The surroundings include about 670,000 square feet of life science and office space and hundreds of planned residential units within 8 acres.

CZI occupies one of Elco Yards’ four buildings, each averaging over 200,000 square feet. The organization recently completed a 111,000-square-foot expansion at its nearby headquarters. The company’s mission is to study and eradicate human disease.

Redwood City is home to several life science companies.

iO Life Science is a virtual incubator for medtech inventors, early-stage startups and entrepreneurs. It provides resources and expertise to help fast-track innovations from ideation to commercialization.

Redwood LIFE is an innovation-focused environment with lab space and amenities that inspire collaboration and breakthroughs.

180 Life Sciences is dedicated to addressing pathological inflammation and developing therapeutics to treat diseases caused by inflammation.

The post Chan Zuckerberg Institute Lease Boosts Bay Area’s Life Science Sector appeared first on Commercial Property Executive.

JPMorgan Chase has signed a renewal and expansion agreement totaling 280,000 square feet in San Francisco’s Financial District, the San Francisco Chronicle first reported.

The company will expand its footprint at Hines’ 560 Mission St. building by 60,000 square feet for the next five years.

The deal comes as the company is asking its employees to return to the office five days per week. The expansion will also also enable JPMorgan Chase to relocate some of First Republic Bank’s former employees to 560 Mission St.

Following JPMorgan Chase’s takeover of First Republic Bank, which occupied 750,000 square feet of office space in downtown San Francisco until 2023, the company is now focusing on consolidating its workforce from the former bank’s space at 1 Front St. to the expanded office space in the Financial District.

First Republic Bank occupied some 460,000 square feet at Paramount Group’s 1 Front St., of which JPMorgan Chase initially agreed to keep some 300,000 square feet. In 2024, JPMorgan downsized its space there once again, marketing for lease another 244,000 square feet, according to The Real Deal.

The Class A office building at 560 Mission St., also known as the JPMorgan Chase Building, totals 667,782 square feet. Other tenants here include Ernst & Young, which occupies 122,760 square feet, as well as Seyfarth Shaw, Munger, Tolles & Olson and Arup, according to CommercialEdge. It is close to multiple bus and light rail stops that allow easy access to the Union Square area and to downtown San Francisco, while being 13 miles from San Francisco International Airport.

Hines developed the 420-foot-tall office tower in 2002 and has since continued to own and operate the asset. Rising 31 stories, the high-rise includes 21,698-square-foot floorplates, 5,000 square feet of retail space and 117 vehicle parking spots. The amenity package includes on-site food and beverages services, events, access to an outdoor plaza, dry-cleaning services, valet parking and EV charging stations.

San Francisco’s office market shows mixed signals

Despite being among the priciest office markets in the U.S., San Francisco recorded one of the highest vacancy rates in the nation, according to a recent CommercialEdge report. The metro had a 28.2 percent vacancy rate as of November last year, marking a 400-basis-point increase year-over-year, far outpacing the 19.4 percent national average.

The on-going struggles in the office sector have impacted the San Francisco market throughout 2024. In May, Google announced plans to exit its 300,000-square-foot space at One Market Plaza, as its lease will expire this April. The 1.6 million-square-foot office complex is owned by Paramount Group.

However, the market is also seeing notable leasing transactions. In November, Alexandria Real Estate Equities Inc. announced a long-term deal with Vaxcyte Inc. in San Carlos, Calif. The tenant signed a 10-year lease for 258,581 square feet at the company’s two-building Alexandria Center for Life Science.

The post JPMorgan Chase Commits to 280 KSF in San Francisco appeared first on Commercial Property Executive.

Genesis, a joint venture between Bain Capital Real Estate and Phase 3 Real Estate Partners Inc., has obtained $484 million to refinance GENESIS Marina, a three-building life science complex totaling 566,661 square feet in Brisbane, Calif.

Brookfield’s Real Estate Credit group originated the loan, in a deal arranged by JLL Capital Markets.

The partnership had initially secured a $450 million construction loan originated in 2021 by Massachusetts Mutual Life Insurance Co., according to CommercialEdge. The note was to mature this year.

READ ALSO: The Most Active Life Science Markets in the US

Developed on an approximately 9-acre waterfront lot, the campus is close to U.S. Highway 101. The location on the 132-acre Sierra Point peninsula provides access to South San Francisco’s life sciences hub, as well as to the entire San Francisco area.

GENESIS Marina came online in December 2023 and includes three purpose-built facilities:

• 3000 Marina Blvd., a six-story building totaling 194,702 square feet
• 3300 Marina Blvd., a five-story building totaling 197,959 square feet
• 3500 Marina Blvd., a five-story building totaling 174,000 square feet

Including lab and office space, the Class A buildings feature floorplates ranging between 35,000 square feet and 43,500 square feet, passenger elevators, access to an on-site fitness center and a total of 1,037 parking spots spread across two levels. Other amenities feature a conference and event center, an on-site dining space, a cafe and an outdoor terrace, as well as EV stations, among others.

Life science real estate is struggling

According to a recent CommercialEdge report, the U.S. life science sector recorded just 948,000 square feet in construction starts at the end of last year, as opposed to more than 30 million square feet of lab space starting construction between 2021 and 2023. The difference in new projects is due to a record low lab space demand and a high volume of new supply.

San Francisco had 3.8 million square feet of office space under development as of November 2024, the report shows. The market ranked second on a national level after Boston (with 9.3 million square feet in the pipeline).

One notable life science project currently underway is IQHQ’s The Spur, a 330,000-square-foot building in South San Francisco, Calif. The developer topped out the first phase of the project in April 2024 and completion is expected later this year. The construction of the fully-electric life science building is backed by a $275 million loan.

The post Genesis Lands $484M for San Francisco Life Science Campus appeared first on Commercial Property Executive.

Despite a slow start in early 2024, San Francisco’s office construction activity picked up pace as the year progressed and became one of the largest in the nation. Developers are continuing to break ground on new developments, with most projects belonging to the life science sector, according to CommercialEdge data.

In contrast, the market’s sales activity was low through 2024, on par with 2023’s trend. Nevertheless, San Francisco emerged as the priciest office market in the U.S., surpassing Manhattan in terms of average sale price per square foot.

Second-largest pipeline in the country

As of November, 3.8 million square feet of office space was under construction across 20 properties in San Francisco, representing 2.3 percent of existing stock—above the national figure 0.8 percent. Among similar markets, Boston led the rankings with 3.6 percent, while San Francisco outperformed Los Angeles (0.7 percent), Manhattan (0.6 percent) and Chicago (0.3 percent). When adding office projects in planning stages, San Francisco’s share reached 9 percent, second after Miami (9.4 percent) and surpassing Boston (8.6 percent).

In terms of square feet underway, San Francisco had the second largest pipeline, after Boston’s 9.3 million square feet. The vast majority of the project rising within the market are life science developments.

Kilroy Realty’s Buildings D, E and F at Kilroy Oyster Point, slated to aid 865,000 square feet of space, is one of the largest projects under construction. A trio of life science buildings are part of the developer’s 3 million-square-foot waterfront project in South San Francisco. Construction commenced in 2022 and the delivery date was pushed to the end of 2025.

Another notable project is IQHQ’s The Spur, a 326,000-square-foot high-tech life science building at 580 Dubuque Ave. in the same submarket. Backed by a $275 million construction loan, the development topped out earlier this year and is expected to come online in early 2025.

Year-to-date through November, developers delivered 2.7 million square feet across 13 properties in the metro, representing 1.4 percent of total stock, while construction starts included 911,700 square feet of space across three properties—accounting for 0.5 percent of total stock.

Among notable properties that came online recently is Lane Partners’ Southline Building 1, a 375,000-square-foot life science building at 30 Tanforan Ave. also in South San Francisco. The property, financed by a $373 million construction loan, represents the first phase of Southline, an office and R&D development that will comprise up to 3 million square feet of space.

Office-to-residential conversions in San Francisco

The office sector is still struggling with high vacancies and office-to-residential conversions have emerged as an attractive option. Recently, CommercialEdge launched the Conversion Feasibility Index, a Yardi-powered tool that measures a building’s potential for a residential makeover.

The CFI score has three tiers, with Tier I office properties being the most suitable candidates. San Francisco had 112 properties—totaling 11 million square feet—in the Tier I category. Additionally, the metro had 295 office building in the Tier II category, totaling nearly 36.3 million square feet.

Work has begun on the repurposing of the historic Humboldt Bank Building. In October, Forge Development Partners started the conversion of the 1908-built mid-rise totaling 91,804 square feet. The developer plans to invest $70 million in the reimagining of the office building into a 124-unit residential community. The Seligman Group is the owner of the property that bears a CFI score of 91 points.

Prices high, low investment activity

Year-to-date through November, San Francisco’s office sector saw $747 million in deals, with 29 properties totaling nearly 1.9 million square feet changing hands. The metro continued last year’s limited sales activity: in 2023, transactions amounted to $722 million and 2.3 million square feet.

Among gateway metros, San Francisco’s total sales volume surpassed only Seattle’s ($687 million), while Manhattan led the nation with $3.8 billion in deals.

One of the priciest sales in San Francisco this year was the $222.2 million acquisition of Sand Hill Commons, a 133,000-square-foot, two-building office campus in Menlo Park, Calif. The buyer was Norges Bank Investment Management, that acquired a 97.7 percent ownership stake in the property from Clarion Partners and Invesco Real Estate.

Office properties changed hands at an average sale price of $384 per square foot—significantly above the national average of $179 per square foot. Among gateway markets, San Francisco emerged as the priciest office market, outperforming the usual leader Manhattan ($379 per square foot), that was followed by Miami ($376 per square foot), Los Angeles ($355 per square foot) and Washington, D.C. ($213 per square foot).

San Francisco’s vacancy rate highest in the U.S.

San Francisco’s office vacancy rate clocked in at 27.7 percent as of November—surpassing the national figure of 19.4 percent and marking a 400-basis-point increase. Tech markets are posting some of the highest rates in the country, with San Francisco and Austin ranking first.

In contrast, one of the lowest rates were registered in similar markets, such as Miami (14.4 percent), Los Angeles (15.7 percent), Manhattan (16.7 percent) and Boston (16.8 percent). The only gateway metro with a significant increase in vacancy was Seattle, that recorded a 25.8 percent figure.

In May, Google gave up 300,000 square feet of office space at One Market Plaza, a two-building office complex totaling 1.6 million square feet in San Francisco. Nevertheless, notable office leases transpired recently in the metro. Among them is Alexandria Real Estate Equities Inc.’s 258,581-square-foot, long-term deal with Vaxcyte Inc. The company has been an anchor tenant at Alexandria Center for Life Science, a two-building property in San Carlos, Calif.

Flex office providers increasing operations in the metro

San Francisco’s coworking market comprised 3.7 million square feet of space as of November, more than in Miami and Seattle, that had 2.9 million square feet each. The share of flex office space as percentage of total leasable office space in the metro reached percent 2.2 percent, above the national figure of 1.9 percent.

The flex office provider with the largest footprint in the metro remained WeWork, with operations totaling 736,795 square feet. The companies that followed were Gateway Labs by Lilly (438,339 square feet), Regus (337,544 square feet), Studio by Tishman Speyer (237,947 square feet) and Spaces (186,402 square feet).

The post San Francisco Office Construction Rebounds Amid High Vacancy appeared first on Commercial Property Executive.

Norges Bank Investment Management has taken full ownership of a 3.7 million-square foot office portfolio, paying $976.8 million for the remaining 50.1 percent interest in the properties. TIAA subsidiaries sold the assets.

The transaction, which values the portfolio at $1.95 billion, closed through NBIM’s $1.7 trillion sovereign wealth fund.

Nuveen Real Estate, a subsidiary of TIAA and a long-time partner of NBIM, represented the sellers and will continue to manage the properties.

The portfolio includes eight office buildings in Boston, San Francisco and Washington, D.C. The properties are:

• 501 Boylston St., Boston—subject to an existing debt of $194.9 million
• 33 Arch St., Boston
• Foundry Square 2 at 405 Howard St., San Francisco
• 888 Brannan St., San Francisco
• 800 17th St., Washington, D.C.
• Evening Star at 1101 Pennsylvania Ave., Washington, D.C.
• Franklin Square, 1300 I St., Washington, D.C.
• 25 Massachusetts Ave., Washington, D.C.

READ ALSO: Office Sector Decline Continues Amid Flexibility Shift

Given the significant disruptions in the office sector, this moment still presents a prime opportunity for investment, NBIM’s Global Co-Head of Unlisted Real Estate Per Løken said in company statement.

In October, Norges Bank Investment Management made another investment in the U.S. office market by acquiring the majority stake in a two-building, 133,449-square-foot office campus in Menlo Park, Calif. The company paid $217 million for a 97.7 percent ownership interest in 2882-2884 Sand Hill Road, situated along one of the most expensive streets for office space in the nation. The transaction valued the property at $222 million.

Boston’s healthy office sector

Boston’s office sector continued to shine, topping the nation for development pipeline and completions. With the influx of new properties, the market’s vacancy rate rose by 650 basis points year-over-year as of October, reaching 16.8 percent, according to a recent CommercialEdge report.

Sales in the metro in the first 10 months of the year accounted for $1.1 billion. Boston’s office assets traded for $187 per square foot on average, slightly above the $177 national average. The market ranked sixth nationally for office investment volume, CommercialEdge data shows.

The post Norges Bank Pays $977M for Office Portfolio appeared first on Commercial Property Executive.

Meridian has signed a 23,000-square-foot lease at Broadway Medical Plaza, an approximately 60,000-square-foot recently converted medical office building in Oakland, Calif. Center for Elders’ Independence will occupy the space accounting for 38 percent of the building’s overall leasing footprint.

This will be the sixth Bay Area location for CEI, a Program of All-Inclusive Care for the Elderly provider. Tenant fit-out is already underway, with completion expected next spring.

Colliers worked on behalf of the landlord, while Sabre Real Estate group represented the tenant.

READ ALSO: Outpatient Facilities Step Into the Spotlight

Originally completed in 1966 as an assembly hall, the three-story building is at 3901 Broadway, less than 2 miles from downtown Oakland. Other medical providers in the area include UCSF Benioff Children’s Hospital, Sutter Health and Kaiser Permanente.

Meridian acquired the 1.3-acre property in March 2022 for $13.5 million, according to CommercialEdge information, and redeveloped it into a medical facility. A $35.2 million permanent loan from MidCap Financial financed this endeavor.

Broadway Medical Plaza has now two elevators, a modern HVAC system and new base building systems. The property also includes a redeveloped, 220-stall parking structure.

Colliers Senior Vice President Sid Ewing worked on behalf of Meridian. Sabre Real Estate Group Founders Douglas Hubert and Steve Polito represented the tenant.

Resilient MOB sector still subject to hurdles

Despite numerous challenges and ongoing economic volatility, the medical office market and the broader health-care sector have demonstrated remarkable resilience. This stability is largely driven by the increasing demand for medical properties, fueled by the growing elderly population, particularly Baby Boomers who are now reaching retirement age and require more health-care services.

However, the sector still faces significant hurdles, including workforce shortages and rising labor costs, which affect both profitability and patient experience. Additionally, the slow pace of new construction, due to higher costs of capital and materials, remains a critical issue.

The post Meridian Inks 23 KSF Bay Area Lease appeared first on Commercial Property Executive.

Stockdale Capital Partners has paid $32.8 million for The MarinHealth Medical Plaza, an 83,789-square-foot medical outpatient building in Novato, Calif., a San Francisco submarket. Vukota Capital Management previously owned the asset, according to CommercialEdge.

This deal marks Stockdale Capital’s sixth purchase through its recently formed, U.S.-focused Healthcare Real Estate Investment Fund. The investment vehicle’s previous buy was Frisco Medical Village, a Class A, 37,943-square-foot medical facility in Frisco, Texas.

READ ALSO: These Markets Top MOB Investment Activity

The MarinHealth Medical Plaza is part of Rowland Plaza, a two-building, 142,856-square-foot complex. Vukota had acquired it for $36.8 million—or $257.3 per square foot—from Buchanan Street Partners, the same source shows.

Completed in 1997, the three-story building underwent renovations in 2017. Its anchor tenant is MarinHealth, which leases 72,888 square feet or 90 percent of the property. Services provided include primary care, OBGYN, laboratory, imaging, cardiovascular and dermatology.

Located at 75 Rowland Way near Sutter Health’s community hospital, the medical facility is 2 miles from downtown Novato and some 27 miles from downtown San Francisco. Other medical providers in the area include UCSF, Common Spirit and Stanford Health Care.

MOB investment activity expected to increase

The medical office real estate sector is flourishing. A recent Savills report forecasted a 26 percent rise in outpatient demand over the next decade, primarily due to the aging population.

Despite economic uncertainties affecting the broader commercial real estate sector, outpatient facilities continue to be in high demand. In addition, reduced interest rates are anticipated to enhance investment in this asset type.

However, this increased demand is straining the medical labor market, which is already facing a shortage of specialists, including physicians and nursing staff.

The post Stockdale Capital Buys San Francisco MOB appeared first on Commercial Property Executive.

Key life science clusters continue to thrive, even amid general economic challenges, because of their dependence on direct research and face-to-face collaboration.

“Unlike other industries where companies can operate remotely, life sciences rely heavily on hands-on research and in-person collaboration—lab work simply can’t happen over Zoom. This commitment to physical spaces has kept demand in established life sciences clusters,” Sonia Taneja, managing director for King Street Properties, told Commercial Property Executive.

While the life science construction pace has slowed in 2024, with only 2.2 million square feet breaking ground compared to 11.4 million square feet in 2023 and 16 million square feet in 2022, the sector has recorded substantial deliveries in previous years. Between the start of 2019 and October 2024, some 36.6 million square feet of lab space came online, including 10.5 million square feet in 2021 and 7 million square feet in 2020. This historical context underscores the robust foundation of the life sciences sector, which continues to support established clusters despite the general sluggishness.

“The life science real estate sector is at a crossroads, with challenges but also signs of recovery. Venture capital deployment is expected to increase as macro conditions improve. However, we should expect varied recovery timeline across different markets and submarkets,” said Maddie Holmes, senior research analyst at JLL.

Following the wave of new supply in 2024, Holmes added, “the new supply outlook improves significantly for 2025 and beyond. This respite in new supply will hopefully give the market some breathing space and the ability to absorb the current oversupply.”

Leveraging CommercialEdge data and expert insights, we delve into the dynamics driving these thriving markets, highlighting how their life science pipelines shape the broader landscape of U.S. commercial real estate.

Boston

Boston solidified its reputation as a leading life sciences hub, boasting a significant volume of construction activity that keeps it at the forefront of the industry.

Between 2019 and October 2024, developers broke ground on 16.8 million square feet of life science space across 60 properties, 5.7 percent of its existing inventory, CommercialEdge data shows.

The market’s strong life science development pipeline reflects ongoing demand, with over 680,000 square feet in construction starts in 2024 alone. In recent years, Boston has significantly expanded its pipeline, with developers breaking ground on 2.5 million square feet in 2023 and 6.7 million square feet in 2022.

From 2019 to October 2024, Boston saw the delivery of more than 10.5 million square feet of new lab inventory, including 2.8 million square feet in 2024, 2.1 million square feet in 2023 and 2.6 million square feet in 2022. This consistent development makes Boston an attractive option for life sciences companies seeking high-quality lab space, particularly as construction slowed in other markets.

Boston’s leadership in life sciences is bolstered by its exceptional talent pool and dynamic innovation ecosystem. World-class research institutions like Harvard and MIT attract top-tier professionals and encourage collaboration with cutting-edge research teams, making the city a natural choice for companies across the life sciences spectrum.

“Innovation tends to cluster around major research and educational institutions, which is why markets like Boston, San Francisco, San Diego and Raleigh-Durham continue to attract lab and bioscience companies,” Taneja noted.

San Francisco

San Francisco maintains its role as a top-tier life sciences market, driven by strong development and demand for lab and biotech space. Between 2019 and October 2024, life science construction starts totaled close to 9.1 million square feet across 37 properties, accounting for 4.8 percent of its total inventory. Recent development has seen steady groundbreakings, with 190,000 square feet started in 2024 and 2.5 million square feet in 2023 as well as in 2022.

CommercialEdge data highlights that lab space deliveries in San Francisco totaled 6.7 million square feet across 30 properties from 2019 to October 2024, accounting for 3.6 percent of total inventory. In 2024 alone, nine properties totaling 1.6 million square feet was completed, following deliveries amounting to 2 million square feet in 2023 and 2022.

A key factor in San Francisco’s growth is the ongoing shift toward high-quality, purpose-built lab spaces, Taneja elaborates. Companies are increasingly seeking facilities designed to meet the specific demands of life sciences operations, from structural reinforcements to specialized HVAC systems, rather than relying on converted office space. This trend, combined with anticipated growth in pharma research funding, suggests a favorable outlook for absorption in the metro.

San Diego

Third on our list with 5.7 million square feet of life science construction starts across 33 properties as of October—accounting for 5.1 percent of total inventory—San Diego is strengthening its position as a major hub in the life sciences sector.

The market has maintained a steady development pace, totaling 68,500 square feet in new lab space construction starts in 2024, following 1.7 million square feet across nine properties in 2023 and 400,000 square feet in 2022.

With life science deliveries totaling 3.6 million square feet between 2019 to October 2024—3.2 percent of the market’s inventory—San Diego continues to expand its offerings for biotech and life sciences tenants, with 2.1 million square feet completed in 2024, 310,000 square feet in 2023 and 343,000 square feet in 2022.

Its supply-to-demand ratio, measured by active tenant demand and total availability, stands at 4.0 percent, reflecting a tightening pipeline amid high interest from life sciences firms, JLL research shows.

Additionally, Los Angeles and Orange County are emerging as vital life sciences hubs, particularly in medtech, bolstered by robust healthcare networks and top research institutions. While these areas face supply constraints that limit immediate expansion, the high demand suggests strong potential for future growth.

Philadelphia

Philadelphia is emerging as a significant player in the sector, with 3.1 million square feet of lab space construction starts across 12 properties as of October, or 1.4 percent of existing inventory.

The market saw a strong year in lab space development in 2023, when 1.2 million square feet across three properties broke ground. According to CommercialEdge data, three properties totaling 900,000 square feet broke ground in 2022.

Life science deliveries totaled 1.1 million square feet across seven properties in the 2019-October 2024 interval, representing 0.5 percent of the market’s inventory. Three projects totaling 750,000 square feet came online in 2023, while 2022 saw the completion of four assets encompassing 369,000 square feet.

The market’s growth is driven by strengths in gene therapy and biomedical research. Its access to top research institutions like the University of Pennsylvania and Children’s Hospital of Philadelphia draws biotech firms and talent. Strong venture capital investment and relatively affordable real estate further boost its appeal, making Philadelphia an attractive alternative to pricier markets like Boston.

Raleigh-Durham, N.C.

The North Carolina metro is making strides in the life science arena, amassing more than 2.6 million square feet in construction starts across 18 properties as of October, accounting for 2.9 percent of its total inventory.

The market has seen a total of 517,165 square feet initiated year-to-date in October, alongside significant lab space construction starts in prior years, including 224,000 square feet in 2023 and 823,000 square feet in 2022.

Life science project completions totaled 1.3 million square feet across 10 properties from 2019 to October 2024, accounting for 1.5 percent of the market’s inventory. In 2024, deliveries encompassed 224,000 square feet across two properties, following a 100,500-square-foot asset in 2023 and two properties totaling 363,249 square feet in 2022.

One of Raleigh-Durham's key advantages is its affordable cost of living combined with a growing talent base, making it an attractive destination for life sciences companies.

“As early-stage companies receive funding and established firms expand, they are more likely to grow within their current markets or seek out additional life sciences hubs to support their work,” said Taneja.

Seattle

An already established player in the life sciences sector, Seattle recorded 1.8 million square feet of lab space construction starts across nine properties between 2019 and October 2024, 1.0 percent of its total inventory. While no new projects broke ground in 2024 or 2023, 2022 saw developers start on 1.1 million square feet across five properties.

Meanwhile, developers delivered a total of 1.8 million square feet of lab space across eight properties from 2019 to October 2024, accounting for 0.9 percent of the market’s inventory. In 2024 alone, 393,000 square feet was completed across two properties, while two properties totaling 443,000 square feet were delivered in 2023.

A significant advantage for Seattle lies in its fast-growing and affordable biotech labor pool, which attracts companies looking for skilled talent at competitive costs, Holmes pointed out. This emerging workforce, coupled with the metro’s strong focus on innovation and research, positions Seattle as an appealing destination for life sciences firms aiming to establish or expand their operations in a supportive environment.

The post The Most Active Life Science Markets in the US appeared first on Commercial Property Executive.

Construction on the 22-acre first phase of the business park in Pittsburg, Calif., is expected to begin in the second quarter of 2025. The data center should be ready for energization in 2027. It will be capable of supporting cloud, high-performance computing, artificial intelligence, government and enterprise workloads.

The Perseus Data Center project will be on the site of the former municipal Delta View Golf Course in Pittsburg in Contra Costa County. Plans call for a three-story, 347,740-square-foot data center building, a substation and switching station to be erected north of the Contra Costa Canal. The site is located on Golf Club Road, south of West Leland Road. It is situated 45 miles from San Francisco and 60 miles from Santa Clara, Calif.

READ ALSO: The Dizzying Pace of Data Center Investment

The Pittsburg City Council signed off on the Pittsburg Technology Park Specific Plan, which will guide implementation of the three-phase development, on Nov. 18. The City Council approved the sale of part of the 175-acre golf course to Pittsburg Land Holdings, a subsidiary of Stamford, Conn.,-based ADP, for $16.7 million in July 2022. The remainder of the golf course, which was closed in 2018, will be used for recreation, including sports fields.

Details for the ADP’s plans for the subsequent two phases were not released at this time. However, documents filed with the City of Pittsburg noted Phases II and III will cover land south of the canal and “allow for the further development of the plan area as a dynamic employment hub and light industrial uses.”

Perseus highlights

According to ADP, a data center business managed by AVAIO Capital, the Perseus facility will exemplify the company’s focus on sustainability. It is situated in an area where more than 90 percent of the grid power is from zero carbon sources, wind and solar supplied by Pittsburg Power Co. ADP has secured commitments for recycled water that will cover all of its cooling and non-potable water needs and will also incorporate on-site solar. The facility has been designed to use biofuels for its back-up generators.

The company has also secured a commitment from Pacific Gas & Electric, with access to seven different 230 kV power lines. Through a partnership with Pittsburg Power Co., the project will save companies money by offering power rates competitive with Silicon Valley Power in Santa Clara, a non-for-profit municipal electric utility owned and operated by the City of Santa Clara. The Pittsburg Power Co. is a municipal joint powers agency established between the City of Pittsburg and the city’s Redevelopment Agency that performs as a municipal utility with the authority to provide wholesale and electric and gas services.

The post $800M Data Center Campus Gets Green Light appeared first on Commercial Property Executive.

In the Bay Area’s largest office lease so far since the pandemic, Snowflake Inc. has committed to 773,000 square feet in Menlo Park, Calif., according to the San Francisco Chronicle. The data storage firm subleased the space from Meta and will occupy the office buildings within Menlo Gateway, a campus owned by Bohannon Cos. and Brookfield Asset Management.

JLL worked on behalf of Meta, which had preleased the space when it was still under construction, The San Francisco Standard reported. CBRE represented Snowflake. The leasing agreement is set to expire in 2033.

The Menlo Park location will be Snowflake’s largest North American office. Currently employing 7,000 people worldwide, the firm gave up its previous headquarters at 450 Concar Drive in San Mateo, Calif., in 2021 and indicated a Bozeman, Mont., address as its main executive office. The company, however, still occupies roughly 200,000 square feet in San Mateo under a lease that will expire in eight years.

Menlo Gateway, up close

Menlo Gateway came online in two phases between 2017 and 2019. The mixed-use campus comprises four office buildings rising eight stories, along with three parking garages and a 230-key hotel. Bohannon completed the complex using funds from two loans totaling $302.3 million, CommercialEdge shows.

The office facilities are LEED Gold-certified and have floorplates averaging between 26,000 ad 33,000 square feet. Amenities include a fitness center, a business training facility, indoor and outdoor café seating, meeting rooms and a restaurant.

READ ALSO: How AI Firms Are Reviving Office Space Demand

Located at 100-190 Independence Drive and 101-155 Constitution Drive, Menlo Gateway is within 22 miles from downtown San Jose. The 16-acre property is also 18 miles from San Jose Mineta International Airport.

JLL Senior Managing Directors Mark Bodie and Toss Vallentine, as well as Vice President Clarissa Richardson, represented Meta in the deal. CBRE Executive Vice Presidents Luke Ogelsby and George Fax, along with Vice President Nick DeMartini, worked on behalf of Snowflake.

Bay Area office vacancy rate on the rise

The Bay Area’s office vacancy rate clocked in at 26.4 percent as of October, registering a 630-basis-point increase year-over-year according to a CommercialEdge office report. The index was the second largest in the West, surpassed only by San Francisco (27.7 percent), However, the area remained one of the priciest, with listing rates averaging $54.2 that month, well above the $32.8 national figure.

One recent notable deal was Vaxcyte Inc.’s renewal and expansion to 258,581 square feet at Alexandria Real Estate Equities’ campus in San Carlos, Calif. The property is expected to measure 1.4 million square feet at full build-out.

And, earlier this year, Intermolecular signed a 146,159-square-foot lease extension at an R&D building in San Jose, Calif. Cannae Partners and Blue Vista Capital Management own the facility that came online in 1980.

The post Data Storage Giant Subleases 773 KSF From Meta appeared first on Commercial Property Executive.

Alexandria Real Estate Equities Inc. has signed a 10-year, 258,581-square-foot lease with Vaxcyte Inc. at 825 Industrial Road, within the Alexandria Center for Life Science – San Carlos. The deal included both new space and an extension of the clinical-stage biopharmaceutical company’s current lease at the property.

Vaxcyte has been an anchor tenant at the two-building life science center since the property came online in 2021. The tenant roster also includes Cargo Therapeutics and Allakos Inc., according to CommercialEdge information.

Amenities at the six-story Class AAA campus in San Carlos, Calif., comprises a pair of buildings at 825 Industrial Road and 835 Industrial Road. The existing campus is 97.4 percent occupied and is slated for a future expansion of 1.4 million square feet. Amenities include conference and meeting spaces, a courtyard, an eatery, a coffee bar, as well as a fitness and wellness center.

The Alexandria Center for Life Science is just off Highway 101 and across the road from San Carlos Airport. The campus is also less than 1 mile away from light rail and bus stops. Downtown San Francisco is 25 miles north.

In April, Alexandria also signed a lease renewal and extension at its Alexandria Center for Advanced Technologies – South San Francisco campus. A machine learning–powered drug discovery and development company committed to 143,188 rentable square feet.

The post Alexandria Inks 259 KSF Bay Area Life Science Lease appeared first on Commercial Property Executive.

These firms are delaying commitments while gradually expanding their footprints, to avoid significant swings in rapid expansions and subsequent downsizings.

Since the beginning of 2023, AI companies accounted for 20 percent of all leases signed in the Greater Bay Area and, together with other tech sectors, nearly 44 percent of all leasing activity.

AI firms’ lease terms generally lean toward three years rather than the average of approximately five years or more for non-AI tenants. Since the start of 2023, most AI leases (61 percent) in San Francisco were signed for sublease space. In Silicon Valley, 25 percent were subleases.

Newmark also reported that since the beginning of 2023, San Francisco AI firms signed on for an average of 4,700 square feet in the early stage, increasing to 9,200 square feet during their growth phase. As these companies hired more employees, their space needs jumped to an average of 28,500 square feet.

However, earlier this month, AI-powered company Notion signed a 105,000-square-foot, 10-year lease at The Monadnock Building. The 204,625-square-foot office building in San Francisco’s South Financial District submarket is owned by Brookfield Properties. Notion will occupy five floors at the 10-story property, with the option to expand.

Tech firms coming and going

San Francisco has now experienced flat or declining rents for eight consecutive quarters, Moody’s Data Scientist David Caputo told Commercial Property Executive. Among the 15 traditional tech markets, rents only declined in San Francisco (by 0.3 percent), according to Moody’s third-quarter data.

X’s San Francisco headquarters is relocating to Austin, Texas. Legal and financial disputes have surfaced, including a lawsuit against X for unpaid rent on its San Francisco headquarters and controversy over unauthorized modifications to its office space, Caputo said.

“This departure exemplifies a broader trend of tech companies scaling back their presence in downtown San Francisco,” Caputo added. “However, there is optimism for reversing this trend, fueled by the number of AI companies in the Bay Area.”

READ ALSO: Return-to-Office Traffic Reaches Record Level

These entities attract significant venture capital investment and show a marked preference for maintaining office-based work environments, according to Caputo. “Consequently, leasing activity has witnessed a 40 percent increase, with tenant demand surging. Over 25 AI companies have sought 1 million square feet of office space this year alone.”

He added that efforts by local officials and community organizations to revitalize downtown areas are noteworthy. Initiatives such as cultural events and pop-ups aim to rebuild office demand. These measures, with the growth of AI companies, are anticipated to reduce San Francisco’s vacancy rate by 2025.

The capital of AI

Not only have AI companies been responsible for leasing larger blocks of space in San Francisco over the past couple of years, but their rapid growth means that this activity has translated into positive absorption and occupancy growth, according to Robert Sammons, Cushman & Wakefield’s research director in Northern California.

San Francisco and the Bay Area have become the “capital of AI” not only because of the number of companies located there (730 at last count at the end of the third quarter of 2024 in the Bay Area, with 440 of those residing in San Francisco—out of 3,344 globally) but also because of the venture capital being pumped into them.

According to PitchBook, through the third quarter of this year, Bay Area companies have absorbed 67.8 percent of global generative AI funding and 31 percent of global funding into San Francisco-based companies alone. Over that time, 23 of the top 50 VC funding transactions went into Bay Area companies, with 10 in San Francisco proper.

“Something to be aware of going forward—there will undoubtedly be M&A activity among some of these AI companies, which could either create further expansion among the winners or a decline in leasing and hiring as well; it’s just too soon to tell,” Sammons said.

AI talent is concentrated in the Bay Area

AI companies have nearly doubled their footprint since 2021, occupying close to 11.6 million square feet in the Bay Area, according to Chris Pham, senior research analyst for JLL.

“AI talent is primarily concentrated in the Bay Area, which will remain an AI superhub,” Pham said.

AI companies have been growing at roughly 37 percent on a compound annual growth rate since 2013, Pham added. The Bay Area AI footprint this year stands at 1.1 million square feet in the East Bay, 1.9 million square feet in the Mid-Peninsula, 3.8 million square feet in Silicon Valley and 4.8 million square feet in San Francisco.

READ ALSO: Are Coworking Networks the Future of Office?

New-to-market AI deals, primarily from new startups, make up close to 40 percent of the AI count this year in the Bay Area, Pham said.

OpenAI, Notion, Anthropic and many other AI firms generated leasing activity of well over 1 million square feet in 2024 alone, according to Markus Shayeb, senior vice president & San Francisco managing director of TRI Commercial Real Estate Services/CORFAC International.

“Numerous AI-related companies are searching for spaces exceeding 50,000 square feet, making up the majority of predicted office leasing activity in 2025 in San Francisco alone,” Shayeb said. “As many as 100 companies with less than 50 employees are searching for space.”

A struggle with gentrification and displacement

The Bay Area had seen a significant drop in office space occupancy since COVID-19, but now we’re seeing a surge in demand, particularly from companies focused on AI, said Mahalakshmi Balachandran, senior associate in the Northern California Office of McCullough Landscape Architecture.

This shift is driving a need for different types of spaces, such as those with a larger footprint for data centers. “At the same time, there’s a growing preference for sustainable building practices and adaptive reuse of existing structures. However, while AI brings new opportunities, it raises concerns about equity and accessibility.”

The Bay Area real estate market has long struggled with gentrification and displacement, Balachandran added. “Without careful oversight, AI could worsen these issues, making it harder for low-income and marginalized communities to own homes. When working with existing data, AI tools can reinforce existing patterns of exclusion within neighborhoods. There needs to be a cautious integration and approach to inferring the results of such analysis.”

The post Why AI Firms Are Taking a Measured Approach to Office Leasing appeared first on Commercial Property Executive.

EQT Exeter has purchased two industrial assets totaling roughly 1.3 million square feet in American Canyon, Calif. DWS sold the properties for $202 million, according to The Registry. JLL represented the seller.

The deal involved two facilities within Napa Logistics Park, namely the 646,000-square-foot 1 Middleton Way, as well as 400 Boone Drive comprising 702,000 square feet. DWS acquired the former for $90.5 million in 2018 and the latter for $123.4 million in 2022, CommercialEdge shows.

Spanning more than 41 acres, the 2017-completed facility at 1 Middleton Way was 100 percent, triple-net leased to IKEA at the time of the deal. The property features 32-foot clear heights, 150 dock doors and four grade-level doors, as well as a 135-foot truck court, among others.

READ ALSO: 2025 CRE Outlook: The Year Ahead

Situated on some 37 acres, the building at 400 Boone Drive debuted in 2020. At the time of the sale, Biagi Bros was leasing approximately 336,960 square feet at the property. It encompasses 130 dock-high doors and four grade-level doors, as well as 60-foot speed bays and 40-foot clear heights.

The 218-acre Napa Logistics Park is roughly 41 miles northeast of downtown San Francisco. A Union Pacific Railroad line services the industrial campus, providing access to the Port of Oakland, some 37 miles away.

EQT Exeter’s Western market purchase complemented its latest industrial shopping spree, which focused mainly on the Southeast and Midwest markets. Just days ago, the company acquired 33 assets totaling 4.5 million square feet through its Value Fund VI.

JLL Managing Director Ryan Sitov, Director Melinda Marino and Chris Neeb, alongside Senior Managing Directors Glen Dowling and Matt Bracco, represented DWS in the transaction proceedings.

San Francisco industrial pipeline shrinks

During 2024’s first three quarters, Greater San Francisco’s industrial sale volume clocked in at roughly $53 million, according to CommercialEdge data. Assets traded for an average of approximately $299 per square foot—more than double the national average of $130 per square foot.

As of November, there were no significant industrial projects underway in metro San Francisco, the same source shows. Additionally, more than 22 percent of the inventory is clustered within Napa County’s borders.

The post EQT Exeter Expands in California With $202M Industrial Buy appeared first on Commercial Property Executive.

Blackstone Real Estate Partners X has entered an agreement with Retail Opportunity Investments Corp. to acquire all of its outstanding common shares and debt for $4 billion. The deal is set to be an all-cash transaction and represents a 34 percent premium to ROIC’s closing share price in July of this year.

ROIC’s portfolio is made up of 93 grocery-anchored retail properties. They are located in Los Angeles, San Francisco, Seattle and Portland and total 10.5 million square feet.

In prepared remarks, Jacob Werner, co-head of Americas acquisitions at Blackstone Real Estate, said that the deal reflects the company’s bullish outlook on necessity-based, grocery-anchored retail. Specifically, the company is optimistic on demand for these types of assets in densely populated areas where there are very low levels of new supply.

READ ALSO: Will CRE Market Conditions Improve?

Pending customary closing conditions, including the approval of Blackstone common stockholders, the deal is set to close in the first quarter of next year. ROIC’s Board of Directors has already approved the transaction.

ROIC’s financial advisor was J.P. Morgan and its legal counsel was Clifford Chance US LLP. BofA Securities, Morgan Stanley & Co. LLC, Newmark and Eastdil Secured were Blackstone’s financial advisors while Simpson Thacher & Bartlett LLP was the company’s legal counsel.

The deal is the latest in a series of major Blackstone real estate acquisitions this year. In April, the firm signed a $10 billion deal to acquire Apartment Income REIT. The portfolio comprised 76 multifamily communities primarily in coastal markets.

Also, Blackstone-owned QTS expanded its presence recently with plans for a 3 million-square-foot data center campus in Phoenix. It is set to include 16 buildings of 180,000 square feet each.  

The post Blackstone to Acquire Retail Opportunity Investments Corp. for $4B appeared first on Commercial Property Executive.

The space had been occupied by Uber, which put it up for sublease in 2019, according to the San Francisco Chronicle. The new agreement has a 10-year term, with options for Notion to lease additional space in the building.  

The U.S. is a global leader in AI and currently hosts 65 of the top 100 globally ranked AI company headquarters, Robert Martinek, director at EisnerAmper, told Commercial Property Executive.

“Demand for artificial intelligence has exploded over the past 18 months,” Martinek said. “We can point to Nvidia and Open AI, two of the fastest-growing companies in the world over the past year.” A January brokerage Cushman & Wakefield report found that AI-related tenants were looking for more than 1.5 million square feet of office space in New York City alone.

READ ALSO: What the AI-Driven Hiring Surge Means for CRE

“During the past few months, we have seen large leases to AI2 in Seattle, Scale AI in San Francisco and OpenAI in New York City. New AI companies are developing and deploying AI-powered apps, which should only increase leasing activity in the future,” Martinek added.

OpenAI, Scale AI and Anthropic have recently leased in San Francisco, which had a 37 percent vacancy rate earlier this year.

AI firms drive San Francisco office leasing activity

The San Francisco market has now exceeded 1 million square feet in AI office leasing volume for the second consecutive year, Alexander Quinn, JLL’s senior director of research, told CPE.

Leasing activity from January to September was up 40 percent compared to last year, driven largely by demand from lease expiration tenants and AI companies, JLL’s third-quarter research showed.

Asking rents remained mostly unchanged over the quarter, while net effective rents have fallen to $68, marking a 33 percent drop from the 2019 highs. Trophy assets have been more resilient, declining by approximately 15 percent over the same period.

“A key trend driving San Francisco’s outlook is its strong economic fundamentals,” Quinn said. “For example, VC funding here—which fuels firms like Notion and so many more—is the highest in the nation through the end of the third quarter at $21.7 billion (per Pitchbook Data).”

CommercialEdge data from June showed an upturn in San Francisco office projects after a recent downturn had whacked office prices. The pipeline has now become one of the largest in the nation.

The post How AI Firms Are Reviving Office Space Demand appeared first on Commercial Property Executive.

AI-powered company Notion has signed a 105,000-square-foot, 10-year lease at The Monadnock Building, the San Francisco Business Times reported. Brookfield Properties owns the 204,625-square-foot office building in San Francisco’s South Financial District submarket.

The tenant will occupy five floors at the 10-story property, with the option to expand its footprint, according to the San Francisco Chronicle. This new agreement will replace and expand Notion’s current headquarters, a 65,000-square-foot location at 2300 Harrison St., in the Mission District, the same source shows.

The Monadnock Building was last occupied by Uber, which put more than 110,000 square feet up for sublease in 2019, alongside three other downtown properties it occupied at the time, the San Francisco Chronicle reported. Other notable tenants include Bluestone Lane, Cornerstone Demo and LensCrafters.

CBRE brokered the deal on behalf of the tenant, while JLL represented the landlord.

READ ALSO: How AI Firms Are Reviving Office Space Demand

Brookfield Properties picked-up the historic building in 2013 for $80 million from seller PGIM Real Estate, CommercialEdge shows.

Completed in 1906, the office mid-rise includes four passenger elevators, 20,000-square-foot floorplates and 9,000 square feet of street retail space. Under its current ownership, the property went through a restoration and improvement strategy in 2016, with more than $25 million in investment.

The Monadnock Building now includes a replaced roof, modernized elevators and retail storefronts, operable windows, a building automation system, a revitalized lobby and an atrium with a courtyard. Additionally, the office building received LEED Gold and WELL Health & Safety certifications.

Located at 685 Market St., the property is close to multiple bus and light rail stops while allowing easy access to the Union Square and to the Financial District areas. South San Francisco and Oakland, Calif., are 10 miles away each, while San Francisco International Airport is 14 miles south.

CBRE Executive Vice President Luke Ogelsby and Senior Vice President Sarah Kelley represented the tenant. Managing Director Jak Churton, Vice President Charlie Hanafin and Senior Managing Director Matt Shewey with JLL negotiated on behalf of the landlord.

The highest rents in the West

San Francisco office real estate trends show that the vacancy rate continues to remain high, reaching 27.6 percent in September, up 350 basis points year-over-year, according to a recent CommercialEdge office report. The average asking rent of $67.32 per square foot remained the highest among Western markets, almost matching the national leader Manhattan, which clocked in at $67.93 per square foot.

In May, Google announced that the company is giving up 300,000 square feet of space at One Market Plaza next April, when the lease will expire. The 1.6 million-square-foot office complex is owned by Paramount Group and Blackstone.

The post Brookfield Properties Inks 105 KSF Relocation in San Francisco appeared first on Commercial Property Executive.

Divesting from this Bay Area property is another example of the company’s long-term strategy of recycling capital at opportunistic points across real estate market cycles. The deal netted a 50 percent gain for JLL Income Property Trust, which acquired Pinole Point in 2016.

Located at 6000, 6015 and 6025 Giant Road, the three warehouses total 518,000 square feet. The properties provide tenants access to critical transportation infrastructure, including major interstate highways, the Port of Oakland, Oakland International Airport, and the densely populated San Francisco Bay Area, where modern warehouse facilities have historically been in short supply.

READ ALSO: Top Mid-Atlantic Markets for Industrial Transactions

The company said that selling out of its industrial portfolio’s largest vacancy freed up more than $125 million to use during the early stages of a new market cycle for core real estate. The runup in valuations across the warehouse property sector was “highly accretive” to its portfolio’s performance.

Industrial market focus

JLL Income Property Trust plans to invest in higher-occupancy, longer-leased, newer properties with the potential for improved core returns at reduced risks as it maintains its significant overweight standing in industrial properties. Its $6.6 billion portfolio, which includes 55 industrial properties worth $2.1 billion, accounts for 31 percent of its holdings.

Nearby in July, Hines obtained $120.3 million to develop Edenvale Industrial Park, a 636,000-square-foot project in San Jose, Calif. Bank OZK provided the senior portion of the financing—$99.8 million, according to CommercialEdge information—while Affinius Capital originated the remainder.

Last year, JLL Income Property Trust fully subscribed its JLLX Diversified II, DST, a five-property, $200 million diversified portfolio structured as a Delaware Statutory Trust to provide 1031 exchange investors the opportunity to defer taxes on gains from the sale of appreciated real estate.

The post WPT Capital Advisors Pays $133M for Bay Area Portfolio appeared first on Commercial Property Executive.

However, office sales closed at a somewhat steady pace. A total of $23.8 billion in investment volume was registered nationally year-to-date through September, with assets changing hands for $171 per square foot on average, CommercialEdge data shows. This only marks a slight decrease compared to 2023’s same time frame, when sales totaled $25 billion. During that interval, properties traded for $198 per square foot.

California’s office transactions volume clocked in at $4.2 billion. About 16.9 million square feet across 159 properties sold for an average of $251 per square foot. The following list shows the leading top markets for office transactions in the state in the first three quarters of the year.

1. The Bay Area

The leading market for transactions in California year-to-date as of September was the Bay Area, which registered more than $1.8 billion in office investment volume. Sales in the metro comprising the San Jose area and the East Bay more than doubled year-over-year. Additionally, the market ranked third nationally, being surpassed only by Manhattan ($2.7 billion) and Washington, D.C. ($2.0 billion).

Despite the considerable growth in investment, office distress is still affecting the Bay Area, with the average price per square foot dropping year-over-year. Assets traded for an average of $278 per square foot in the first three quarters of this year, a significant decline from the $348 per square foot registered during the same interval in 2023.

In September, Behring Cos. purchased 1950 Franklin St., a 446,998-square-foot office building in Oakland, Calif., for only $14.4 million. This means the high-rise changed hands for a little more than $32 per square foot.

2. Los Angeles

Los Angeles remained the priciest market in the state and regionally, with properties trading for $345 per square foot through the first nine months of the year. However, the metro has been surpassed by Austin as the nation's leader in sale prices, with assets averaging $379 per square foot.

Total L.A. sales amounted to just under $1 billion during the same time frame, ranking second in the top markets for office transactions in California. This accounts for less than half of the roughly $2 billion registered in the same interval in 2023. Despite the huge volume shrinkage, the price per square foot increased by nearly $40.

At the beginning of the year, The Regents of the University of California paid $700 million for a pair of office assets dubbed One Westside and Westside Two. Hudson Pacific Properties and Macerich sold the recently redeveloped buildings totaling about 687,000 square feet.

3. San Diego

Despite San Diego being a hotspot for investors, the metro’s average price per square foot year-to-date as of September was $196, the lowest compared to the other major markets in the state and this ranking, but still above the U.S. figure. On average, properties traded for nearly half the price registered during the same period of 2023.

Total sales in the market reached $447 million, marking an almost 34 percent drop year-over-year. One of this year's most notable transactions was Breakthrough Properties’ purchase of a 65 percent stake in Callan Ridge, a two-building life science development. The fully leased property traded for $236 million.

4. San Francisco

Rounding out the top markets for office transactions in California is San Francisco, where office sales in the first three quarters of the year totaled $339 million. This marks a 40 percent decrease year-over-year, as investments reached about $571 million in the same interval of 2023.

Assets in the metro traded for an average of $268 per square foot, a considerable decline from the $321 per square foot registered during last year's same interval. In September, SC Properties paid $37.5 million—about $160 per square foot—for San Mateo Gateway Center, a 235,000-square-foot office campus. The complex changed hands for less than half of its pre-pandemic price.

The post Top California Markets for Office Transactions appeared first on Commercial Property Executive.

PSAI Realty Partners has acquired The Plaza at Walnut Creek, a trophy 362,399-square-foot office complex in San Francisco’s East Bay market for $162 million. The seller was Clarion Partners.

The Plaza at Walnut Creek comprises two multi-tenant buildings with an underground parking garage at 1331 and 1333 N. California Blvd. Both seven-story assets are rated as Class B properties by CommercialEdge. The 1333 N. California Blvd. asset was built in 1986, and its partner two years later.

At the time of sale, the property was 93 percent leased and has achieved a market-leading occupancy of 91 percent during the past five years.

READ ALSO: Return-to-Office Efforts Fail to Boost Usage

Newmark Executive Vice Chairman & President, Western Region Capital Markets Steven Golubchik, Vice Chairman Edmund Najera, Managing Director Darren Hollak and Associate Director Francesca Zappula represented Clarion Partners in the transaction. Another Newmark team including Vice Chairman Breck Lutz, Senior Managing Director Alex Grell and Managing Director Danny Bartz is in charge of the property’s leasing.

The office campus provides convenient access to the 680 and 24 freeways and proximity to Walnut Creek’s dense amenity base, including Broadway Plaza, Main Street Plaza, Olympia Place and Plaza Escuela. Downtown San Francisco is some 24 miles away.

A rare investment opportunity in a strong market

The slowdown in investment activity through August had dented office prices in San Francisco, according to a recent CommercialEdge report on the local market. Still, the metro remains one of the priciest in the U.S., with multiple life science properties changing hands.

Golubchik called the deal “a once-in-a-generation opportunity to acquire a top-performing asset in the region,” according to a statement, adding that The Plaza at Walnut Creek recorded meaningful occupancy and rental rate gains since 2019, bucking a trend.

San Francisco is a market where developers continue to bring a significant amount of new office space to the market.

As of June, 5.6 million square feet of office space were under construction across 25 office properties in San Francisco, representing 3 percent of the total stock.

Thinking about the city’s long-term office market recovery, Related California has recently proposed more than doubling the size of a mixed-use building in the city’s Financial District and including more than 300,000 square feet of office space in its reimagined $600 million plan.

The post Bay Area Campus Commands $162M appeared first on Commercial Property Executive.

SITE Centers Corp. has sold the 57,218-square-foot, free-standing Whole Foods at Bay Place in Oakland, Calif., for $44.4 million. JLL Capital Markets arranged the transaction.

Completed in 2007, the retail asset is fully leased to Whole Foods on a long-term basis. The Class A property occupies a 2.2-acre site at 230 Bay Place in downtown Oakland, a location with many multi-housing communities within walking distance. The immediate area is densely populated, with more than 289,000 residents within a 3-mile radius.

JLL Managing Directors Eric Kathrein, Geoff Tranchina and Gleb Lvovich and Director Warren McClean led the Investment Sales and Advisory team representing SITE.

READ ALSO: CRE Prices Are Stabilizing

Earlier this week, SITE Centers announced it has completed the spinoff of Curbline Properties Corp. as the first public REIT focused exclusively on convenience retail assets. The new company immediately began trading on the New York Stock Exchange under the symbol CURB.

In preparation for the spinoff, SITE Centers has been building its capital reserves through aggressive sales of multiple retail centers across the U.S. over the past year or so, totaling more than $1.3 billion. These included—most recently—the current disposition, as well as the sale of two properties in Florida, The Shops at Midtown Miami and Cypress Trace in Fort Myers.

Whole Foods expansion

In a report earlier this year that focused on the grocery sector, Marcus & Millichap noted Whole Foods’ plans to open at least 100 new locations this year. The report also remarked on the trend by some supermarkets to follow in the footsteps of some of the big box retailers by launching smaller formats to target specific customer bases.

“Geared toward urban residents seeking quick shopping trips, Whole Foods will debut its Market Daily Shop in New York City later this year, with plans to expand the 7,000- to 14,000-square-foot store model to other cities nationwide,” the report stated.

The post SITE Centers Sells Free-Standing Whole Foods for $44M appeared first on Commercial Property Executive.

The campus’ second building, 1701 Bayshore, is currently under construction. It will be six stories tall and measure 203,500 square feet, sharing a landscaped plaza, on-site fitness and conferencing facilities with 1699 Bayshore.

Both buildings will support science-based organizations’ specialized needs, according to King Street, providing 15-foot deck-to-deck heights (20-foot heights on the ground floor), 33-foot and 44-foot structural grid, and infrastructure to support a 60 percent lab/40 percent office split. A campus parking garage will provide two vehicle stalls per 1,000 square feet, as well as bicycle parking.

Amenity spaces at the campus are designed to foster interaction, including the shared plaza, as well as an indoor/outdoor bistro café, and gathering areas within the two buildings. Collaboration spaces include a conference center, boardroom and tenant lounge with shared and private spaces. The Landing will also feature a gym with private training studios, spa-like locker rooms and meditation space.

READ ALSO: Life Science Sector Faces Challenges, Yet Recovery Is in Sight

Burlingame is on the San Francisco Peninsula, south of the city, and in recent decades has become an important part of the Bay Area life sciences market. Such companies as Corvus Pharmaceuticals, Halo Labs, Protillion Biosciences and Tallac Therapeutics have offices in the suburb, among others.

King Street is a private real estate investor specializing in life science/bioscience properties. Headquartered in Boston, the company has about 3.5 million square feet of existing assets in Greater Boston, New York, the Research Triangle in North Carolina, the San Francisco Bay Area and San Diego, with a further 3 million square feet in various stages of development.

The company has tasked the JLL team of Grant Yeatman, Cole Smith, Mark Bodie and Toss Vallentine to lease The Landing. Perkins & Will designed the property, with SWA Group as the landscape architect and Hathaway Dinwiddie as general contractor.

Bay Area’s life science real estate market still softening

New life science product has been added to the Bay Area market at a steady pace in recent years, resulting in a softening market, according to CBRE. The overall vacancy rate came in at 24.6 percent in the second quarter of 2024, with a negative net absorption of 381,000 square feet for the quarter.

New construction projects continue in the sector, as well as office to life science conversions, CBRE reported. A total of 29 life science projects were in development at the end of the second quarter of 2024, totaling 5 million square feet. Some 2 million square feet came online during the quarter.

The Central Peninsula, which includes Burlingame, had a 32.5 percent vacancy rate. During the first half of 2024, the submarket has seen negative absorption of more than 151,000 square feet.

The post King Street Wraps 1st Building at Bay Area Life Science Campus appeared first on Commercial Property Executive.

SC Properties has acquired San Mateo Gateway Center, a 235,000-square-foot office campus in San Mateo, Calif. The property traded for $37.5 million, the San Francisco Business Times reported.

The previous owner was Kennedy Wilson, which bought the asset in 2019 from Hines Interests for $87.5 million, according to CommercialEdge.

At the time of the transaction, the property was approximately 40 percent vacant. SC Properties Partner Kevin Phillips, who oversaw the purchase along with Managing Director Chris Giotinis, said in prepared remarks that the company sees momentum in return-to-office, which will help lease the remaining space.

Cushman & Wakefield Managing Director Gary Boitano, alongside JLL Senior Managing Director Clarke Funkhouser, consulted the buyer on the deal. The two have been tapped to lease the campus.

READ ALSO: You Bought an Office Building. Now What?

Available spaces at the property range from 1,700 square feet to a full floor totaling some 26,000 square feet, with the potential for further expansion within the same building. San Mateo Gateway’s tenant roster includes The Manor Association, Cetree, Camico, Warner Design and Cala Health, among others, CommercialEdge data shows.

The campus encompasses three Class A buildings which came online between 1985 and 1987, and underwent cosmetic renovations in 2016. The upgrades feature an on-site cafe, new spec suites, outdoor lounge and seating areas, a conference room and a fitness center. The buildings offer a total of six passenger elevators, controlled access and floorplates ranging between 24,000 and 30,770 square feet.

Located at 1800, 1810 and 1820 Gateway Drive, the property has access to U.S. Highway 101 and Interstate 280. Downtown San Francisco is some 21 miles away.

Another Bay Area office transaction closed at a steep discount recently. Behring Cos. acquired 1950 Franklin St., a 446,998-square-foot office building in Oakland, Calif. Kaiser Permanente sold the 21-story asset for only $14.4 million.

Bay Area office market still stymied

The Bay Area office market continues to post an elevated vacancy rate, coming in at 25.6 percent in the second quarter of 2024, according to CBRE, with a negative net absorption of 1.4 million square feet.

During the years immediately before 2020, the market-wide vacancy rate was around 6.0 percent, which represented a recovery from the higher rate in the aftermath of the Great Financial Crisis.

According to CBRE, there have been no periods of positive absorption in the Bay Area office market since 2020, although the pace of negative absorption has slowed down recently. In 2023, more than 15 million square feet were returned to the market.

The post Kennedy Wilson Sells Bay Area Office Campus appeared first on Commercial Property Executive.

The renovation was extensive, with a particular focus on the 510,000-square-foot building’s common areas. Among other major changes along those lines, the building now has a grand lobby, a space that the previous iteration lacked, with a coffee bar, gift shop and florist. The building also has new gathering places, including a gym, spa, conference spaces and, for tenants only, a bar on the 27th floor, and a top-floor bar.

Besides the pyramid-shaped main building, the renovation also involves two smaller components that are part of the complex, including an office building at 505 Sansome Street, and a site set for about 100,000 square feet of office redevelopment at 545 Sansome Street. 

READ ALSO: Designing an Office Experience That Feels Like Home

Anchoring the three buildings is Redwood Park, consisting of a grove of mature redwood trees shading public open space. The renovation fully refurbished the park, connecting it to the buildings for the first time.

The 853-foot main building is reportedly 70 percent occupied, though more space might be taken, pending negotiation. The building is also one of the more expensive in the country, with space reportedly fetching more than $200 per square foot on occasion, but more often in the $125 to $180 range.

As part of the reopening, the building’s spire was re-lit for the first time with over 1,300 newly installed LED lights, which is part of a new lighting design for the structure from the base to the spire, both interior and exterior. Lighting specialist L’Observatoire International undertook the lighting re-design.

SHVO acquired the complex at the height of the pandemic in 2020 with financing from Deutsche Finance America and German pension fund Bayerische Versorgungskammer, for $650 million. With the renovation costs included, the owners have put north of $1 billion in the property.

Some of SHVO’s other properties include the Raleigh Hotel in Miami Beach, 333 South Wabash Avenue in Chicago, Mandarin Oriental Residences in Beverly Hills, Mandarin Oriental Residences Fifth Avenue in New York City and the AMAN New York Hotel and Residences at the Crown building.

San Francisco office market still tough

In the post-pandemic years, the city of San Francisco continues to have a huge hangover of office space, with the market’s office vacancy rate coming in at 36.8 percent as of the second quarter of 2024, according to CBRE. The quarter saw 290,000 square feet of negative net absorption.

Still, tenants took about 2 million square feet in the market in the second quarter, making it the second-best quarter for leasing activity in the last two years, only behind the fourth quarter of 2023, noted CBRE.

Rents dropped by 7 percent year-over-year, with the average direct asking rate down 0.2 percent for the quarter, coming in at $68.43 per square foot in the second quarter of 2024. CBRE also reported that no significant office project was under construction in the city as of the second quarter.

The post Transamerica Pyramid Reopens Following $400M Makeover appeared first on Commercial Property Executive.

Behring Cos. has acquired 1950 Franklin St., a 446,998-square-foot office building in Oakland, Calif. Kaiser Permanente sold the 21-story asset for only $14.4 million, according to CommercialEdge information.

As part of the deal, the company also purchased 1901 Franklin St., an adjacent 255,098-square-foot garage rising eight stories. The two structures will be part of Behring’s Stak Site urban campus, a live-work-play destination that will also include 1900 Broadway, a recently completed 452-unit community.

Kaiser had acquired the asset more than two decades ago, according to the San Francisco Chronicle. The company used to occupy the building that became mostly vacant after the pandemic started.

The Class A building came online in 1975 and has floorplates averaging 21,286 square feet. The tower features event and conference venues, media production studios, a cafeteria, as well as other indoor and outdoor lifestyle amenities.

READ ALSO: Where to Find the Bright Side of Office

The new owner plans to conduct a redevelopment program that will lead to the building’s integration into its real estate ecosystem at 1900 Broadway. The properties are connected through an elevated skybridge and provide direct access to the 19th Street BART Station.

Located in Uptown Oakland, 1950 Franklin St. is close to a host of dining and retail options. Downtown San Francisco is 11 miles away, while the San Francisco Bay Oakland International Airport is less than 10 miles southeast.

San Francisco’s office vacancy rate stays high

Metro San Francisco saw $220 million in office investment volume year-to-date as of July, according to the latest CommercialEdge office report. Assets traded on average for $269 per square foot, well above the $173 national average. Additionally, the metro’s vacancy rate in July was 25.4 percent, well above the 18.1 percent U.S. figure.

One of the most significant recent deals in the area was Swift Real Estate Partners’ acquisition of Gateway at Millbrae Station, a 174,072-square-foot office building in Millbrae, Calif. Republic Family of Cos. sold the asset for $47.7 million or about $274 per square foot.

The post Behring Buys Bay Area Office Asset appeared first on Commercial Property Executive.

Oakley Shops will include approximately 79,000 square feet of retail space at the signalized arterial intersection of Laurel Road and O’Hara Avenue. It will address a void of limited high-quality retail and grocery destinations in the trade area.

Safeway will occupy approximately 56,000 square feet at Oakley Shops. An additional 23,000 square feet will host quality retail, restaurant and everyday needs space. Upcoming merchants are in various stages of lease negotiations and discussions, with more announcements expected soon.

Oakley is in Contra Costa County, within the nine-county San Francisco Bay Area. The population at the 2020 U.S. census was 43,357 residents. Oakley is the newest incorporated city in Contra Costa County.

Matt Hammond, principal, Coreland Cos., told Commercial Property Executive that well-positioned grocery stores continue to thrive despite facing headwinds.

“For each, the potential for growth and expansion remains, especially in developing or underserved areas,” Hammond said.

“Quality operators, like Safeway, provide the needed draw to attract complimentary neighborhood-serving restaurants, services and retailers. When a daily-needs grocer is incorporated into a well-designed shopping center with outdoor seating, landscaped pedestrian pathways and gathering places, it becomes a true focal point for communities.”

Cameron Baird, senior vice president of Avison Young, told CPE that grocery-anchored centers are among the most popular and successful retail developments in California and nationwide.

“Due to the frequent nature of grocery shopping, the number of repeat shoppers that visit grocery-anchored centers ensures that co-tenants have ample visitation and cross-shopping opportunities versus other centers,” Baird said.

READ ALSO: Retail Owners Gain Leverage

“Because of the internet, the resilience of grocery retail visitation tends to be higher. Generally, these centers tend to have less turnover, less vacancy and higher profitability than other retail assets.”

Reliable income through long-term leases

Richard Rizika, partner & co-founder of Beta Retail, told CPE that grocery-anchored centers are highly valued for their stability and resilience, driven by the consistent foot traffic generated by essential retailers.

“They offer reliable income through long-term leases, attract a diverse mix of tenants and often serve as community gathering places and a source of local pride,” Rizika said. “These centers are aligned with the growing consumer demand for convenience. This classification of retail centers has remained competitive over decades, making them attractive to investors and developers seeking steady returns in an ever-changing market.”

The trends in grocery store-anchored centers reflect a shift toward enhancing the shopping experience through mixed-use developments, sustainability initiatives and technology integration.

“The most successful grocery-anchored centers continue to evolve to meet consumer demands through several key trends,” Rizika said. “Owners enhance the shopping experience by integrating amenities like outdoor dining, entertainment and gathering spaces.

“Additionally, technology is playing a crucial role, integrating automated checkouts, curbside pickup and other digital tools that improve convenience. Finally, grocery stores adapt to e-commerce by offering online ordering and delivery services, effectively blending physical and digital shopping experiences to remain relevant in today’s retail landscape.”

He said another trend is incorporating energy-saving technology into sustainability initiatives. Sensors optimize lighting and HVAC systems by adjusting energy usage based on real-time occupancy and environmental conditions.

“These technologies reduce energy consumption and operational costs and contribute to a center’s overall sustainability while aligning with growing consumer and tenant preferences for environmentally responsible practices,” Rizika said.

READ ALSO: How Retail Properties Are Getting Greener

“The rise of mixed-use developments is also seeing grocery-anchored centers incorporated into larger projects, including residential, office and recreational spaces. This creates increasingly desirable environments for consumers to live, work and play.”

According to Rizika, grocery-anchored centers are likely to remain a key focus for investors and developers due to their stability, adaptability and central role in communities, consistent with the ongoing evolution of consumer needs and preferences.

Grocery-anchored centers at ‘greatest strength’

Mark Sigal, CEO of Datex Property Solutions, told CPE that retail remains the hottest real estate sector, with grocery store-anchored shopping centers showing the greatest strength.

“The reasons are simple,” he said. “Retail is at a historical low point in terms of vacancy, which is a product of a healthy consumer, strong fundamentals for retailers in terms of sales per square foot and occupancy cost trends, and a scarcity of new retail development over the past few years.”

“Retail and retailers are battle-tested, perennially by local competition, by adapting to changing consumer tastes, the risk of getting Amazon’d, and overcoming the disruptions caused by the COVID pandemic,” he added.

Sigal said the conventional wisdom when Amazon acquired Whole Foods was that they would disrupt the grocery business.

“Billions of dollars in market cap evaporated when the deal was announced,” he said. “But a funny thing happened on the way to the dustbin of failed retail concepts. The pandemic was a boon for supermarkets. Consumers realized that they like to see and touch their produce, meats and other perishables more than ever.”

“Amazon’s brutal efficiency, which has served them well in specific categories, worked against them in supermarkets, where operators are used to competing on experience and volume via a business model that can be profitable with 1 percent to 3 percent margins,” he also told CPE.

“Coupled with the general shift in consumer preferences from enclosed malls to open-air ‘necessity retail,’ the grocery store-anchored shopping center is ascendant and ripe for further development,” Sigal concluded.

Consumers increasingly recognize the value of essential services at their doorstep, and grocery store-anchored developments are central to creating vibrant, self-sustaining communities, Craig Studnicky, founder & CEO of ISG World, told CPE.

“Convenient access to a grocery store is now seen as a luxurious amenity,” Studnicky said. “For example, by incorporating a 35,000-square-foot Publix as its anchor, Shoma Bay highlights this growing real estate trend and marks a new era in urban development, where convenience and luxury converge.”

Rick Redpath, principal of Nadel Architecture + Planning, the design firm of record for many national retail brands, including Sprouts, told CPE, “For years, grocery-anchored neighborhood shopping centers were the basis of many developers’ portfolios. During the explosion/expansion of the 2000s before the economic bubble burst, the grocery-anchored center was somewhat left behind for larger, more exciting entertainment and hospitality venues.”

According to Redpath, once the economy tanked, the one part of most developers’ portfolios that remained strong was their existing grocery-anchored centers. “Even during difficult times, people still need to eat, and the grocery-anchored center is a part of the local community, providing necessary food and staples for everyone from singles to large families,” he added.

“In a more cautious current economy, there is a trend back to grocery-anchored centers as they traditionally have performed well for developers and are an asset to stable as well as growing communities,” Redpath concluded.

The post Regency Centers Enters Northern California Market appeared first on Commercial Property Executive.

UCSF Health opens today Bayfront Medical Building, a 181,000-square-foot outpatient clinic, at its Mission Bay medical campus in San Francisco. The project’s development costs amounted to $228 million, San Francisco Chronicle reported.

Clark Construction Group broke ground on the five-story building in September 2021. The development team also included Stantec, Rutherford + Chekene and Guttmann & Blaevoet, among others.

A few months later, a nine-level garage started to rise nearby, meant to provide 500 car parking spaces for the new clinic. That structure came online in 2023.

READ ALSO: Medical Office to Perform Well in 2024

Bayfront Medical Building features 14 operating rooms for outpatient surgery, imaging suite, laboratory, physical and occupational therapy gym, 15 types of specialty care, as well as retail and pharmacy spaces. Its medical tenant roster includes the flagship UCSF Medical Center, UCSF Benioff Children’s Hospital, Langley Porter Psychiatric Hospital and Clinics and UCSF Faculty Practice, Becker’s Hospital Review reported.

The clinic will provide a variety of medical services, including allergy, dermatology, endocrinology, hepatology, pulmonology, urology, gastroenterology, pain medicine, physical therapy and rehabilitation and vascular surgery.

Formerly known as Block 34 Clinical Building, the facility is at 520 Illinois St., having access to Interstate 280 and public transportation. Downtown San Francisco is less than 3 miles away. Other medical providers in the surrounding area include Cardinal Medical Center and Concentra Urgent Care, among others.

Bay Area health-care development

As of August, the Bay Area had approximately 1.6 million square feet of medical office building space in various stages of development, CommercialEdge data shows.

One of the currently underway developments is Valley Health Center, a 230,000-square-foot medical office building in San Jose, Calif. Completion of the 10-story facility is expected in late 2025.

Planned projects include UCSF’s 284,800-square-foot research facility and outpatient treatment center in San Francisco. The facility would be part of the Potrero Power Station redevelopment district.

The post UCSF Opens $228M Health-Care Facility appeared first on Commercial Property Executive.

The slowdown in investment activity has dented office prices, but the metro remained one of the priciest in the U.S., with multiple life science properties changing hands.

As of June, there were 5.6 million square feet of office space under construction across 25 office properties in San Francisco, representing 3 percent of total stock.

The figure is well above the national average of 1.4 percent and also outpacing other similar markets, such as Manhattan (1.4 percent), Los Angeles (1.1 percent) and Chicago (0.5 percent), while Boston led the fold, at 4.5 percent.

Office development activity outpaces other gateways

The global tech hub’s under-construction pipeline outperformed those of Los Angeles (3.5 million square feet) and Washington, D.C. (3.1 million square feet). In terms of square feet underway, San Francisco had middling performance among gateway markets, with Boston leading the ranking with a 12.9 million square feet pipeline, while Manhattan followed with 6.6 million square feet.

Year-to-date through June, San Francisco saw 1.7 million square feet of office space delivered, accounting for 0.9 percent of total stock. Among the significant properties that came online since the start of the year was Boston Properties’ 651 Gateway Blvd., a 327,000-square-foot life science building that was completed in March. The 16-story South San Francisco property was originally built in 1986 and fully redeveloped.

The notable office properties currently underway include Kilroy Oyster Point’s Buildings D, E and F, three life science buildings that will total 865,000 square feet. The developments are part of Kilroy Realty’s larger 3 million-square-foot waterfront project and are expected to come online in late 2025.

Lane Partners’ Southline Building 1 is also under construction. The 375,000-square-foot life science project broke ground in 2023 and is part of Southline project’s first phase. The developer secured a $373 million construction loan for the development that can accommodate up to 2.8 million square feet of office and R&D space.

San Francisco office prices still stay high despite investment slowdown

Year-to-date through June, San Francisco saw the continuation of the limited sales activity witnessed last year. The metro recorded $176.6 million in investment, with 12 office properties changing hands for an average sale price per square foot of $319.

Among peer markets, Washington, D.C. led with $1.5 billion in office investments. The life science property type continues to garner attention and, along with medical office building investment, is a key factor in the success of other gateway markets, most notably Boston.

So far in 2024, in terms of average sale price per square foot, Manhattan remained the priciest office market, with properties changing hands for $552. Los Angeles followed (at $354 per square foot), while Washington, D.C., trailed with $271 per square foot.

A significant deal was the $47.7 million acquisition of Gateway at Millbrae Station, a 174,072-square-foot office building that came online last January. Coming in at $274 per square foot, the deal for the Class A, six-story property was completed between buyer Swift Real Estate Partners and Republic Family of Cos.

High vacancy rates, deals still coming through

The office vacancy rate in San Francisco reached 25.4 percent as of June. Since the start of the year, the percentage showed a continuous increase—from the 23.7 percent recorded in January to the 25.2 percent recorded in May. In line with this ongoing trend in the metro, Google announced in May that the company is giving up 300,000 square feet of office space at One Market Plaza.

Notable office leases that closed in the first six months of the year include Alexandria Real Estate Equities Inc.’s early lease renewal and extension at its Alexandria Center for Advanced Technologies – South San Francisco campus, that consists of 211,405 square feet. The tenant is insistro, which will occupy 143,188 rentable square feet of space through 2034.

In March, Silicon Valley Bank opened its new downtown San Francisco office at Tishman Speyer’s 222 Second St., a 452,418-square-foot office tower. The tenant will occupy multiple floors at the 26-story building, with its footprint totaling 60,000 square feet, according to CommercialEdge.

Coworking sector still steady

The coworking sector in San Francisco is keeping steady so far, with 1.9 million square feet of shared office space in the metro as of June. Manhattan led the all gateway markets with 8.4 million square feet and was followed by Los Angeles (4.3 million square feet), Washington, D.C. (3.1 million square feet) and Chicago (2.9 million square feet).

The metro’s coworking space as percentage of total leasable office space reached 1.9 percent in June, above the national average of 1.8 percent and Washington, D.C.’s rate (1.6 percent).

The coworking operator that had the largest footprint in the metro was still WeWork, with locations totaling 772,964 square feet. The providers that followed were Regus, with 317,691 square feet, Studio by Tishman Speyer, with 158,632 square feet, Spaces, with 154,847 square feet and ReadySpaces, with 150,225 square feet.

The post Strong Development Activity in Pricey San Francisco appeared first on Commercial Property Executive.

Related California filed a revised application with the San Francisco Planning Department for 530 Sansome Street, a public-private partnership with the City and County of San Francisco, seeking to build a 41-story, 575-foot-tall tower rather than a 19-story, 218-foot-tall building that would have been constructed atop a renovated fire station. The original proposal was approved by the San Francisco Planning Commission in 2021.

This week, Related California, the West Coast affiliate of New York-based Related Cos., stated it is pursuing a new approach that is more feasible in today’s financial reality. The revised plan would still include a five-star, 200-key hotel but it significantly boosts the amount of office space to about 375,000 square feet. In addition to hotel rooms, the original version called for 39,800 square feet of office space, a 36,350-square-foot fitness center and 6,800 square feet of retail and restaurant space, according to city planning documents. The ground-floor fire station would have been renovated and occupied 30,750 square feet.

READ ALSO: Is Development Still Financeable? That Depends.

Under the new plan, Related California will build a $40 million fire station adjacent to the newly constructed tower. The firehouse development is included in the total $600 million project cost, along with a $4.5 million in lieu of affordable housing fee that will help fund an affordable housing project for seniors in Chinatown.

According to the San Francisco Chronicle, which first reported the story, the hotel and offices would be divided by an amenity floor plus another floor with a spa and fitness center. The two floors above the ground-floor lobby would have a restaurant and conference rooms.

Matt Witte, principal of Related California Residential LLC, told the San Francisco Chronicle that the offices will target tenants seeking smaller floorplates with views of the bay. Designed by Skidmore Owings & Merrill, the proposed tower tapers toward the top, providing floorplates ranging from 9,000 square feet to 18,000 square feet.

In a news release announcing the revised plan, Witte stated that the Jackson Square area is seeing strong demand for bespoke office space because of its character and amenities. He noted that 530 Sansome would bring new office space with world-class views and a new hotel to the edge of Jackson Square, adding new uses to further energize and complement the neighborhood in the Financial District.

Because there is a 200-foot height limit, Related California would need a rezoning variance from the Board of Supervisors to move forward. The firm expects public meetings to occur in late 2024 or early 2025. If the project receives city approvals, development could start by 2027 and conclude by 2030.

Changing market conditions

It’s not the first time in recent history that Related has changed plans on a major California project due to changing market conditions. Earlier this year, the company announced it was seeking to swap out most of the office space at its $8 billion, 9.2 million-square-foot Santa Clara megaproject in Silicon Valley.

The public-private partnership project had been through a decade of planning and was approved in 2019 by the Santa Clara City Council. The 240-acre LEED-certified, multi-phased, mixed-use project next to Levi’s Stadium was expected to have a city center with about 5 million square feet of office along with residential, retail/entertainment and hotel space.

Related wanted to eliminate about 4 million square feet of office space and replace it with up to 1.6 million square feet of light industrial and advanced manufacturing space.

Back in San Francisco, 530 Sansome is about one block from the Transamerica Pyramid building, which is being renovated for $400 million by New York developer Michael Shvo and his firm SHVO. In March 2022, SHVO selected Foster + Partners to redesign the block-wide office complex that includes the iconic 48-story tower at 600 Montgomery St., completed in 1972. The firm and a team of investors acquired the campus in October 2020 for $650 million.

It is also close to 350 California, a 22-story, 297,642-square-foot office building on the corner of California and Sansome streets that reportedly sold for about $61 million in September 2023. The Swig Co. and SKS Partners acquired the tower at a deep discount from Mitsubishi UFJ Financial Group. When it first hit the market in 2020, the building was priced at $250 million.

San Francisco office market still struggling

The San Francisco office market continues to face challenges in its postpandemic recovery. The vacancy rate hit a record 37 percent in the second quarter, CBRE reported. But there were some bright spots in the second-quarter report.

The market recorded the smallest increase in vacancy rate since the third quarter of 2021. Leasing activity totaled 2 million square feet, up 40 percent from the first quarter of 2024 and 61 percent higher than in the second quarter of 2023. CBRE noted that some submarkets experienced positive or near-positive net absorption due to large expansion deals signed by artificial intelligence and technology companies.

The post Related Doubles Size of $600M San Francisco Project appeared first on Commercial Property Executive.

Joining the major corporations that have left California in recent years, Chevron announced on Friday that it will relocate its headquarters to Houston.

The energy giant will move its base of operations from Bishop Ranch, a mixed-use campus in San Ramon, Calif., to two Houston office towers that the company owns and occupies in full.

According to Chevron, the relocation to Houston will take place over five years. Mike Wirth, the firm’s chairman & CEO, as well as Vice Chairman Mark Nelson, will move to Houston later this year, joining other senior members of the leadership team already based in the city. About 7,000 Chevron employees are currently located in the Texas city, compared to 2,000 in San Ramon. Chevron will become the second-largest public company located in Houston, second only to Exxon Mobil Corp.

Making the move

The origins of Chevron’s San Ramon downsizing and Houston expansion go back several years. In 2022, the firm reduced its presence nearly threefold when it sold Chevron Park, a 1.3 million-square-foot campus within Bishop Ranch that had been its base of operations since 1982. Chevron sold the campus back to its previous owner, Sunset Development Co. With that sale, the company leased 400,000 square feet at Bishop Ranch – 2600, a 1.8 million-square-foot property that is also owned by Sunset.

According to previous coverage in CPE, the sale was motivated by the firm intending to focus more of its operations in Houston.

The company has had a presence near the Houston Energy Corridor for more than a century. Chevron acquired the towers on Louisiana and Smith streets in downtown Houston in 2004 and 2011, respectively, according to information from CommercialEdge.

1500 Louisiana St. is a 40-story, 1.1 million-square-foot Class A+ tower completed in 2000. The 1.2 million-square-foot 1400 Smith St., which opened in 1983, rises 50 stories. During its ownership, Chevron has renovated the buildings’ interiors and mechanical equipment.

In 2017, Chevron spent $10 million to renovate 1500 Louisiana St., according to Texas A&M University’s Texas Real Estate Research Center. Both buildings are LEED-certified.

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Along with the towers, Chevron owns 3901 Briarpark Drive, a 222,544-square-foot office property in the city’s Westchase suburb. The company also hosts The Launchpad at Rice University’s Ion District Development, where it conducts research into integrating external technologies into its operations around lowering its carbon footprint, as well as data analytics and information technology.

Another potential project that has been a source of speculation is 1600 Louisiana St., a 58-story tower that would span 1.5 million square feet.

A long time coming

Chevron’s presence in San Ramon dates back to 1879, when a series of smaller, California-based companies merged with Standard Oil.

According to Bloomberg, reasons for Chevron’s departure from California include the state’s emissions regulations and its weaning off oil and gasoline consumption. The Golden State accounts for more than a third of the nation’s electric vehicle sales. It also has the nation’s most aggressive decarbonization initiative and has set a 2045 deadline for net-zero emissions.

Chevron also cited Texas’ lower taxes and cost of living as motivations, according to the Bloomberg report.

Heading southeast

Over the past several years, a number of corporations have moved from California to Texas, notably technology companies. Last month, Elon Musk announced that he would be moving the headquarters of both X, formerly known as Twitter, and SpaceX to the latter company’s Starbase campus. Tesla, formerly based in Palo Alto, relocated to Austin in 2021.

Oracle, formerly based in Redwood City, moved to Austin in 2020, but is now set to relocate its headquarters to Nashville.

A recent CBRE report on corporate relocations found that Sun Belt states–including Texas, Florida and Georgia–have received the most net gains in space from Fortune 500 firms over the past six years. California, Illinois, New York and New Jersey have had the sharpest decreases.

Still, the series of moves has not done much to affect fundamentals in the Los Angeles and Bay Area markets, which have retained some of the nation’s largest pipelines, asking rents and transaction volumes, data from CommercialEdge’s latest National Office Report shows.

The post Goodbye, Golden State: What’s Driving Chevron’s HQ Move appeared first on Commercial Property Executive.

The research facility would be on Block 2 of the Potrero Power Station Special Use District, which is the legal framework for the redevelopment of the shuttered Potrero Power Station in the Dogpatch neighborhood into a mixed-use project, a long-term redevelopment undertaken by Associate Capital.

The redevelopment district is roughly bounded by 22nd Street, 23rd Street, Illinois Street and the bay. The long-term plan for the district calls for as many as 2,600 housing units, 1.6 million square feet of commercial space, a 250-key hotel and green space.

The UCSF plan would mean that the university would own the block outright, once the city signs off on the plan. Swiss architects Herzog & de Meuron, best known for the de Young Museum, designed the new UCSF building.

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The research facility would be the second building in the district so far, following a 105-unit residential development that Associate Capital started in 2023, after funding was approved to make infrastructure improvements in the district.

The city created the district itself in 2020, anticipating that it would add a significant amount of publicly accessible open space and community facilities, increased public access to the waterfront, neighborhood-serving retail, and affordable housing. The site had been devoted to electricity production since the late 19th century, eventually operating as the last fossil fuel power plant in the city, which closed in 2011.

San Francisco life science market cools

Once a hot market, life sciences in the Bay Area cooled as funding got more expensive, though the market is still sizable and active companies are looking for high-quality space. The city managed to eke out positive absorption of nearly 36,500 square feet in the first quarter of 2024, Avison Young reports, compared with negative absorption of more than 278,000 square feet for San Francisco Peninsula as a whole.

Life science vacancies have been rising steadily in the Bay Area, from well below 10 percent just before the pandemic—and in the quarters immediately after the worst of the pandemic—to exceeding 20 percent by the beginning of 2024, with some development still underway. The upshot may be a short-term oversupply in the Bay Area, Avison Young notes.

Total life science employment in the Bay Area has mushroomed in the last 20 years, according to Avison Young, supporting the expansion of life science real estate in the region, with San Francisco forming one of the nation’s main clusters in the industry. In the city, only about 2,000 people worked in the sector in 2002. Twenty years later, the total was more than 13,000.

The post UCSF Plans R&D Facility in San Francisco appeared first on Commercial Property Executive.

Primestor Development has purchased Hilltop Plaza, a 245,921-square-foot retail center in the East Bay city of Richmond, Calif., for $36.5 million. The acquisition, marking the company’s entrance in the Northern California market, was arranged by JLL.

The previous owner was Madison International Realty, according to CommercialEdge data. The company had acquired the asset for $31.8 million back in 2002.

Since its inception, Primestor has invested more than $1 billion in urban, mixed-use real estate. In another recent deal, also brokered by JLL, Primestor has acquired the Esplanade Shopping Center, a nine-building, 357,000-square-foot grocery-anchored property in Oxnard, Calif.

An 88 percent leased retail center

Hilltop Plaza came online in 1996 on some 59 acres and includes 26 acres of undeveloped land. Besides actively negotiating with several prospective tenants, the new owner plans to revamp the retail center. SITE Centers handled leasing and property management prior to the sale.

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The shopping center was 88 percent leased at the time of closing. The property’s roster includes a diverse mix of national and regional retailers such as Ross Dress for Less, City Sports Club, dd’s Discounts and Century Theatres, among others, boasting a long-term average tenant occupancy of more than 18 years.

Located at 3190-4251 Klose Way, Hilltop Plaza is positioned along Interstate 80, in an area where the daily traffic count reaches approximately 190,000 vehicles, as reported by JLL. The retail center sees 3.2 million annual visits.

JLL’s Managing Directors Geoff Tranchina, Eric Kathrein, Gleb Lvovich and Warren McClean represented both parties in the transaction.

The post Primestor Pays $37M for Bay Area Shopping Center appeared first on Commercial Property Executive.

Gateway of Pacific is a five-phase lab and office development in South San Francisco, a highly sought-after area by the biotech industry. More than 200 life science companies are operating alongside a wide network of venture capital and skilled workforce drawing from the prestigious universities in California, so demand for life science space is always high.

BioMed Realty, a portfolio company within Blackstone’s Core+ Life Sciences Real Estate strategy, owns and operates the flagship campus that was designed to provide flexible solutions to the life science and technology industries. GOP’s first four phases are complete, according to Salil Payappilly, senior vice president at BioMed Realty, and once finalized, the campus will grow to 2.2 million square feet of office and specialized space.

Commercial Property Executive talked to Payappilly about his company’s sustainability practices and ambitions, zooming in on the GOP project.

How do the sustainability features at the Gateway of Pacific campus align with BioMed Realty’s overall sustainability strategy?

Payappilly: Investors and tenants are increasingly demonstrating a preference for sustainable buildings. At Gateway of Pacific, we’ve made strategic energy investments in solar generation, high-efficiency heating and cooling, rainwater harvesting, condensation capture and EV charging infrastructure. Across our portfolio, we’ve taken actions to make our buildings more energy efficient, invest in renewable energy, and help our tenants conduct business more sustainably.

More than 5 million square feet of our operating portfolio in the U.S. is LEED certified as of last year. Since 2016, BioMed Realty has implemented 189 energy-efficiency projects, including replacing HVAC cooling towers and implementing LED retrofits, saving over 40.8 million kilowatt-hours of electricity. The company has also implemented transportation programs, saving approximately 286,000 metric tons of carbon dioxide emissions.

What specific energy efficiency measures have been implemented at the campus?

Payappilly: We’ve implemented several energy efficiency measures to improve the sustainability of our operations and help our tenants reduce their energy consumption. These include high-performance facades, a high-efficiency and expandable central mechanical plant, heat recovery chillers and exhaust stack discharge controls. With interconnected heating and cooling systems, we take advantage of system diversity, providing our tenants with resiliency and reliability.

Each building and Traverse—the campus amenity center that offers a personalized array of culinary, fitness and community experiences—have base-building HVAC with individual air handling units optimized to meet our tenants’ laboratory requirements.

Beyond energy, GOP has taken a holistic look at carbon emissions across the campus. We’ve studied energy efficiency, renewable energy and reductions in transportation emissions, and have made major savings in embodied carbon.

READ ALSO: Boosting Asset Value Through Fit Buildings

Can you share more details about the renewable energy installations at GOP? What percentage of the campus’ energy needs are met through these installations?

Payappilly: We’ve installed solar panels on Traverse to generate renewable energy onsite. These installations provide approximately 48 percent of the total energy for the Traverse property. We are also currently designing an onsite solar panel system installed and managed by a third-party provider for GOP, which is expected to generate approximately 2.1 million kilowatt-hours annually.

How does the rainwater capture and greywater collection system work?

Payappilly: As part of the property’s water conservation efforts, GOP-II recycles water within the facility’s restrooms. The system harvests rainwater and condensation from the tower roof to feed into the bathrooms in Traverse. Additionally, all bathrooms are equipped with water-efficient fixtures.

What steps have you taken to ensure all buildings achieve some sort of green building certification?

Payappilly: GOP-I and Traverse achieved LEED Platinum certifications. All other buildings hold LEED Gold certifications. This achievement is possible through various sustainability features, including onsite energy generation, rainwater capture, high-efficiency HVAC systems and light fixtures, sustainable construction materials, as well as ample electric vehicle infrastructure.

Additionally, BioMed Realty provides transportation for commuters at GOP through the DNA Shuttle to popular public transportation points including Bay Area Rapid Transit, CalTrain and SamTrans to promote rideshare practices. The campus also features a green roof and 5.5 acres of landscaped open space uninterrupted by vehicles, offering park-like experiences for quiet contemplation and connection.

Last year, Gateway of Pacific’s conference center, Forum, received Fitwel 2 Star certification, acknowledging the development as a world-leading healthy building. In 2022 and 2023, the campus was awarded ‘Best Site for Commuters’ and, in 2020, was also granted an award for its smart building features.

How do you plan to keep improving the sustainability features at GOP?

Payappilly: BioMed Realty is committed to partnering with our tenants to advance their ESG goals by promoting health, wellness, innovation, connection and sustainability through all phases at GOP. Central to this partnership is our robust data collection process, which allows us to effectively monitor our progress and make informed adjustments to optimize sustainability efforts.

As part of the GRESB Real Estate Assessment, we report on energy, water and greenhouse gas data across our operating portfolio. We also monitor all renewable energy generated at GOP as part of our corporate ESG data collection and management framework.

BioMed is actively pursuing Fitwel Champion status, having registered GOP-III as part of this commitment to implementing Fitwel Healthy Building Certifications across our portfolio. This initiative will optimize health and wellness at GOP.

What was your tenants’ response to all these sustainability initiatives?

Payappilly: We regularly engage with tenants at the GOP campus to discuss their energy consumption patterns and use these insights to inform annual operating plans and to identify opportunities to make our buildings more energy efficient. We value sustainable practices and consider them a key part of our growth strategy. We’ve seen an increase in demand for sustainable infrastructure from tenants and investors, so our goal is to continue building properties that deliver leading sustainability features.

Tell us more about how you’re planning to meet the new greenhouse gas emissions targets set by California.

Payappilly: In support of California’s 2045 carbon neutrality goal, BioMed Realty is increasing renewable electricity across its operating portfolio, including onsite hosted solar power that will supply renewable electricity across select California assets in the Bay Area and San Diego markets, with commercial operation beginning in 2025. We’ve incorporated our ESG goals and policies into new construction and developments such as GOP, including optimizing electrification and integrating low-carbon design strategies.

California is also the first in the nation to mandate embodied carbon targets for new construction, starting this year. GOP is a model for embodied carbon savings. We initiated embodied carbon lifecycle analyses at GOP before it was common practice and have continued throughout our portfolio ever since. Recent examples include the construction of GOP-II and GOP-III, which resulted in 27 percent and 23 percent less embodied carbon compared to typical construction at the time.

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What impact do you foresee these new laws having, particularly on life science real estate?

Payappilly: We’ve already seen an increase in demand from tenants and investors for sustainable infrastructure and we anticipate this trend to continue, especially with respect to EV infrastructure, energy-efficient technologies and water-conscious systems.

How are you planning to collaborate with tenants to meet these new legislative requirements?

Payappilly: We have successfully implemented tenant surveys across our operating portfolio to enhance tenant engagement and satisfaction and have pulled valuable insights to inform future operating plans. We’re committed to transparency and will continue to regularly report on our ESG goals and progress.

Now more than ever, tenants are inquiring about the sustainability of our buildings and setting high ESG goals. BioMed Realty is in a great position and has led the market by example.

The post BioMed’s Gateway of Pacific: Where Life Sciences, Tech and ESG Meet appeared first on Commercial Property Executive.

Signs are pointing to a resurgence, and there are reasons to be optimistic about improving conditions, said Travis McCready, head of life sciences for the Americas with JLL, in a prepared statement. McCready emphasized company creation throughout 2023 despite significant headwinds. He noted venture capital firms have record funding waiting deployment and big pharma has substantial resources aiming for acquisitions. There’s also an upcoming patent cliff that will help drive activity.

The JLL paper pinpoints five key trends for lab space, including growing national demand, how quality in top markets is driving leasing successes and how the supply-to-demand ratio is gradually beginning to normalize in most major cities. Other top observations include the fact that lease terms are shrinking in an occupier-favorable environment, and that newly added vacancies are expected to fall after 2024.

While there are good rebound indicators, the main hurdle is dealing with current oversupply, virtually everywhere. The sector saw a dramatic shift in the macro environment combined with a glut of new supply arriving while the market cooled, leading to a downcycle. Data shows the sector is on the right path to achieving equilibrium, though.

READ ALSO: Emerging Life Science Hubs Stake a Claim

Newly added vacancies are set to fall quickly after 2024, but the sector must first absorb all the new space that came online after 2021. A little more than 13 million square feet of vacant space came online in the U.S. lab market in 2022 and 2023 alone. This year, more than 15 million square feet of new vacant space could be delivered unless demand materially changes before the year ends.

However, the numbers drop considerably after 2024. Currently, only 4.7 million square feet of lab space underway has the potential to deliver vacant from 2025 into 2027, according to JLL. The report also notes that a respite in new supply will give the market some breathing room for improved absorption. Total supply at the end of 2024 could be more than 65 million square feet, with aggregate demand at only 11.5 million square feet.

Hot markets, shorter leases

The usual suspects continue to see strong activity: Boston, San Diego and the Bay Area. The Bay Area alone jumped from less than 2 million square feet of demand at the end of 2023 to 2.7 million square feet in the first quarter. Kevin Wayer, division president for JLL life sciences, stated occupiers in those markets should take advantage of conditions this year because competition for space is likely to heat up once startup capital starts flowing more freely in 2025 and beyond.

READ ALSO: Attracting Life Science Tenants in Core Markets

Wayer also noted demand in the three markets is now on par with 2019 levels. While the aggregate U.S. figure is still 55 percent lower than the 2021 peak, the big three have 6.9 million square feet of demand today. Over the past three quarters, they have seen quarterly growth in demand for lab space averaging 17 percent.

Not surprisingly, the top-tier “core” submarkets have significantly outperformed peers in the three areas. Those top submarkets include UTC and Torrey Pines in San Diego, South San Francisco in the Bay Area and East Cambridge in Boston.

JLL also observed that lease terms are shrinking in an occupier-favorable market. In the second half of the last decade, demand started to outpace supply, giving landlords greater leverage. With supply outpacing demand as of late, tenants are now pushing for shorter lease terms, particularly startups.

The report notes that shorter leases are particularly evident in smaller and midsize deals, which make up the majority of activity now. The average term has decreased by 2 years for middle-market deals and by almost 1.5 years for smaller deals, compared to 2 years ago. Lease terms in the first quarter of 2024 were at an average of 5.1 years.

The post Life Science Prospects Are Looking Up: JLL appeared first on Commercial Property Executive.

Owned by Paramount Group and Blackstone, the complex has two high-rise towers and an 11-story office annex building known as the Landmark, where Google will retain an office when it clears out of the larger tower. Google has leased the 300,000-square-foot office space since 2018.

Google spokesperson Ryan Lamont told the San Francisco Chronicle, which broke the story, that the company is committed to having a long-term presence in San Francisco but would not say how long it would retain its space in the Landmark building at the complex. Lamont reiterated the company’s stance that it is focused on investing in real estate efficiently to handle the current and future needs of a hybrid workforce. Google also leases about 400,000 square feet of space at the nearby 345 Spear St., but Lamont declined to discuss a possible lease renewal at that property, according to the Chronicle.

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Google’s announced exit comes one year after Visa listed its 190,000-square-foot headquarters at One Market Plaza for sublease ahead of its move this year to Mission Bay, a 1.4 million-square-foot megaproject in the Mission Rock neighborhood being developed by Tishman Speyer and the San Francisco Giants. Also last year, Autodesk listed 73,000 square feet at One Market Plaza for sublease as well.

However, a Paramount and Blackstone spokesperson told the Chronicle the Google lease doesn’t expire for another year and they are already in discussions with possible new tenants. The property also still commands rents about 20 percent higher than other trophy office assets in the city, the Chronicle reported.

The Google lease news came several months after Paramount and Blackstone modified and extended their existing $975 million loan for the trophy office complex. The mortgage was due to mature in February, but the joint venture partners worked out a deal to reduce the loan balance to $850 million, following a $125 million paydown. The modified loan matures in February 2027, with a possible one-year extension.

Office concerns remain

While the San Francisco office market has seen some positive net absorption in the first quarter, the strongest quarter since 2020, issues remain. Vacancy increased to 32.7 percent and availability stayed flat at 37 percent, a sign of surplus space, according to Cresa’s San Francisco office market summary for the first quarter of 2024. The report also noted that 84.7 percent of tenants taking 100,000 square feet or more in the past two quarters move into subleased space, which offer discounted rents, lower capital costs and quicker occupancy. New leases in the first quarter included Silicon Valley Bank, a division of First Citizens Bank, opening a new office on several floors of 222 Second St.

Like other technology companies, Google has had layoffs in recent years and began downsizing its real estate portfolio as more of its employees chose to work remotely or take advantage of flexible schedules that didn’t require them to be in the office five days a week.

In February 2023, the company stated it expected to spend $500 million in the first quarter that year to reduce its office space globally. Several months later, Google put more than 1.4 million square of office space in the Bay Area up for sublease, including 736,000 square feet in Sunnyvale, Calif., according to The Real Deal. In November, Google and Lendlease agreed to halt the $15 billion development of four master-planned mixed-use neighborhoods in Silicon Valley, including one project in Mount View, Calif., that would have included office space as well as residential and retail uses across 153 acres. Further north on the West Coast, Google notified Kirkland, Wash., last year it wasn’t going to buy a 10-acre property where it was planning a major redevelopment and space for as many as 6,000 employees.

In positive office news, earlier this year Google opened its New York City headquarters at the expanded and rehabilitated 1.3 million-square-foot St. John’s Terminal building at 550 Washington St. in Manhattan’s Hudson Square section. The adaptive reuse project is the centerpiece of Google’s 1.7 million square feet of space in the neighborhood, including nearby offices at 315 Hudson St. and 345 Hudson St.

The post Google to Give Up 300 KSF at San Francisco Trophy Tower appeared first on Commercial Property Executive.

Astellas Pharma Inc. has opened the West Coast Innovation Center, a new 154,000-square-foot laboratory and office facility in South San Francisco, Calif. The Japanese company leased the entire Building A of Vantage, a 20-acre, three-phase life science campus that is being developed by Healthpeak Properties.

Astellas took initial occupancy of the space in December and plans to house all of its Bay Area-based employees there. Completion of several of the building’s amenity spaces, including an auditorium and cafeteria, is expected this summer.

Previously, employees from Astellas’ Gene Therapies, Xyphos Biosciences, business development and Rx+ Business Accelerator arms and subsidiaries worked out of separate offices in San Francisco and Menlo Park, Calif. Nearly 300 of them have already relocated to Vantage and 200 more will follow, according to San Francisco Business Times.

Built and occupied in phases

Astellas’ new abode came online in 2023 as part of Vantage’s three-building, 343,000-square-foot first phase. The five-story, LEED certified building has floorplates averaging 35,000 square feet, with each section configurable to both laboratory and office space.

Almost concurrently with Building A’s opening, Healthpeak gained the approval of entitlements for Phases II and III, which will include 1.3 million square feet of additional laboratory space. The announcement came nearly two months after the $21 billion all-stock merger between the firm and Physicians Realty Trust.

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The campus’ Building B is slightly larger, at six stories and roughly 188,0000 square feet, while its third component is a 40,000-square-foot, free-standing amenity center that includes a café, a fitness center and pop-up dining spaces, as well as larger meeting and conference spaces. CBRE handles leasing at the property.

Located at 480 Forbes Blvd. within South San Francisco’s life science cluster, Astellas’ West Coast Innovation Center is within 1 mile of access to the U.S. Route 101, with stops of the SFO, Caltrain and BART located 4 miles away. Neighbors include Genentech, Yali Bio and National Bioskills laboratories.

Healthpeak now owns 13 campuses in the Bay Area totaling 5.2 million square feet, with roughly 500,000 square feet in active development.

Golden City’s office sector struggles with vacancies

Despite having the second-largest office pipeline in the nation, San Francisco’s office sector has struggled with vacancy as of late, according to a CommercialEdge report. The metro has seen a 510-basis-point year-over-year increase in vacancy as of March, the rate reaching 24.2 percent. The larger Bay Area fared slightly better, at 20.8 percent.

Characteristically, most recent leasing and development activity in the city and its surroundings has been driven by AI and life science companies. Last month, IQHQ topped out Spur Phase One, a 330,000-square-foot transit-oriented project in South San Francisco. Completion is expected by early 2025.

Two weeks prior, Alexandria closed on a renewal and six-year extension of a lease with insitro for 143,188 square feet at the Alexandria Center for Advanced Technologies – South San Francisco campus. The tenant’s initial lease at this location was in 2018 for nearly 36,000 square feet of lab space. 

The post Astellas Pharma Opens Bay Area Innovation Center appeared first on Commercial Property Executive.

Dalfen Industrial has acquired five industrial outdoor storage sites on the West Coast. Two of the purchased properties are in San Francisco’s East Bay, two are in metro Seattle and one is located in Southern California.

Richard Weiss, Dalfen Industrial’s regional senior vice president, West investments, told Commercial Property Executive that the gross capitalization across the five deals was around $26 million.

The assets were purchased from five unique sellers and were acquired into a venture with Centerbridge Partners L.P. The venture is rapidly expanding its portfolio within infill industrial markets and near ports and key logistics infrastructure.

Property specifics

In separate transactions, Dalfen acquired two properties in Hayward, Calif.: 847–877 Industrial Parkway and 23422 Clawiter Road. At acquisition, 847–877 Industrial Parkway was some 70 percent leased. Dalfen quickly secured a new tenant following closing and brought the property to full occupancy. 232422 Clawiter was acquired fully leased with significant capital upgrades planned.

Both sites offer access to Highway 238, Interstate 880, I-580 and the Port of Oakland.

Dalfen also acquired two IOS sites in Washington State: 214 21st St. SE in Auburn and 8328 S. Tacoma Way in Lakewood. The Auburn site was purchased with highly accretive seller financing and is fully leased to one tenant. A 10-year lease with a large regional landscaping company was signed concurrent with closing on the Lakewood site.

In Southern California, Dalfen acquired a fully paved and fenced yard at 12371 Los Nietos in Santa Fe Springs, Calif. The property is less than 3 miles from the I-605/I-5 interchange. Select capital improvements are planned before offering the site for lease.

Weiss said that the types of capital improvements Dalfen has planned are typical for IOS properties: parking lot upgrades, building refurbishments and deferred maintenance.

A popular niche

Dalfen isn’t the only player actively pursuing IOS assets.

In April, Catalyst Investment Partners closed its Catalyst IOS Fund II at $186.9 million in LP commitments, handily surpassing its $150 million target. Commitments to the fund included domestic and international institutional investors, endowments, foundations, wealth managers, family offices and high-net-worth individuals.

So far, the fund has acquired IOS properties in metro Baltimore, Savannah, Ga. and Pennsauken and Fairfield, N.J.

The post Dalfen Picks Up 5 IOS Assets on the West Coast appeared first on Commercial Property Executive.

The possibility that AI could boost office space demand popped up more clearly last year, albeit at a local level. In 2023, San Francisco-based firms captured 67 percent of venture capital funding for global AI, and those in the Bay Area overall nabbed a whopping 78 percent.

In the City by the Bay alone, this translated into 1.1 million square feet of 2023 office leasing activity, according to Cushman & Wakefield research. Yes, yes, yes. While 1.1 million square feet is miniscule for a market of San Francisco’s size, an amplification in leasing last year could be a harbinger of things to come. If AI grows and evolves, so will the system supporting it.

READ ALSO: Where to Find the Bright Side of Office

Ermengarde Jabir, senior economist at Moody’s, believes AI will drive office demand. “Many perhaps fail to realize in their alarmism over AI taking everyone’s jobs, that to build and maintain AI requires a large workforce,” she said. “While certain types of jobs may become obsolete because of AI, other sets of skills will become prevalent, and very in demand in order to keep AI operational.”

Face to face

Today’s AI firms have determined, almost universally, that the work they conduct is best undertaken in offices, said Ethan McCall, vice-president of Spear Street Capital, developer of the new 300 Kansas building in San Francisco’s Potrero Hill. The property was developed to enable firms to recruit and retain the city’s finest AI talent and build market-leading firms, he said.

Echoing the notion that AI companies undertake ideation and development work within offices is Katy Redmond, technology industry lead, markets advisory at JLL. Working within shared physical space is integral to the establishment of teams and in-person collaboration required to move AI forward, she said.

She and her colleagues understand that dynamic because of the way their clients in the AI space describe their workplace needs. That’s why she’s more optimistic about footprint growth for AI firms vis-a-vis other types of tenants.

Already, AI organizations are involved in a flight to higher-quality spaces in their push to invest in tech-enabled square footage. A number have recently garnered venture capital funding and now require additional space for growing staffs, Redmond pointed out.

READ ALSO: Cause for Optimism on the Tech Front

“Some of the companies have grown so quickly that within a few months they are out looking for more space,” she added. “We’ve also seen greater emphasis among major retail, financial and legal companies on AI divisions, (resulting) in greater space needs among some of these companies.”  

In addition to AI companies, JLL has also tracked footprint growth of app and developer tool companies built on top of the main AI models, and expansions of AI teams in industries like health care and life sciences, Redmond reported.

She envisions the Bay Area remaining the nexus for AI companies over the next 5 years. But as generative AI becomes established, she foresees more growth in leading markets such as Boston, New York and Seattle. With AI a major focus of government and defense contractors, the Washington, D.C., area should also benefit.

Redmond also predicted growth in AI will in turn propel additional advancement in supporting industries.

Data centers, semiconductor manufacturers, AI application companies and others are anticipated to flourish, leading to footprint expansion of the supporting infrastructure required, she concluded.

Blast radius

A similar sentiment comes from Charles Clinton, CEO & co-founder of real estate investing platform Equity Multiple, who believes a multiplier effect may result from investment in firms the likes of OpenAI and Anthropic.

“These firms will create a blast radius of demand in real estate markets,” he reasoned. “Smaller firms will pop up to benefit from the talent that the larger firms draw and to create ancillary value-add services on top of the fundamental AI progress delivered by larger firms. An influx of highly compensated employees will create demand for coworking space, coffee shops and yoga studios, creating demand for flex office space, retail, mixed-use space as well as multifamily. We saw the same thing happen with Microsoft’s impact on the Greater Seattle area, and Google’s impact on Silicon Valley and the South Bay.”

READ ALSO: 7 Uses for AI in CRE

Clinton and his colleagues also believe the adoption of AI will propel a trend toward creation of satellite offices and flex collaborative spaces in non-central business districts, such as suburbs and outlying urban neighborhoods inside the borders of major cities.

Don’t bet on AI’s space needs being limited solely to urban and suburban areas, added David Dowell, partner of architectural firm El Dorado. The company, which teamed with Spear Street Capital on 300 Kansas, handles work in rural Tennessee and rural Kansas. There, “satellite-based connectivity has been a game changer,” Dowell said. “This may surprise people, but cities are not the only place where digital innovation is and will continue to occur. There are completely different design considerations and opportunities for rural places.”

Regardless of setting, AI firms’ needs may veer toward spaces more closely resembling light industrial or manufacturing than traditional office footprints, Dowell said. They need large facilities with workspace, collaboration zones and employee amenities, as well as floor area for computers and servers linked to significant building system capacity, including electrical and ventilation.

Growth phase

Taking a distinctly more cautious view is Lucas Bianchi, founder & CEO of Namaste Credit, an online marketplace for lenders, SMEs and loan agents, headquartered in India. Substantial gains in office space demand from AI companies should be expected only as the firms mature and evolve toward later funding stages, Series B, C and beyond, he said. This expansion phase often requires sizable investments and significant job growth.

The substantial 2023 San Francisco office space absorption authored by AI companies like OpenAI, Databricks and Anthropic remains but a fraction of the city’s 86 million square feet of office, approximately 30 percent of it empty. AI will benefit San Francisco initially, but due to the technology’s Bay Area focus, other cities aren’t likely to be advantaged for some time, Bianchi said.

AI firms’ unique needs, which may include special hardware, space for robotic testing and areas for creative brainstorming, may provide a “localized boom” in Bay Area office space demand for 5 or 10 years. “That said, it is not yet clear whether, over time, AI companies will require more or less space per employee or per company,” he said.

“In other cities, the effect may be less pronounced and slower to materialize, due to differing rates of AI adoption and the potential for AI to reduce traditional office needs through automation and remote work enhancements.”

Decade out

While few are willing to attempt even hazy predictions regarding where AI will lead the CRE market years from now, Redmond did observe, “Ten years from now is the really exciting part… We don’t know for certain where AI will be in 10 years, but PwC and McKinsey forecast AI to be major contributors to global GDP by then. If this scenario plays out, the supporting infrastructure required for app-based companies means AI will be firmly entrenched in commercial real estate, becoming major occupiers not just in the Bay Area but in secondary and tertiary markets as well.”

Compared to what’s predicted for AI’s future, the current status of the industry might be best described as embryonic. This may explain AI companies’ tentativeness about inking big leases, despite headcount and investment growth, Clinton said.

To get a handle on where the technology may be 10 years from now, it’s necessary to think beyond AI companies themselves, he added. That’s because AI use cases could accelerate productivity gains in sectors as widely diverse as health care, the law, data-heavy fields such as accounting and consulting and novel applications not yet imagined.

“With past major innovations, like internal combustion engines and personal computers, it took decades for the technology to really propagate through the economy,” Clinton said.

“It could well be different with AI because of the accessibility of the technology and because it is growing in power exponentially. The hope is that this will create new entrepreneurship and productivity gains across a wide range of industries and a wide range of markets. Office investment may or may not concentrate around central business districts. But an AI-driven revolution will broadly benefit the office sector, as well as many other commercial real estate property types.”

The post AI Will Probably Boost Office Demand. And CRE at Large. appeared first on Commercial Property Executive.

IQHQ has topped out Spur Phase One, a 330,000-square-foot life science building in South San Francisco, Calif. Completion of the eight-story development is anticipated by early 2025.

Partners on the Class A project include general contractor McCarthy Building Cos. Inc., architect Perkins & Will, structural engineer Magnusson Klemencic Associates and VFR, which is the owner’s representative. Cushman & Wakefield is handling leasing, according to CommercialEdge data.

In November 2022, IQHQ took out a $275 million construction loan originated by Apollo Global Management, the same source shows. The developer expects to finish the exterior phase in September.

READ ALSO: San Francisco Office Deals Slowest Among Gateway Markets

The high-tech life science building will be fully electric and include a mechanical penthouse on the roof and a below-grade, four-level parking structure. Designed to achieve LEED Gold certification, the facility will feature floorplates averaging 35,000 square feet, as well as a fitness center, bike storage, café, conference room and lobby reception area. Its sustainable components will comprise daylighting usage, bioretention and recycled water irrigation.

The transit-oriented, speculative building is rising on almost 2 acres at 580 Dubuque Ave., close to Highway 101 and the South San Francisco Caltrain Station. Downtown San Francisco is 2 miles from the site, while the Alexandria Center for Advanced Technologies-South San Francisco campus, where a drug development company recently signed an early lease renewal, is 1 mile away.

IQHQ also has a 900,000-square-foot, three-building project planned for a nearly 6-acre site at 800 Dubuque Ave., CommercialEdge shows. Development costs were estimated at $1.3 billion, according to SF YIMBY.

San Francisco’s office sector faces headwinds

The San Francisco metro saw almost 5.8 million square feet of office space under construction as of February, according to the latest CommercialEdge office report. However, the market’s vacancy rate clocked in at 24 percent, rising 480 basis points year-over-year. Additionally, San Francisco is still leading the region in terms of average rent—$59.81 per square foot—although the value dropped 11.1 percent year-over-year.

In December, Healthpeak Properties received approval of entitlements for the second and third phases of Vantage, an approximately 1.7 million-square-foot life science campus also in South San Francisco. The development’s first phase included two build-to-suit properties totaling 343,000 square feet and a 40,000-square-foot amenity building.

A few months earlier, Forge Development’s plans for the construction of a 900,000-square-foot life science park moved forward. Dubbed Berkeley Forge, the development will rise on 10 acres and consist of eight buildings.

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Alexandria Real Estate Equities Inc. has executed an early lease renewal and six-year extension with insitro, a machine learning–powered drug discovery and development company, for 143,188 rentable square feet in the Alexandria Center for Advanced Technologies – South San Francisco campus.

The six-year extension now carries the lease through August 2034. The initial lease by insitro at this location, 279 E. Grand Ave., was in 2018 for nearly 36,000 rentable square feet of lab space. The South San Francisco campus remains insitro’s headquarters and R&D site.

The lease extension, Alexandria stated, “highlights the need for laboratory space to generate the large datasets that power AI capabilities in the discovery and development of new medicines.”

READ ALSO: Attracting Life Science Tenants in Core Markets

The campus features a conference center, café and lounge, walking paths and access to adjacent transportation hubs.

The two companies have been closely connected from the beginning, according to a recent article in Genetic Engineering & Biotechnology News, with Alexandria investing in insitro’s Series A financing in 2018 and also in later financings.

Joel Marcus, executive chairman & founder of Alexandria Real Estate Equities, told the publication that insitro is building a mini–data center of roughly 10,000 to 15,000 square feet to facilitate the use of AI for discovery of new molecules. It’s a model, Marcus said, that’s likely to be adopted by other life science companies that use AI in drug development.

Rising vacancy

Alexandria has been living up to its powerhouse reputation in recent months. The developer:

•  Landed a lease extension last month from an affiliate of Takeda Pharmaceutical Co. for a 223,000-square-foot space at the Alexandria Center at Kendall Square campus in Cambridge, Mass.

•  Last December, signed a long-term lease with Novo Nordisk for all of a 165,940-rentable-square-foot building at 60 Sylvan Road on its Alexandria Center for Life Science – Waltham campus in metro Boston. The building is currently under redevelopment and expected to deliver in 2025.

•  Also in December, executed a long-term lease with CARGO Therapeutics for 99,557 square feet of space in the Alexandria Center for Life Science – San Carlos campus, in San Carlos, Calif. CARGO is a clinical-stage biotech company that focuses on developing next-generation cell therapies for cancer patients.

The Bay Area’s life science space market has been loosening, with an overall vacancy of 16.1 percent, after a lengthy period of conditions favorable to landlords, according to a February report from Cushman & Wakefield. That balance seems unlikely to swing back, because about 6.2 million square feet are under construction and more than a further 16 million are in planning, most of both primarily speculative, as against a current inventory of 46.4 million square feet.

The post Alexandria Secures Early Lease Renewal at Bay Area Bio Campus appeared first on Commercial Property Executive.

Silicon Valley Bank, a division of First Citizens Bank, has opened its new downtown San Francisco office at 222 Second St. The financial services provider will occupy multiple floors of upgraded space in the building.

According to CommercialEdge data, Tishman Speyer completed the full acquisition of 222 Second St. in 2017, paying $542 million for a remaining 80 percent interest in the asset. Built in 2015, the property totals 452,418 square feet.

Amenities at 222 Second St. include 6,000 square feet of event space, an outdoor terrace and collaboration areas. The property is one block away from SVB’s previous office space at 505 Howard St.

LinkedIn also leases space at 222 Second St. Located on an approximately 0.6-acre lot, the 26-story office tower is LEED Platinum-certified.

The high-rise is within walking distance of multiple dining, retail and entertainment options. Interstate 60, I-280 and Highway 101 offer easy access to the larger San Francisco and northern California areas. The San Francisco International Airport is less than 14 miles from the building.

San Francisco’s office market performance

As of January, San Francisco has had an extremely limited office sales activity. The slow start to the year is on par with the deal volume seen throughout 2023, which lagged behind other major gateway metros.

Along with the low transaction activity, the city’s office buildings continued to carry higher vacancy rates than the national average. In the first month of 2024, the office vacancy in San Francisco was 23.8 percent, while the U.S. rate stood at 17.8 percent, according to CommercialEdge data. However, the figure marked a decrease from the metro’s highest vacancy rate of 24.2 percent, recorded in November 2023.

Earlier this month, Shorenstein Properties also landed a new tenant at its downtown San Francisco office building at 45 Fremont St. A law firm signed a 19,137-square-foot lease agreement. The asset is less than a mile from SVB’s new office.

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Shorenstein Properties has secured a leasing agreement for 19,137 square feet at 45 Fremont St. in San Francisco. Law firm Dechert is the tenant, which is expanding its local offices by 2,093 square feet. The new space will accommodate roughly 25 attorneys and 11 staff members.

Completed in 1978, the 596,000-square-foot building underwent a cosmetic renovation in 2010. It rises 34 stories with floorplates ranging from 17,000 to 19,433 square feet and features 19 passenger elevators. It is also LEED Platinum certified. Dechert will occupy space on the 26th floor. Other tenants at the property include Slack, Wells Fargo and ClearSlide, according to CommericalEdge data.

In 2017, Blackstone Group acquired a 49 percent stake in the building for $233 million, the same source shows. Additionally, in 2019 the tower became subject to a $347 million loan from Bank of America.

Located within Union Square, 45 Fremont St. is in downtown San Francisco and close to Interstate 80. It is also within walking range of multiple public transit stations and landmarks such as the Ferry Building.

As of January, the vacancy rate in San Francisco reached 23.7 percent, the third highest in the U.S., only surpassed by Houston and Detroit, according to a recent CommercialEdge report. The metro’s vacancy registered the sharpest year-over-year increase, as it rose by 4.9 percent. The listing rate clocked in at $62 per square foot, representing an 8.7 percent drop over 12 months, but remaining considerably above the $37 national average.

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The global tech hub started the year off slowly, continuing on an already decelerating path. As last year wound down, even with Google’s removal of the San Francisco Bay Project, the tech and life science sector saw significant office space being added, while San Francisco office properties changed hands at a high average price per square foot.

As of January, the metro’s under-construction pipeline amounted to 6.8 million square feet of office space spread across 30 properties, accounting for 3.7 percent of the existing stock, higher than the national rate of 1.6 percent. Across life science markets, Boston led with 5.2 percent while other gateway metros recorded low figures, such as Los Angeles (0.8 percent) and Chicago (0.5 percent).

Office construction activity was limited in 2023

A significant project currently underway is Kilroy Oyster Point’s Buildings D, E and F, that broke ground in late 2021 and are scheduled to come online this June. The three life science buildings will total 865,000 square feet and are part of the second phase of Kilroy Realty’s 3 million-square-foot waterfront project. Also dubbed as Gravitate, the $940 million addition to the 50-acre megaproject has JLL as leasing agent.

Since the start of the year, there was only one office property delivered in the metro. Brittan West, a three-story, 173,731-square-foot life science building came online in January in San Carlos, Calif. The site was sold to the Florida State Board of Administration in 2021, for $177 million, while developers Premia Capital and Prince Street Partners retained their ownership interest in the asset.

Construction starts in 2023 totaled 3 million square feet across 14 properties, while deliveries amounted to 1.9 million square feet across 14 properties. In August and September 2023, Tishman Speyer completed two office projects totaling 613,552 square feet of Class A office space. The eight-story Building B and the 13-story Building G are part of the developer’s Mission Rock, a waterfront community that will encompass 1.6 million square feet of office and retail space.

Another office property that came online last year is Alexandria Real Estate Equities’ 751 Gateway Blvd., a R&D building totaling 230,592 square feet that was completed in October. The property is within the submarket of South San Francisco and is part of Gateway North Campus’ expansion. The seven-story life science property is developed in partnership with Boston Properties.

San Francisco office deals lagged

CommercialEdge data shows that as of January 2024, San Francisco had recorded very limited sales activity. That comes as no surprise, as last year ended with 2.3 million square feet across 23 properties changing hands for a total of $722 million. Among gateway metros, Manhattan led with $2.4 billion in office sales, followed by Boston and Washington, D.C., both with $1.9 billion, Los Angeles ($1.7 billion) and Chicago ($1 billion).

Office properties in San Francisco traded at an average $314 per square foot, as the market still carries a high price compared to other gateways like Los Angeles and Chicago, where office assets were sold at $266 and $109 on average. In terms of average price per square foot in 2023, Manhattan led with $833, followed by Boston at $346.

One of the priciest office deals in the metro was Gaw Capital Partners’ $82 million acquisition of North Park, a 294,000-square-foot, Class A office building in San Francisco’s North Waterfront submarket. EQ Office sold the asset in December 2023, while ING Group Bank originated a $150 million acquisition loan.

Another significant sale was The Sobrato Organization’s $80 million purchase of One Harrison, a 1918-built low-rise office building in the metro’s South Financial District. The 200,000-square-foot property was sold last February by Gap Inc.

In November, Rubicon Point Partners picked up a 137,031-square-foot office property for $72 million. Built in 2000, the asset at 123 Townsend St. was previously owned by CBRE Investment Management, which had acquired it for $132.6 million.

Fluctuating office vacancy rate pointed upwards overall

As of January, San Francisco’s office vacancy rate was 23.8 percent, higher than the national 17.8 percent. Since the start of 2023 the rate has fluctuated significantly. Starting at 18.8 percent in January, the index continued to increase to 21.7 percent in July. The highest vacancy rate was recorded in November 2023, when numbers reached 24.2 percent.

The metro’s January vacancy rate was the highest across similar markets, with the lowest registered in Washington, D.C. (17.2 percent), while other metros had figures higher than the national average, such as Chicago (18.1 percent) and Seattle (22.9 percent).

Significant lease agreements signed in 2023 in San Francisco include Alexandria Real Estate Equities Inc.’s long-term deal with CARGO Therapeutics, in December. The tenant signed a 99,557-square-foot deal at Building 2 of The Alexandria Center for Life Science, a 276,945-square-foot Class A laboratory and office property in San Carlos, Calif.

Earlier, in June, DivcoWest secured a 44,000-square-foot long-term lease at its 5000 Shoreline Court, a 140,000-square-foot office building in South San Francisco’s Sierra Point life science cluster. JLL negotiated on behalf of the tenant, clinical-stage precision medicine oncology company IDEAYA Biosciences.

In April, tech company Silergy Technology signed a 27,715-square-foot relocation deal at the Santa Clara Gateway office campus. The tenant expanded its Silicon Valley corporate footprint at the property while also relocating its headquarters. Irvine Co. owns the three-building office complex.

San Francisco’s coworking sector slow but steady

As of January, San Francisco had 2.1 million square feet of shared office space, outpaced by Manhattan, that led with 9.2 million square feet, Los Angeles (4.3 million square feet), Chicago (3 million square feet) and Boston (2.6 million square feet).

San Francisco’s share of coworking space as percentage of total leasable office space reached 2 percent in January, higher than Chicago (1.9 percent), Washington, D.C. (1.6 percent) and Boston, that was on par with the national average of 1.7 percent.

Year-to-date through January, WeWork had the largest footprint of leasable office space in the metro, with locations totaling 915,702 square feet. The flex office provider was followed by Regus, with 270,111 square feet, Spaces (177,599 square feet), Studio by Tishman Speyer (158,000 square feet) and Industrious (128,443 square feet).

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Newmark brokered the deal, with Executive Managing Director Mark Geisreiter, Managing Director Aaron Gillespie and Senior Managing Director Seth McKinnon working on behalf of the landlord.

LB Stone Properties purchased the property back in 2016 for $9.7 million, according to CommercialEdge data.

According to YIMBY, a project proposal including a 10-year lease of the property was submitted last year. The project proposed the use of the 2177 Jerrold Ave. property as a temporary shelter for the unhoused. The plans also called for the demolition of an existing warehouse and tenant improvements to the existing office building and warehouse.

Located on 2.3 acres, 2177 Jerrold Ave. comprises two buildings totaling 24,455 square feet and 79,643 square feet of secure yard space. Completed in 1944, one of the buildings, a two-story one, features 10- to 18-foot clear heights, an electric fence, LED lighting and parking spaces.

The property’s central location within San Francisco’s Produce Market provides easy access to Route 101 and Interstate 280.

The Bay Area ranked fifth nationally for industrial transactions last year through October, according to a recent CommercialEdge’s report. The area’s volume totaled some 6.6 million square feet of industrial space changing hands across 51 properties.

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Concord Corporate Center is 30 miles from downtown San Francisco. Image courtesy of Newmark

Sierra Pacific has acquired Concord Corporate Center, a two-building, 346,731-square-foot office campus in Concord, Calif. Harbert Management Corp. sold the asset for $20 million, CommercialEdge data shows.

The campus previously traded in 2017, when Harbert purchased it from PGIM Real Estate for $63.5 million, according to the same source.

One Corporate Center came online in 1983. The seven-story, Class B building encompasses 134,251 square feet and features 19,535-square-foot floorplates, three passenger elevators, controlled access and offers 537 car parking spaces and a fitness center.

The 213,188-square-foot Two Corporate Center was completed in 1986. The 10-story Class B building includes 2,230 square feet of retail space and features four elevators, controlled access, 844 car parking spots and a fitness center. The new owner plans to update and renovate the amenities package and the common areas of both buildings.

READ ALSO: Top 5 Markets for Office Transactions

At the time of the sale, the property was 73 percent leased, with tenants including Patelco Credit Union, Walsh Construction Co., Pacific Service Employees Association, Regional Center of the East Bay and Versa Engineering & Technology, among others.

Located at 1320 and 1390 Willow Pass Road, Concord Corporate Center provides access to U.S. Route 242 and Interstate 680, and is some 30 miles from downtown San Francisco. The property is near The Veranda, a mixed-use retail center, and a variety of other retail and restaurant options.

The Newmark team that worked on behalf of the seller included Executive Vice Chairman & President Steven Golubchik, Vice Chairman Edmund Najera, Senior Managing Director Jonathan Schaefler and Director Darren Hollak.

The Bay Area’s office market endures

The Bay Area office market has been heavily impacted by the growing popularity of remote work models. However, transaction volume remained above $1 billion for the 12 months ending in October, a recent CommercialEdge report shows, with per-square-foot prices at $343. Vacancy clocked in at 18.9 percent, marking a 290-basis-point increase over a 12-month period.

Office values in San Francisco have been steadily declining recently. For example, The Swig Co., in partnership with SKS Partners, acquired 350 California for only $61 million in September, a steep discount compared to the $250 million price sought when the tower hit the market in 2020. Last month, Rubicon Point Partners paid only $72 million for The Townsend Building, a 137,000-square-foot property that seller CBRE Investment purchased three years ago for $132.6 million.

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The Vantage campus is taking shape next to Genentech’s headquarters. Image courtesy of Healthpeak Properties

Healthpeak Properties has received approval of entitlements for the second and third phases of Vantage, its life science campus underway in South San Francisco, Calif. The development is expected to grow by some 1.3 million square feet and reach approximately 1.7 million square feet at full buildout.

Healthpeak broke ground on the first phase of the 20-acre project in 2022 and completed it earlier this year. Flad Architects designed the two build-to-suit properties measuring roughly 343,000 square feet, together with a 40,000-square-foot amenity building that includes multiple dining options, conference space and a fitness center.

READ ALSO: Life Science Market to Bounce Back

The LEED Gold-certified buildings feature five and six stories with floorplates averaging 35,000 square feet. Those properties are 52 percent leased to Astellas Pharma—a Japanese pharmaceutical company—which occupied its space this month.

Phases II and III will rise on Forbes Boulevard, providing access to downtown San Francisco’s amenities. A host of dining and retail options, including The Shops at Tanforan, will be within 3 miles, while San Francisco International Airport will be some 4 miles south.

In October, Healthpeak Properties entered into a definitive agreement with Physicians Realty Trust to combine in an all-stock merger. Valued at $21 billion, the new company will own a 52 million-square-foot portfolio of health-care facilities.

The Golden City’s life science developments

In the beginning of the year, Lane Partners received $373 million in financing for the construction of the first phase of a mixed-use, life science development that is set to encompass some 3 million square feet upon full buildout. Tenants at the $1 billion property that is some 2 miles away from Vantage are expected to move in by the end of 2024.

In May, a joint venture between Trammell Crow Co. and CBRE Investment Management broke ground on a 234,000-square-foot life science project in Redwood City, Calif. The Class A building is slated for delivery at the end of next year.

San Francisco’s office market holds steady

The San Francisco metro had some 6 million square feet of office space under construction as of October, amounting to 3.8 percent of total stock, according to a CommercialEdge report. The Golden City was surpassed by Boston and Seattle, which had development pipelines of 13.7 million and 6.6 million square feet, respectively.

In terms of sales, San Francisco saw $643 million in assets changing hands, for an average of $336 per square foot. Recent transactions in the area include Rubicon Point Partners’ purchase of The Townsend Building. CBRE Investment Management sold that property for $72 million.

The post Healthpeak to Add 1.3 MSF to Bay Area Life Science Campus appeared first on Commercial Property Executive.

Fairfield Industrial Center’s Building One totals 205,223 square feet. Image courtesy of Trammell Crow Co.

Trammell Crow Co., in joint venture partnership with Clarion Partners, has completed construction on the first phase of Fairfield Industrial Center in Fairfield, Calif.

Building One is a 205,223-square-foot, Class A facility, currently available for lease. CBRE and Cushman & Wakefield are the project’s exclusive leasing agents.

The development team included FCL Builders as general contractor and HPA Architecture as architect of record. The project received a $23.3 million construction loan originated by Cadence Bank, according to CommercialEdge.

Located at 2725 Low Court, the industrial building features 36-foot minimum clear heights, ample column spacing, a 4,000-square-foot office component, two grade-level doors, ESFR sprinkler system, 32 dock doors with 16 docks, 40,000-pound levelers and seals, 156 vehicle parking spots and 44 trailer parking spots. Additionally, the facility includes exterior glass entries, canopies and a landscaped site with water-efficient planting. The development is expected to receive LEED Silver certification.

READ ALSO: Multistory Warehouses’ Future is Looking Up

The 11-acre property is situated within Busch Corporate Center, close to Interstate 80 and State Highway 12. It is also situated 38 miles from Oakland, Calif., 44 miles from Sacramento, Calif., 45 miles from San Francisco, 47 miles from Oakland International Airport and within 77 miles of San Jose, Calif.

Construction on Fairfield Industrial Center’s second phase is scheduled to begin next year. Plans call for two Class A buildings totaling 328,553 square feet at 300 Chadbourne Road.

Cushman & Wakefield’s Executive Managing Director Brooks Pedder and Executive Director Tony Binswanger, together with CBRE’s Senior Vice President Kevin Hatcher will be marketing Building One for lease.

Recent developments in the area

Other projects in the area include Seefried Properties and USAA Real Estate‘s 334,157-square-foot speculative warehouse in Tracy, Calif. The companies purchased the development site earlier this year. In late 2022, Trammell Crow Co. and CBRE Investment Management commenced construction on Cochrane Technology Center in Morgan Hill, Calif. The five-building project will total 500,000 square feet At the time, it was the largest speculative industrial development to break ground in Silicon Valley.

Earlier this year, Trammell Crow Co. also broke ground on Cotton Lane Commerce Park’s first phase in Goodyear, Ariz. The approximately 1 million-square-foot industrial park’s first two building will total 542,873 square feet and are slated for delivery in September 2024.

The post Trammell Crow, Clarion Deliver 1st Phase of Industrial Project appeared first on Commercial Property Executive.

835 Industrial Road, also known as Building 2 of the Alexandria Center for Life Science – San Carlos mega-campus. Image courtesy of Alexandria Real Estate Equities Inc.

Alexandria Real Estate Equities has inked a long-term lease with CARGO Therapeutics for 99,557 square feet of space at Building 2 of The Alexandria Center for Life Science – San Carlos campus, a 276,945-square-foot Class A laboratory and office facility in San Carlos, Calif.

CARGO, a clinical-stage biotech company that focuses on developing next-generation cell therapies for cancer patients, is moving into its new labs in early 2024. The company’s headquarters lies in nearby San Mateo, roughly 5 miles northwest along California State Route 82.

A mega-campus within a master plan

Building 2 of the campus is located at 835 Industrial Road. The facility was built in 2021, as a portion of the first phase of a planned 1.4 million-square-foot, seven-building campus taking shape adjacent to Highway 101. Building 1, its neighbor located at 825 Industrial Road, spans 280,000 square feet over six stories, according to CommercialEdge information. The same source shows that JLL and Newmark head up leasing within the building.

READ ALSO: Emerging Life Science Hubs Stake a Claim

Overall, the site has 737,000 square feet of rentable space. Labs around the campus feature private conference rooms, with amenities including a central courtyard, dining space, coffee bar, fitness center and covered parking. Located at the 20-mile midpoint between San Francisco and San Jose, Calif., the facilities have access to much of the biotechnology talent around Silicon Valley, with Stanford University and the University of California Berkeley sitting within 8 and 25 miles away, respectively.

According to the San Francisco Business Times, plans for the development go back to 2019, when Alexandria first submitted the project to the City Council.

Laboratory space inside 835 Industrial Road. Image courtesy of Alexandria Real Estate Equities, Inc.

The larger campus is a component of San Carlos’ East Side Innovation District, a master-planned mixed-use neighborhood envisioned by the San Carlos City Council that calls for the transformation of the area’s industrial buildings into life science, residential and hospitality space, as well as for a rearrangement of the area’s urban planning to support quicker and more efficient transportation. According to CommercialEdge information, Alexandria currently owns two parcels in the area, which contain 12 buildings totaling more than 2.5 million square feet of space. Around the Bay Area’s life science clusters, Alexandria holds 8.8 million square feet of rentable space.

Alexandria’s other endeavors

Outside of the birthplace of biotech, the nation’s largest life science developer continues to scale in both longstanding and emerging life science hubs. In Boston, the firm is developing the Alexandria Center for Life Science – Fenway, a four-building campus that will total 2 million square feet. In October, the REIT announced the development of a $201.5 million, 325,000-square-foot campus in Houston.

The post Alexandria Leases 100 KSF at Bay Area Life Science Campus appeared first on Commercial Property Executive.

The State Bar of California will continue to occupy much of the office building at 180 Howard St. in San Francisco’s South Financial District. Image courtesy of the State Bar of California

Madison Capital and Taconic Capital Advisors LP have provided $40 million in financing for the acquisition of 180 Howard St. in San Francisco’s South Financial District.

The State Bar of California announced separately that it had sold the 13-story, 211,000-square-foot, Class A building, its San Francisco headquarters for the past 25 years, to Ridge Capital Investors for $54 million. The State Bar had purchased the property in 1996 for $22.5 million, according to CommercialEdge data.

The State Bar of California, a regulatory agency overseeing California attorney licensing and discipline, is the only independent state court in the U.S. dedicated solely to overseeing attorney discipline.

The agency plans to stay in its space for about a year, after which it will consolidate its operations into about half (68,000 rentable square feet) of its current footprint.

180 Howard St. is in the Spear Street Corridor and close to the Transbay Termination, Ferry Building and Embarcadero waterfront.

READ ALSO: Is CRE Lending Bottoming Out?

In a prepared statement, Jonathan Nachmani, managing director at Madison Capital, and Andrew Lam, director in Taconic Capital Advisors’ Commercial Real Estate Group, praised the building’s transit-oriented location, strong cash flow and sound business plan, despite San Francisco’s current economic challenges.

In the run-up to this transaction, a California state audit reportedly had determined that the State Bar needed an increase in attorney licensing fees to meet its public responsibilities. However, this year’s licensing fee bill did not contain a fee increase, although it did allow the State Bar to use proceeds from the sale of 180 Howard to address the agency’s operational needs while the state legislature considers a fee increase for 2025.

Facing that issue in addition to experiencing the ubiquitous situation of fewer employees in the office day to day, the State Bar in 2021 began efforts to sell the building, assisted by Cushman & Wakefield.

Rough waters by the bay

The San Francisco office market has now gone through eight straight quarters of negative net absorption, totaling about 5.1 million square feet of negative absorption so far this year, according to a third-quarter report from Kidder Mathews. Total office vacancy has hit 28.8 percent, with sublease supply steadily exceeding demand.

Kidder Mathews notes a “flight to quality,” however: “Premier Class A offices with desirable amenities and views remain highly competitive and have asking rates well over $80 per square foot full service, with the very best suites commanding rents north of $100 per square foot full service.”

As if to illustrate the City by the Bay’s office woes, earlier this month Rubicon Point Partners acquired The Townsend Building, a 137,000-square-foot asset, for $72 million, a hefty discount from the $132.6 million that the seller, CBRE Investment Management, had paid just three years ago.

The post Madison Capital, Taconic Provide $40M for San Francisco Acquisition appeared first on Commercial Property Executive.

A rendering of Novva’s newest data center in San Francisco. Image courtesy of Novva Data Centers

Novva Data Centers has acquired a 7.5-acre campus in South San Francisco with plans to invest more than $500 million in developing a 28-megawatt facility. The project, 9MW, will include green features and advancements in data center design.

The first phase of 9MW will launch in the summer of 2026. Once built out, the two-story data center facility will be 182,000 square feet with a 56,000-square-foot office and an operations support center.

It will be the company’s fifth announced location in less than three years as Novva continues expanding its footprint throughout the Western United States. In May, Novva broke ground on a second facility on a 20-acre site in Reno, Nev., within the Tahoe-Reno Industrial Center. The 300,000-square-foot, 60MW facility will be its fourth at the Reno complex and is expected to come online in late 2024.

In September 2022, Novva started construction of a 100MW data center in the Tropical Distribution Center industrial development in Las Vegas, Nev. Novva also has campuses in West Jordan, Utah, and Colorado Springs, Colo.

Green data center

Wes Swenson, Novva’s CEO, said in a prepared statement the South San Francisco location will be one of the greenest data centers created in the Bay Area. He said it represents a rare opportunity for clients to locate intelligent computing in one of the most important cities for software and hardware development in the world.

The data center will include numerous advancements in data center design. Features are set to be:

• 28MW N+1 critical compute load via Novva’s proprietary electrical delivery system which has no centralized infrastructure and is designed for resiliency, concurrent maintenance and distributed redundancy
• A water-free air-cooling system
• Generators that will operate with hydro-treated vegetable oil, a biodiesel
• Sodium Ion UPS batteries with no thermal runaway risk or rare earth materials
• Recyclable polypropylene employed for the chilled water loop air supply
• A direct-to-chip cooling loop

The post Novva Data Centers Expands to San Francisco With $500M Investment appeared first on Commercial Property Executive.

Vital Records Control fully occupies 37580 Filbert St. Image courtesy of Bridge Logistics Properties

Bridge Logistics Properties, a subsidiary of Bridge Investment Group Holdings Inc., has entered Northern California with the sale-leaseback acquisition of a 84,482-square-foot warehouse at 37580 Filbert St. in Newark, Calif. Vital Records Control sold the property, according to CommercialEdge data. Newmark facilitated the transaction.

Built in two phases, in 2000 and 2012, the property features 34- and 40-feet clear heights. Vital Records Control is the facility’s sole tenant.

The 4.7-acre property provides access to Interstate 880, connecting San Jose to Oakland, Calif. Dumbarton Bridge is 10 miles away, while San Jose International Airport and Oakland International Airport are within a 21-mile radius. Port of Oakland is 25 miles northwest, while San Francisco International Airport is some 27 miles away.

The Newmark team which brokered the deal included Executive Managing Directors Mark Geisreiter and Mike Spiro, along with Senior Managing Director Seth McKinnon. Earlier this year, other Newmark brokers arranged the sale of a 177,117-square-foot industrial, warehouse and flex campus in San Jose, Calif.

In June, a BLP investment vehicle partnered with The Townsend Group for the purpose of acquiring logistics properties in gateway markets across the U.S. The joint venture will deploy $147 million in acquisitions, with an option to raise the investment value to $200 million.

The post Bridge Logistics Enters NorCal With Sale-Leaseback Deal appeared first on Commercial Property Executive.

The Pier 70 area was already an industrial site since before the Gold Rush, having blasting powder manufactured here. During the two world wars, the region saw a real boom due to the shipbuilding industry. In fact, during World War II, Pier 70 was among the most productive shipyards in the country, comprising a complex of buildings that were designed for an efficient flow of operations, Ariane Fehrenkamp, senior project manager at Perkins & Will, told Commercial Property Executive. 

As an industrial site, Pier 70 was never open to the public and largely unknown to people, Tim Bacon, senior director of development at Brookfield Properties, revealed. More so, access was prohibited not just to many buildings within Pier 70 but also to the waterfront, according to Fehrenkamp. 

Starting with Building 12, a new chapter in Pier 70’s history is unfolding, with plans calling for a new waterfront neighborhood that is set to include between 1,200 and 2,150 residential units—with 30 percent of them reserved for affordable housing—up to 1.8 million square feet of office and lab space, 60,000 square feet of retail, arts and light industrial space, as well as 115,000 square feet of retail and neighborhood amenities.

Building 12 stuns through its size and the complex systems of gritty riveted steel elements that allowed the production of huge steel ship hills, Fehrenkamp told CPE, adding that the floor-to-ceiling height in the first level Market Hall is 40 feet.

“It is breathtaking to stand inside the building’s main hall and experience the monumental scale and the tactile quality of the existing build-up columns and steel trusses,” she continued. “Leaving these in place, our transformation built upon these qualities with a combination of careful restoration and calibrated intervention. The result celebrates the power of the existing structure and use, and complements it with our new mixed-use interventions.”

These days, Building 12 is a platform that melds Dogpatch’s creative ethos with the site’s manufacturing history. It’s the focal point of Pier 70.

“Building 12 is the creative and social heart of what will be a new waterfront neighborhood,” according to Bacon.

Preserving history in more than one way

Pier 70’s Building 12 is listed on the National Register of Historic Places as a contributor to the Union Iron Works District. This means that it provides physical record of the trends in industrial architecture during the mid-1900s. Hence, when designing the renovation, the architects looked for a way to allow the historic use and structure to remain visible and to include several character-defining features of the historic building, such as the gantry crane rails, the Howe trusses, the colossal interior volume, the patinated siding and the original Aiken roofline.

“The existing building structure, for example, is made up of massive built-up columns and trusses with visible bolts and rivets, and multiple layers of paint,” Fehrenkamp said. “This existing structure remains visible and somewhat raw as it has a very tactile and handmade quality, which is appropriate for our programmatic functions on the existing first level and new second level—a Maker’s Market Hall and PDR/Maker Space, respectively,” she further explained.

READ ALSO: Reviving the Past Through Adaptive Reuse

Specifically, the original Building 12 consisted of two stories—the ground level where the steel was cut and formed, and the second level—known as the Mold Loft. Because the main volume of space was 40 feet tall, the architects were able to insert a new second level that flanks the Market Hall on the east and west sides along with a new mezzanine. Ultimately, the programmatic mix is a Maker’s Market Hall on the first level, Maker Space on the second level, office space on the third level and a new below-grade garage.

Additionally, to conform with current codes, including seismic ones, new brace frames, cambered I-beams and wide-flange columns were “surgically inserted” and connected to the existing structure so that the new interventions fit seamlessly in the building while reflecting a clear, modern look, Fehrenkamp detailed. The new steel elements have been painted gray or bright red to differentiate them from the historic structure, with red a recurring element in the design of Building 12.

“The interplay between the old and the new is what makes this project shine, by allowing historic building trends to be traced alongside present-day building practices,” Fehrenkamp said. 

The project is embracing its historical significance through its purpose, too, as the 1940s-era steel-and-wood shipbuilding facility is now a commercial and office space fit for innovators, according to Bacon.

“The same building that once was home to the production and fabrication of steel plates for ships’ hulls, will now be an inclusive home to a new generation of making and industry,” Bacon said. “Adapting to today’s and future environmental conditions was essential.”

Another key consideration that had to be respected during the construction phase was the preservation of the graffiti that existed before the start of the construction.

“Given this was an element of the building to remain as we found it, this took a great deal of coordination and reminding,” shared Matt Burdette, project manager at Plant Construction Co. “Small adjustments to standard construction processes took place, such as removable markers in place of spray paint or other temporary markings that would have to be maintained or reimplemented regularly.” 

In addition, since preservation often requires sourcing or recreating materials that match the original ones, Burdette revealed that the corrugated metal removed from the building for the lifting process was put back in. Moreover, other adjacent buildings from the property with the same profile helped with the missing parts, so that all the siding is original from the site.

Uplifting for the future

The new neighborhood was in the development phase long before the Pier 70 project began. Developer Brookfield Properties and the Port of San Francisco agreed that the area must address a 100-year projected sea level rise, which meant that an entirely new infrastructure had to be created, and the site regraded to account for the sea level rise, said Bacon. This also meant that Building 12 had to be lifted some 10 feet above the current ground level. Consequently, the team involved in the project had to plan for the lifting of a 240-foot-wide by 240-foot-long by 60-foot-tall building weighing 2,100 tons, the equivalent of 118 full school buses.

Lifting the building took 19 months of planning and 14 months of construction, divided into four phases—the initial lift, preparation for the main lift, the main lift and post-lift work.

“We had many brainstorming meetings when we came together to figure out how to accomplish the Herculean feat before us,” Fehrenkamp detailed. “The design and documentation phases involved a constant negotiation between the constraints and tolerances needed for the building lift and the desire to maintain the historic integrity of the building alongside our new design element,” she added.

In addition to the difficult process of lifting the building, work on the project took place during the height of the pandemic, which brought with it a whole new set of challenges as the teams had to quickly implement ever-changing measures as dictated by officials.

Building 12’s green restoration

Once WWII ended, shipbuilding on Pier 70 downsized and Building 12 remained abandoned. By the time the design team got to it, Building 12 had fallen into an extreme state of disrepair.

“The original building was … essentially a giant thermal bridge with uninsulated walls made of corrugated steel siding, steel girts and steel sash windows,” noted Fehrenkamp.

The design team used THERM analysis to model the whole building exterior envelope, to test the performance of the existing and the proposed wall assembly, she added. The specialists designed the wall assembly to perform well in various conditions, providing an energy efficiency that exceeds expectations. The new HVAC system is all-electric, setting a precedent for decarbonization in historic building renovations. Electric heat pumps provide hot water to a radiant slab in the Market Hall, which combined with natural ventilation and the thermally efficient new wall assembly keeps the space comfortable year-round with very little energy.

READ ALSO: Inside the Mass Timber Playbook

Working together

A project of such complexity was possible because it had flawless coordination between the various teams it gathered. Brookfield Properties had done extensive community outreach in the neighborhood prior to the start of the project and understood the need to embrace the site’s historic architecture and uses, along with the adjacent neighborhood’s spirit of creativity—Dogpatch is known for its eclectic roster of creatives and innovators.

“Pier 70 reflects six years spent involving hundreds of meetings with disparate stakeholders to understand and bring to life their vision, including how to use Building 12,” explained Bacon.

After obtaining consensus for the land-use plan—which was supported by the Port, city leaders and the Dogpatch neighborhood—the complex plan weaved together a new neighborhood with permanent arts and creative spaces, housing across the spectrum of affordability, local manufacturing, local retail, new waterfront parks, rehabilitated historic structures, and a shoreline protected from sea level rise.

“Pier 70 was the first waterfront project requiring a citywide vote under Proposition B and an unprecedented 73 percent voted yes,” Bacon added.

This year in April, the owner announced that it had leased space within Building 12 to seven businesses, four of which were women-owned. Signed leases include local brewer Standard Deviant, baker Breadbelly and custom sneaker designer Studio Duskus. Also at Building 12 will be florist Marbled Mint, design studio Prowl Studio and 30-year legacy San Francisco business owner and alternative motorcycle dealer Scuderia. Paper artist Zai Divecha and metalsmith and maker Emi Grannis also occupy space at Building 12, with more leases expected soon.

The post Raising the Bar for the Future of San Francisco’s Pier 70 appeared first on Commercial Property Executive.

In June, Google and Lendlease received unanimous approval from the city council to move ahead with the 153-acre Google North Bayshore Master Plan in Mountain View, Calif. Image courtesy of Google and Lendlease

Last week’s news that Google and Lendlease have mutually agreed to halt development on four Bay Area master-planned districts, valued in total around $15 billion, has been widely reported.

And against a backdrop of worsening post-pandemic upheaval in the office sector nationwide, this seems like an appropriate moment to try to understand Google’s and Lendlease’s decision in a broader context.

Progress was being made as recently as June, when the partnership received unanimous approval from the city council in Mountain View, Calif., to move ahead with a 153-acre, master-planned mixed-use neighborhood there.

READ ALSO: Emerging Trends for CRE

The other three sites were Downtown West in San Jose, Calif., Moffett Park in Sunnyvale, Calif., and a second location in Mountain View. Demolition had already begun for the 80-acre campus in San Jose, which was to have included a massive 7.3 million square feet of office space, along with about 4,000 housing units and 15 acres of parks.

In an announcement last week, Lendlease said, “the decision to end these agreements followed a comprehensive review by Google of its real estate investments, and a determination by both organizations that the existing agreements are no longer mutually beneficial given current market conditions.”

The Australia-based construction giant added that it will be paid “in consideration for value created through the entitlement and master-planning process,” and that the overall San Francisco Bay Project, originally set to get underway in fiscal year 2026, has been removed from its development pipeline.

Trouble in Techtopia

Lawrence Yun, Ph.D., Chief Economist & Senior Vice President, National Association of Realtors. Image courtesy of National Association of Realtors

Google has been cutting both jobs and its budget since the beginning of this year, and in February the company stated that it anticipated incurring $500 million in costs in the first quarter in connection with reducing its office space globally.

The implosion of the Bay Area projects reflects more than just an issue at one tech powerhouse, industry observers agree.

“Google halting the development of new office properties is not unique and has been a theme since late ’22,” Ryan Miller, a senior analyst at CRE analytics firm Green Street, told Commercial Property Executive.

READ ALSO: Creating a Winning Back-to-the-Office Formula

“Other large tech companies have also pressed “pause” on new office developments across the nation,” he added. “Tech companies continue to put more sublease space on the market, and we expect tech leasing activity to be lower than pre-pandemic levels over the near term.”

Glenn Brill, Managing Director of Real Estate Solutions, FTI Consulting. Image courtesy of FTI Consulting

Glenn Brill, managing director, real estate solutions, at FTI Consulting Inc., agreed: “The slowdown and disruption in the tech industry, combined with general economic uncertainty and a high cost of capital, makes for a situation whereby any large capital investment in a non-core business will likely demand a higher return than previously considered, which makes partnering with core real estate investors more difficult.”

Brill also pointed to another angle of tech firms’ real estate projects: “Over the past several years, big tech has been committing to large-scale, long-term, mixed-use development projects to relieve pressure on local housing markets where they reside and to accommodate their own, and that has not changed and has only been delayed.”

Lawrence Yun, chief economist for the National Association of Realtors, predicts some ongoing pain.

“The office market will continue to bleed for at least the next two years,” he told CPE.

Particularly in San Francisco, Yun continued, there has been “a sharp rise in vacancy to around 20 percent, from under 10 percent pre-pandemic. Moreover, the shadow vacancy is likely running at 50 percent, with many formerly leased properties that will not be renewed once the time arrives.”

The post Google Just Canceled $15B in Bay Area Projects. Does It Signal a Bigger Problem? appeared first on Commercial Property Executive.

The Townsend Building, converted in 2000 from industrial use, is home to Paybal, Braintree and Al Jazeera America, among others. Image courtesy of CommercialEdge

Rubicon Point Partners has purchased The Townsend Building, a 137,000-square-foot office property in San Francisco, for $72 million. CBRE Investment Management sold the asset, according to CommercialEdge data.

CBRE IM previously acquired the property three years ago from Manchester Capital Management for $132.6 million, the same source shows.

Converted in 2000 from its initial industrial use to office, the property underwent another major renovation in 2004. The six-story building features a fitness center, three passenger elevators, parking spaces and controlled access. The LEED Silver certified, transit-oriented and brick and timber building is home to companies including Paypal, Braintree, Samba TV, Al Jazeera America, Reflektive and Quizlet, CommercialEdge also shows.

READ ALSO: Rubicon Point Closes $232M Commingled Fund

Located at 123 Townsend St. directly across the Embarcadero from Oracle Park, the property is situated in a neighborhood with an abundance of retail centers. The Townsend Building is within walking distance of the San Francisco Caltrain station and the Muni Central Subway, providing convenient transit access.

The acquisition of The Townsend Building is part of the woman- and minority-owned private real estate investment and operating company’s strategy to invest in high-quality properties on the West Coast.

The post Rubicon Pays $72M for San Francisco Office Asset appeared first on Commercial Property Executive.

Portal 405 is rising at 405 Industrial Road in San Carlos, Calif. Image courtesy of Menlo Equities and Beacon Capital Partners

Menlo Equities and Beacon Capital Partners have started construction on their latest Bay Area project. The two firms broke ground on Portal 405, a six-story life science building in San Carlos, Calif., that is scheduled for completion in late 2024.

The developers tapped RMW as the project’s architect, while CBRE’s Mike Moran and Cushman & Wakefield’s Clarke Funkhouser will be tasked with marketing and leasing the property.

Portal 405 has been designed to accommodate either a single tenant or multiple users, as the space can be divided into approximately 60,000-square-foot floorplates. The 240,000-square-foot property will include four floors of lab and office space, with two levels of above-grade parking. Portal 405 will also feature two levels of underground parking and a lobby on the ground floor that will have bike storage, restrooms with showers and lockers and tenant amenity areas that can accommodate a fitness center and café. The building will also have a rooftop terrace that can be used as an outdoor work or event space.

READ ALSO: Life Science Assets Outperform Despite Slowing Economy

Located at 405 Industrial Road, Portal 405 has visibility and nearby access to Highway 101 and is also within walking distance to the San Carlos Caltrain station. The building is located across the highway from the San Carlos Airport, but also within walking distance to downtown San Carlos and its many retail and restaurant options.

Menlo Equities’ Bay Area projects

As a vertically integrated firm, Menlo Equities has been an active developer in the northern California market for more than two decades. Besides Portal 405, the firm is working on two additional office and life science developments in the region, that are currently in the early planning stages.

Menlo Equities has also developed 3333 Scott Blvd., a 244,906-square-foot six-story office building in Santa Clara, Calif. Preylock Real Estate Holdings acquired the asset in June 2023 for $182.5 million. In late 2021, Menlo Equities sold The Campus at South County, a 210,083-square-foot office complex in the Foothill Ranch neighborhood of Orange County, Calif., for $50 million.

The post Menlo Equities, Beacon Capital Break Ground on Bay Area Project appeared first on Commercial Property Executive.

The 350 California building underwent extensive renovations over the last seven years. Image courtesy of The Swig Co.

The Swig Co. and SKS Partners have acquired 350 California, a 297,642-square-foot office building in San Francisco. Mitsubishi UFJ Financial Group reportedly sold the asset for approximately $61 million, according to the San Francisco Chronicle.

The partners teamed up back in May to start the sale negotiations. The transaction finally closed at a steep discount, compared to the $250 million price sought when the building entered the market in 2020.

Completed in 1976, the 22-story tower features 1,500 square feet of retail space on the ground floor, a wraparound amenity center, a conference center, a game room, eight passenger elevators and controlled access. The LEED Gold-certified building underwent extensive renovations over the last seven years, such as seismic, elevator and building systems improvements, a lobby renovation and common-area upgrades.

CEO Connor Kidd said in prepared remarks that The Swig Co. plans to seek tenants for the property’s vacant spaces, as well as more sustainability certifications and improvements which are in alignment with the company’s carbon reduction goals.

Convenient location in the Financial District

The Class A office building is located on the corner of California and Sansome Streets in San Francisco’s Financial District. The 350 California building is within walking distance of Montgomery BART stations, Embarcadero, the commuter ferry and an abundance of dining options and retail centers. The property is near Interstate 80, which provides easy access across the San Francisco metropolitan area.

CBRE brokered the transaction, with Executive Vice Presidents Kyle Kovac and Michael Taquino and Vice President Giancarlo Sangiacomo working on behalf of the seller. In July, another CBRE team represented United Properties in the sale of 525,000 square feet of office space within the mixed-use RBC Gateway Tower in Minneapolis. Spear Street Capital purchased the asset for $225 million.

The post The Swig Co., SKS Buy San Francisco Tower appeared first on Commercial Property Executive.

The portfolio includes four buildings in Valencia, Calif., completed in 2000. Image courtesy of Colliers

Westcore Properties has acquired a 16-building industrial portfolio in California, spread across Livermore, Valencia and Chino. MEPT was the seller of the 3.5 million-square-foot Odyssey Portfolio, CommercialEdge data shows. Eastdil Secured assisted the seller, while Westcore represented itself in the transaction.

Fully leased at the time of the deal, The Odyssey comprises Class A, A- and B+ buildings. The portfolio includes nine buildings in Chino totaling 1.5 million square feet, occupied by nine tenants. Adding up to 742,558 square feet, the four properties in Valencia came online in 2000 and comprise five tenants. Completed in 2016, the three Class A Livermore buildings are leased to two tenants and offer a total of 1.3 million square feet.

READ ALSO: Real Estate Market Sentiment Improves

The portfolio’s tenant roster comprises distribution, warehousing and light manufacturing companies, operating on a national, regional or local level. Some of the major tenants include Pharmavite, Tesla, Draxlmaier Automotive, as well as blue-chip companies, such as Coca Cola and Schlage.

The properties are part of the Los Angeles, Inland Empire and Bay Area markets. As of July, all three metros led the U.S. industrial market for price per square foot and transaction volume, a recent CommercialEdge report shows. Inland Empire was at the forefront, with a $2.8 billion deal volume year-to-date through July, followed by Los Angeles ($1.8 billion) and the Bay Area ($1.4 billion).

Eastdil Senior Managing Director Steve Silk, Managing Director Jay Borzi, Director Adam Pastor and Christina Buhl with Industrial Equity Sale facilitated the deal for the seller.

Westcore’s industrial expansion

The Odyssey Portfolio brings Westcore’s assets under management in the U.S. to more than $4 billion and 25 million square feet. The real estate investment company focuses on industrial properties since its founding in 2000.

During the first half of the year, the company made several purchases in the Southwest, with a main focus on its Texas portfolio. Westcore entered the Fort Worth market in April with the acquisition of three buildings at North Quarter 35, totaling 485,000 square feet. The deal was followed by two additional purchases in Fort Worth, namely the acquisitions of the 301,120-square-foot Rockwall Distribution Center and the Railhead Business Station, a 519,905-square-foot, Class A industrial campus.

The post Westcore Adds 3.5 MSF to California Footprint appeared first on Commercial Property Executive.

300 Lakeside became subject to the largest C-PACE loan on an office property in the U.S. so far. Image courtesy of GreenRock Capital

TMG Partners has secured $172 million in C-PACE financing for 300 Lakeside Drive, a 910,000-square-foot office building in Oakland, Calif. GreenRock Capital provided the loan in conjunction with KeyBanc Capital Markets.

The transaction marks the largest C-PACE loan on a U.S. office property to date. The building was already subject to a $430 million loan from Goldman Sachs, according to CommercialEdge data.

An office tower in Oakland’s CBD

TMG acquired 300 Lakeside in 2020 from Rockpoint Group and The Swig Co. The $449.8 million portfolio transaction also involved Kaiser Center Mall, a 128,700-square-foot office and retail asset located nearby.

Completed in 1961, the office tower rises 29 stories and features 46,541-square-foot floorplates, 17,000 square feet of retail space and a 3.5-acre rooftop garden. The C-PACE financing will provide the necessary funding for various property upgrades such as a complete HVAC overhaul, envelope sealing for energy efficiency, water conservation measures and a complete seismic retrofit.

The LEED Platinum-certified building serves as headquarters for Pacific Gas & Electric Co. The company exercised an initial option to buy the property in 2020, stipulating a price of $892 million; PGE recently amended the offer, moving the closing date to 2025.

The high-rise is some 12 miles from downtown San Francisco within Oakland’s Central Business District. Other tenants at the property include University of California, LiquidSpace and AECOM, CommercialEdge information shows.

C-PACE as a new financing opportunity

Current economic headwinds such as rising interest rates and reduced availability of debt have made C-PACE financing considerably more attractive. GreenRock Capital Managing Principal Chris Robbins stated in prepared remarks that this form of capital is quickly becoming mainstream in commercial real estate markets.

GreenRock Principal Michael Lincoln recently told Commercial Property Executive that retroactive C-PACE financings put lenders in a better situation, as the collateral stays the same but at less exposure, when discussing the growing number of use cases for this type of debt.

The post TMG Partners’ $172M Bay Area Loan Sets a Record appeared first on Commercial Property Executive.

The former Pacific Steel Casting plant will be transformed into an R&D campus. Image courtesy of CommercialEdge

Plans for the redevelopment of the former Pacific Steel Casting and Berkeley Forge and Tool in Berkeley, Calif., are now moving forward, according to the Berkeleyside. Forge Development acquired 16 land parcels at the property for $48 million and will embark on the construction of a 900,000-square-foot life science campus.

The former plant filed for bankruptcy in 2014 and eventually closed in 2018, while The Berkeley Forge and Tool shut down operations last year. As part of the current transaction, $24 million will be used to fund the pensions of former workers at the plant.

READ ALSO: Checkup on Health-Care, Life Science Opportunities

In previous phases of the project, Rhoades Planning Group filed the rezoning application on behalf of Spur Capital in December 2022 and a pre-application was submitted recently. Now the 16 parcels have become the 10-acre development site of what is currently known as Berkeley Forge.

In February, Perkins&Will drafted the plans for the R&D project that included a partial preservation of some of the existing structures, according to SF YIMBY, while the rest of the buildings will be demolished. Berkeley Forge is expected to break ground two years from now, after the developers receive the plan approval for the current project. The campus is set to encompass eight buildings and will be developed in three phases.

The project will take shape at 640 Gilman St. across four city blocks. The Northwest Berkeley property is 7 miles from downtown Oakland, Calif., and 13 miles from downtown San Francisco via interstates 580 and 80.

Recent Bay Area life science developments

The Bay Area continues to attract life science developments. Several projects emerged in the area in the first half of 2023, currently being in the planning or construction stages.

Longfellow Real Estate Partners broke ground on the 315,000-square-foot Avia Labs at Millbrae Station in Millbrae, Calif. The development will comply with ESG standards and meet the requirements of academic research institutions, as well as biotech companies.

Another R&D facility is taking shape in Redwood City, Calif. The joint venture of Trammell Crow Co. and CBRE Investment Management broke ground last month on a 234,000-square-foot building that is set for completion in the fourth quarter of 2024.

Prologis also announced plans to develop a 550,000-square-foot office and laboratory campus in South San Francisco. At full build-out, the property will comprise two eight and 10-story buildings, alongside a nine-story parking garage.

The post 900 KSF Bay Area Life Science Project Moves Forward appeared first on Commercial Property Executive.

200 Twin Dolphin Drive. Image courtesy of Trammell Crow Co.

The joint venture of Trammell Crow Co. and CBRE Investment Management has broken ground on a 234,000-square-foot life science development in Redwood City, Calif. DGA is the architect of record, while Truebeck Construction serves as general contractor. Completion is expected during the fourth quarter of 2024.

The five-floor Class A project rising at 200 Twin Dolphin Drive in Bay Area’s Peninsula will feature a rooftop deck, outdoor terraces and access to walking and biking trails. Electric vehicle charging will be available at the property, which is aiming for a LEED Gold certification. A CBRE team comprising Mike Moran, Damon Schor and Charlie Moran are managing marketing and leasing at the facility.

READ ALSO: San Francisco’s Office Market Favored Life Science in Q1

The project’s beginnings date back to 2018, when Sand Hill Property Co. proposed the demolition of a six-asset office campus existing on location at the time; two new office buildings were to take its place.

However, plans changed over time. In 2021, the developer submitted a new proposal to Redwood City authorities, including a five-story office building and a five-level garage. Although approved, the project never took flight and, one year later, Trammell Crow purchased the 4.7-acre development site from Sand Hill for some $65 million.

The property will be just east of U.S. Route 101, across from the Red Shores Lagoon. Downtown San Francisco will be some 23 miles away.

Recent life science activity in San Francisco

Greater San Francisco remained the most expensive market in western U.S., according to a recent CommercialEdge report. The metro also had one of the nation’s highest vacancy rates in June, which the report attributed to difficulties surrounding the tech sector. Vacancies reached 21.1 percent, up 3.6 percent year-over-year.

However, the metro continues to attract life science projects. In March, Prologis requested the local authorities’ approval for the construction of a 550,000-square-foot campus in South San Francisco. The development site is just south of 100 E. Grand Ave., another parcel where the firm plans to build a recently entitled 600,000-square-foot life science campus.

Other recent life science deals in the area include IDEAYA Biosciences’ recent agreement to occupy 44,000 square feet at DivcoWest’s South San Francisco’s Sierra Point life science hub, and Madison Capital Group’s acquisition of a 575,775-square-foot research and development campus in Fremont, Calif.

The post Trammell Crow, CBRE IM Break Ground on San Francisco Life Science Project appeared first on Commercial Property Executive.

Willow Village’s town square. Rendering courtesy of Willow Village

A longtime plan by Facebook parent company Meta Platforms to turn the former Menlo Science & Technology Park into a 59-acre, 1.6 million-square-foot mixed-use campus in Silicon Valley is moving forward with recent approvals of four architectural plans for the walkable urban village, SFYimby first reported.

Nearly seven months after the Menlo Park City Council signed off on the overall Willow Village project, the city’s Planning Commission approved architectural plans for portions of the development at 1250-1390 Willow Road, 925-1098 Hamilton Ave. and 1005-1275 Hamilton Court. Designs include a glass-domed meeting and collaboration space, town square, office campus and two apartment buildings.

READ ALSO: A Closer Look at Tech Layoffs’ Impact on Office Leasing

Additional architectural reviews by the Planning Commission, to ensure the project components conform with the approved master plan, are expected to occur this month and in August. According to documents filed with the Menlo Park city government, the key project components include:

• 1.6 million square feet of office and accessory uses, including meeting/collaboration space
• up to 200,000 square feet of retail/non-office commercial uses, including a grocery store, pharmacy services, entertainment and restaurant uses
• up to 1,730 multifamily units, including 312 below-market rate apartments, of which 119 would be age-restricted housing
• a hotel and associated retail/dining
• publicly accessible open space including an approximately 3.5-acre park, 1.5-acre town square, dog park, 2-acre elevated linear park and additional public space

The linear park would extend over Willow Road and provide access to the Belle Haven Shopping Center, also known as the Hamilton Avenue Parcel North. There may also be a below-grade tunnel to connect inter-campus trams, bicyclists and pedestrians to Meta’s nearby West and East campuses.

The project developer is Peninsula Innovation Partners LLC—a joint venture between Oakland, Calif.,-based Signature Development Group and Meta. The multi-phase development, to be constructed along Willow Road between Hamilton Avenue and Ivy Drive, is expected to take many years to build out.

A project years in the making

Willow Village’s office component. Rendering courtesy of Willow Village

Plans for Willow Village surfaced several years ago. In 2019, a Facebook blog post noted the company had partnered with Signature Development Group, a development team known for designing mixed-use districts that integrate with established neighborhoods to create connections between the new development and the community.

The project has evolved over the years with input from neighbors, local community organizations and civic leaders. The plan is consistent with Menlo Park’s General Plan—ConnectMenlo—and is aimed at providing much-needed housing, retail, office and parks to serve the needs of the company and the community, according to the Facebook blog post. Development will entail the demolishing of about 1 million square feet of outdated industrial, office and warehouse buildings at the former tech park.

Hart Howerton is the master planner for Willow Village. Ankrom Moisan Architects is handling residential design while Pickard Chilton is providing office design and Safdie Architects is serving as the meeting and collaboration space architect.

The post Meta’s Bay Area Mega-Development Moves Forward appeared first on Commercial Property Executive.

22330 Glen Drive. Image courtesy of CommercialEdge

Office Properties Income Trust, one of the nation’s largest owners and operators of office space, has closed on $77.4 million in mortgage loans for three properties totaling 478,475 square feet in New Jersey, Virginia and California.

The financings are the latest developments resulting from a previously announced merger between the REIT and Diversified Healthcare Trust, expected to take place in the third quarter of 2023.

All of the properties are owned and operated by OPI’s asset manager, The RMR Group, according to CommercialEdge information.

In-depth financing endeavors

Princeton South Corporate Center. Image courtesy of CommercialEdge

The loans are subject to all-in fixed interest rates over five to 10-year interest-only payment terms and range from 7.3 percent to 8.2 percent. The characteristics of the financing resemble those of other properties financed as part of the merger, where OPI intends to gain better lending terms for the assets, rather than drawing on existing bridge loan facilities. The financing deals comprise:

• A $42.7 million mortgage with an 8.2 percent fixed interest rate over a five-year interest only-term, secured for Princeton South Corporate Center, a 250,000-square-foot Class A office complex located at 500 Charles Ewing Blvd. in Ewing, N.J. Princeton South Corporate Center was built in 2013, and was acquired by the owner in January of 2015 for $74 million, according to CommercialEdge information. The property’s sole tenant is consumer goods giant Church & Dwight, the same source shows.
• A $26.3 million mortgage, accompanied by an 8.1 percent all-in fixed interest rate set over another five-year interest-only term for 22330 Glen Drive, a 167,000-square-foot Class A office asset in Sterling, Va., a submarket of Washington, D.C. Built in 2016, the property is fully leased to the U.S. General Services Administration and the U.S. Customs and Border Protection.
• An $8.4 million mortgage, accompanied by a 7.3 percent interest rate, coupled with a 10-year interest-only term, for 145 Rio Robles Drive, a 58,000-square-foot property in San Jose, Calif. The class B property was built in 1985, and picked up by The RMR Group in December of 2013 for $13.5 million, according to CommercialEdge data. Situated in Silicon Valley, 145 Rio Robles Drive is flanked by offices used by the likes of Google, Samsung, Cisco and SK Hynix.

The merger’s other moves

145 Rio Robles Drive. Image courtesy of CommercialEdge

When completed, the merger between OPI and DHC will lead to a combined portfolio of $12.4 billion, with properties located in 40 states. As part of the merger, Office Properties Income Trust worked to obtain a $368 million bridge loan commitment from JPMorgan Chase Bank.

READ ALSO: What the New Wave of M&As Means for CRE

So far, the firm has closed on more than $108 million in mortgage loans for properties to be absorbed by the merger. In May, OPI worked to ink $30.7 million for a 266,000-square-foot office property in Landover, Md. The non-recourse 10-year CMBS loan is subject to an all-in fixed interest rate of 7.21 percent.

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3333 Scott Blvd. Image courtesy of CommercialEdge

Preylock Real Estate Holdings has acquired a 244,906-square-foot office asset in Santa Clara, Calif., for $182.5 million, according to CommercialEdge data. The seller, a partnership between CBRE Global Investors and CalSTRS, had bought the building for $162.5 million in 2017, after its completion.

Records filed with Santa Clara County show that Preylock borrowed $120.9 million of PCCP LLC‘s debt funds, via promissory notes, for the acquisition.

Developed by Menlo Equities, the recently purchased Class A building was fully occupied by Applied Materials at the time of closing; the company had subleased the space from Aruba Networks Inc. in 2022.

READ ALSO: A Closer Look at Tech Layoffs’ Impact on Office Leasing

Situated on 3.5 acres at 3333 Scott Blvd., north of Applied Materials’ Santa Clara headquarters, the six-story asset is part of the 1.3 million-square-foot Campus @ 3333. The 30-acre property comprises seven office buildings, two parking garages and a 30,000-square-foot amenity building. Features include a fitness center, cafeteria, basketball court, outdoor dining area, bocce ball court and outdoor seating spaces.

The office campus is 3.5 miles from downtown Santa Clara and roughly 7 miles from downtown San Jose, Calif. The location is less than 5 miles from Meta Sunnyvale Campus, the 719,037-square-foot property that changed hands last year in Silicon Valley’s largest investment sale.

The Bay Area commands high prices

The 3333 Scott property sold for roughly $745.3 per square foot in one of the largest deals of the Bay Area market this year so far. The transaction shows that, while the office sector is facing serious headwinds, demand in certain areas continues to result in very high prices, especially for Class A space.

Bay Area’s office sales averaged $448 per square foot in the first four months of the year, according to a recent CommercialEdge report. The value was more than double the one recorded on a national level ($196 per square foot), although 13 percent smaller on a year-over-year basis.

The post Preylock Pays $183M for Bay Area Office Asset appeared first on Commercial Property Executive.

Google North Bayshore Master Plan. Image courtesy of Google and Lendlease

A partnership between Google and Lendlease has received unanimous approval from Mountain View, Calif.’s City Council to move forward with an upcoming 153-acre master-planned mixed-use neighborhood in the North Bayshore Precise Plan area.

After more than 10 years in the making, the project achieved a significant milestone in September 2021, with the submission of the development application by Google. The Google North Bayshore Master Plan—created and designed by SITELAB urban studio—surpasses any previous development in the city’s history, according to the local administration.

READ ALSO: Designing the Suburbs of the Future

Spanning a period of 30 years, the agreement incorporates a wide range of components, including residential, office, commercial and hospitality facilities. Plans calls for up to 3.1 million square feet of office space, 288,990 square feet of ground-floor commercial space, 55,000 square feet designated for community facilities and 7,000 high-density residential housing units spread across 7 acres, of which 15 percent will be affordable.

The neighborhood will feature a private district utility system, up to 525 hotel rooms distributed across two locations, 26 acres of public parks and open spaces, 4 acres of land for a school, as well as new public and private streets, along with bicycle and pedestrian improvements.

Google also recently announced the launching of another long-awaited project, codenamed Red Hawk. The development involves the construction of a $1 billion data center on some 190 acres in Mesa, Ariz., in the Phoenix area.

New Google project to redefine the North Bayshore landscape

The development will take shape north of U.S. Route 101, bounded by Charleston Road to the north, Stevens Creek to the east, Space Park Way to the south and Huff Avenue to the west. The project will also occupy portions of the Gateway Master Plan area, situated at the northwest corner of Shoreline Boulevard and the U.S. 101 northbound on-ramp, as well as six parcels between San Antonio Road and Marine Way, within the North Bayshore Precise Plan.

Additionally, the master plan will encompass a portion of the Shoreline Amphitheatre parcel (Lot C) located north of Amphitheatre Parkway in the PF (Public Facilities) Zoning District. A section of the project is situated in the city’s Gateway Master Plan area, which received city approval last year.

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5000 Shoreline Court. Image courtesy of CommercialEdge

Clinical-stage precision medicine oncology company IDEAYA Biosciences has signed a long-term lease to occupy 44,000 square feet at DivcoWest’s 5000 Shoreline Court in South San Francisco’s Sierra Point life science cluster. CBRE brokered the lease on behalf of the landlord, while JLL represented the tenant.

IDEAYA’s lease gives the firm access to a custom-designed lab space adapted to company’s specific requirements and future expansion goals. Anticipated move-in is scheduled for the middle of 2024.

READ ALSO: San Francisco’s Office Market Favored Life Science in Q1

DivcoWest purchased the 140,000-square-foot Class A office building last year for $164.5 million, CommercialEdge information shows. The same source reveals that the property is also subject to a $124 Deutsche Bank loan set to mature in 2032.

CBRE Vice Chairman Chris Jacobs and Associate Matt Jacobs brokered the lease singing on behalf of DivcoWest, while JLL Senior Managing Director Grant Dettmer and Executive Managing Director Scott represented IDEAYA in the agreement.

A San Francisco vacant space transformed into a life science hub

Upon acquisition, the owner executed a plan to transform the vacant building into a laboratory facility, enhancing building systems and infrastructure to attract life science tenants. Improvements to the base building encompassed upgrading the electrical service to 4000 amps, replacing rooftop mechanical units, as well as installing a 1,200kW emergency generator.

DivcoWest is also implementing the installation of two extra service elevators, a new gym and upgrading the building’s common-space areas to include meeting spaces. The three-story building offers flexible space options ranging from 10,000 to 80,000 square feet.

DivcoWest is currently undertaking the development of 10,000, 13,000, and 20,000-square-foot spec suites, designed to provide lab space, lab support areas, offices, conference rooms and lounges. The suites are slated for occupancy in the first quarter of 2024.

A lab space in the middle of it all

The building at 5000 Shoreline Court is less than 9 miles from downtown San Francisco and some 6 miles from San Francisco International Airport. The San Francisco Bay Trail, a 350-mile network of connected walking trails, bike paths and parks is also close by.

The trail offers pedestrian and cycling access to the Alameda-Oakland-South San Francisco ferry, positioned just across the Oyster Point Channel. The building is also situated within a life science cluster including AstraZeneca, Bristol Myers Squibb and Janssen Pharmaceuticals.

Sublease surge pushes up San Francisco office vacancy

A recent CommercialEdge report reveals that San Francisco has seen continued rate hikes, with prominent corporate tech tenants such as Salesforce and Meta listing their office spaces for sublease as part of downsizing or office cutback strategies.

This surge in sublease offerings has caused the vacancy rate in San Francisco to rise, reaching 19.4 percent in April—an increase of almost 2 percent compared to 12 months prior. Despite facing challenges, San Francisco also maintained its position as the most expensive market in the Western region, commanding an average asking rent of $65.3 per square foot.

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Rendering of 220 Park Road. Courtesy of Sares Regis Group of Northern
California and Dostart Development

A joint venture between Dostart Development Co. and Sares Regis Group of Northern California has unveiled the final stages of 220 Park, Connect CRE first reported. The 184,000-square-foot, Class A office and retail development is underway in downtown Burlingame, Calif., and involves the integration of a historic property.

The developers broke ground on the project in 2021. According to CommercialEdge, Newmark arranged $181.9 million in construction financing on behalf of the ownership, originated by AustralianSuper. The loan is set to mature in 2024.

READ ALSO: Will CRE Construction Hold Steady in 2023?

The development is set become the tallest structure in the city. The project is slated for completion by the end of 2023, with the exterior and site enhancements concluding in early 2024, according to Sares Regis.

A Bay Area mixed-use: Delving into the details

Construction plans involve integrating the restored historic Post Office building 1.3-acre vacant site into the upcoming 220 Park six-story building. The design will also encompass an adjoining 11,000-square-foot outdoor amenity space. Developers will preserve the front exterior of the post office while adding new construction behind it, along with a two-level, 275-spot underground parking garage.

The lower level, incorporating a section of the current post office, will consist of 17,000 square feet of retail and dining areas. The office component will feature terraces on each level, along with patios located on the third and sixth floors.

READ ALSO: California, a Leader state for LEED-Certified Office Properties in 2022

The property is set to emerge at 220 Park Road, closely intertwined with Burlingame’s forthcoming Town Square, a 28,000-square-foot public gathering space. The project aims to achieve LEED Gold and Fitwell certifications, a combo aiming for both environmental sustainability and well-being.

According to Sares Regis, the partnership undertaking the development will contribute $2 million to the city for the development of Town Square. Furthermore, it will allocate an extra $3.5 million in various fees to support the construction of affordable housing in Burlingame.

Bay Area office market has 5.3 MSF under construction

As of April, the latest CommercialEdge report revealed that there were 118.2 million square feet of office space under construction across the nation, which accounted for approximately 1.8 percent of the total stock.

The vast majority of upcoming supply consists of Class A and A+ properties, totaling 109.9 million square feet. Furthermore, there were more than 300 million square feet of office space in the planning stages. The same source reveals that the Bay Area market contributed 5.3 million square feet to the overall under construction pipeline.

Earlier this month, Sares Regis, in partnership with Hunter Storm, topped out another California project. The developers are bringing online three buildings within Cityline, an upcoming mixed-use development in downtown Sunnyvale.

The post Dostart, Sares Regis to Wrap Up Bay Area Mixed-Use appeared first on Commercial Property Executive.

Image by georgeclerk/iStockphoto.com

San Francisco’s office market continued at a sluggish pace through the first quarter. Vacancy failed to improve, with most large deals being subleases. Most development activity is concentrated in the southern portion of the metro, especially in South San Francisco, as traditional office users have put expansion plans on hold. Meanwhile, the continued growth of life sciences has led to a race by developers to capitalize on this need.

Life sciences dominate development

As of March, San Francisco had 7.8 million square feet of office space under construction across 39 properties, representing 5.1 percent of existing stock—almost triple the national average of 1.8 percent. The metro’s pipeline as a percentage of existing stock grew by 150 basis points year-over-year.

The impact of the life sciences industry on the office market brought San Francisco in line with other metros where this sector is thriving, such as Boston (5.5 percent of stock underway) or San Diego (5.3 percent). Compared to other gateway markets, San Francisco’s office construction pipeline stood at the top. It was followed by Miami (3.3 percent), Manhattan (2.0 percent), Chicago (1.2 percent) and Los Angeles (0.9 percent).

The largest development underway was Kilroy Oyster Point’s three-building second phase, dubbed Gravitate, which broke ground last year. The $940 million project, developed by Kilroy Realty Corp., will offer 750,000 square feet of office space in South San Francisco and is expected to come online in 2024.

Construction starts during the first quarter amounted to 1 million square feet of rentable office space across three properties—all of them are marketed as offices for the life science sector. These three projects were also among the top five largest developments underway in the market.

Rendering of Southline. Image courtesy of Square Mile Capital Management

The largest of these was Lane Partners’ first phase of Southline, comprising 715,000 square feet of office space across two buildings, in South San Francisco. In January, the developer received a $373 million financing package for the project, which is estimated to have a total cost of $1 billion and comprise approximately 3 million square feet of office space once fully completed.

The third property that broke ground during the first quarter was Longfellow Real Estate Partners’ Avia Labs at Millbrae Station, a 315,000-square-foot property set to comprise lab and office space and to achieve LEED Gold and Fitwel certifications. In March, the developer received a $310 million construction loan for Avia Labs, from Otera Capital.

The South San Francisco submarket had by far the largest share of the construction pipeline, with 3.7 million square feet underway as of March. It was followed by Redwood City (1 million square feet), San Francisco-SOMA (840,000 square feet) and Burlingame (700,000 square feet).

Office vacancy still struggled

San Francisco’s office vacancy stood at 19.1 percent as of March, down only 10 basis points month-over-month. The market’s rate was 240 basis points higher than the national average. With return-to-office sentiment still wavering, along with companies downsizing or pausing expansion plans, the metro’s vacancy remains the highest among gateway markets, except Chicago, which was on equal footing (19.1 percent). It was followed by Phoenix (18.2 percent), Manhattan (16.5 percent), Los Angeles (14.7 percent) and Miami (11.9 percent).

Despite sluggish leasing activity, with most large deals being subleases, the average listing rate of stabilized assets stood at $66.1 as of March, up 4.9 percent year-over-year and among the most expensive in the U.S. The national rate was $38.2, and only Manhattan recorded a higher rate, at $74.2.

Both sales volume and average prices dropped

Eight properties changed hands during the first quarter in San Francisco, generating $316.4 million in sales. Sales volume dropped by 38.6 percent from 2022’s first quarter. The average price per square foot of stood at $520 in March, significantly above the national average of $195, but down 33 percent year-over-year.

Despite a decline in prices, San Francisco remained among the most expensive metros in the U.S., exceeded only by Manhattan ($1,002 per square foot on average), The Bay Area—comprising the East and South Bay ($604) and Boston ($555).

The largest sale of the first quarter occurred in the South Financial District submarket—The Sobrato Organization purchased the 156,512-square-foot One Harrison from Gap, for $80 million, or $511 per square foot.

Southbridge Plaza. Photo courtesy of CommercialEdge

Another notable sale was of the newly constructed, 56,000-square-foot Southbridge Plaza, at 345 Fourth St. in the SOMA submarket. Taipei Economic and Cultural Office acquired the property for $52.8 million, or $880 per square foot, from Tarsadia Investments. The new owner will occupy the entirety of the office space.

Morgan Stanley closed on the most expensive transaction on a per-square-foot basis. The company acquired a medical office building at 321 Middlefield Road in Menlo Park, for $68 million, or $1,404 per square foot. The seller was Pollock Financial Group.

More coworking providers appear

San Francisco had flexibile office space accounting for 1.8 percent of its entire office inventory, standing slightly above the 1.7 percent national value. The largest flexible office markets, represented as a share of total office space, were Brooklyn (5.2 percent), Miami (3.3 percent) and Manhattan (2.8 percent).

San Francisco Pacific Heights. Image courtesy of Pacific Workplaces

The growing demand for more flexible space in the market continues to attract more providers, as well as prompt existing ones to expand their portfolio. In January, Pacific Workplaces opened its second location in San Francisco—the new location measures 10,798 square feet at 2001 Van Ness Ave., in Pacific Heights.

Last month, AvantSpace announced plans to open a 10,000-square-foot coworking space in San Rafael, at 835 5th Ave., within a 12,976-square-foot historic building.

Convene announced it will open its first location in the market at 100 Stockton St., in the Union Square neighborhood. The 65,000-square-foot space will serve as a Meetings and Events venue, and sits within a 265,000-square-foot building that is currently undergoing a mixed-use renovation. Convene plans to bring it online in October this year.

CommercialEdge covers 8M+ property records in the United States. View the latest CommercialEdge national monthly office report here. We included properties of 25,000+ square feet in our research.

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3478 Buskirk Ave. Image courtesy of CommercialEdge

Local flexible office provider Pacific Workplaces has renewed its 10-year lease at a 14,090-square-foot coworking space in Pleasant Hill, Calif. Owned by Graham Street Realty, the building at 3478 Buskirk Ave. is part of the Hookston Square Office Park. Veracity Commercial Partners represented the tenant and Newmark worked on behalf of the landlord in the lease signing.

The flex office space encompasses 51 furnished private offices ranging from 140 to 156 square feet, along with meeting rooms, board rooms and virtual office plans. On-site amenities include a fitness center, full-service deli, free parking, as well as services such as personalized call answering.

Completed in 1985, the 100,963-square-foot property is located just off Interstate 680, some 19 miles from Oakland, Calif. Situated less than 3 miles from Walnut Creek, Calif., the building is within walking distance of numerous retail, dining and fitness options.

Veracity Commercial Partners’ Vice President Ian Osborne and Co-founder Erik Sorenson worked on behalf of Pacific Workplaces, while Newmark’s Vice Chairman Breck Lutz, along with Managing Director Curtis Berrien represented Graham Street Realty. At the time of the lease renewal, the flex office provider operated 18 locations across three states, most of them concentrated in the Bay Area. Recently, the firm opened a hybrid workplace in the Pacific Heights neighborhood of San Francisco.

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The Franciscan and Mohave Centers in Fremont, Calif. Image courtesy of JLL Capital Markets

Sterling Organization has closed its purchase of two retail properties in Fremont, Calif., for $40.5 million. The firm has acquired Franciscan Center, a 106,840-square-foot shopping center, and the adjoining Mohave Center, a 10,228-square-foot strip mall.

The previous owner of the site was Danville, Calif.-based company Patterson Ranch Inc., according to CommercialEdge data. JLL Capital Markets, which represented the former owner in a singular transaction selling both assets, declined to name the seller in a statement announcing the transaction. However, JLL did note that the retail properties were sold by their original owner, who had held the assets for half a century.

READ ALSO: Office, Retail Net Lease Cap Rates Reach Highest Level Since 2020

Located in the San Francisco Bay Area, the properties have an occupancy rate of 92 percent. Tenants at the properties include supermarket Safeway, which anchors the Franciscan Center, fast food locations Taco Bell, KFC and Burger King, a 7-Eleven location and a Bank of America branch.

Franciscan Center, which sits adjacent to the Tesla Fremont Factory, is located at 46690-46850 Warm Springs Road, with Mohave Center located at 46650 Mohave Drive. The projects are near major freeways, corporate campuses and residential areas.

JLL’s Retail Capital Markets Investment Sales and Advisory team, led by Managing Directors Gleb Lvovich, Geoff Tranchina and Eric Kathrein, and Senior Director Daniel Tyner, advised the seller.

West Palm Beach, Fla.-based Sterling Organization invests in value-add retail real estate, core grocery-anchored retail real estate and consumer fulfillment and distribution real estate. The firm owns 73 properties in various U.S. markets. JLL’s Tyner praised the grocery-anchored asset class in the statement, saying the sector drives strong demand and pricing.

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2600 Great America Parkway. Image courtesy of Commercial Edge

Tech company Silergy Technology has signed a 27,715-square-foot lease at Irvine Co.’s Santa Clara Gateway office campus. Cushman & Wakefield Managing Director Alex Lagemann brokered the lease agreement on behalf of the tenant, which will expand its Silicon Valley corporate headquarters at the property.

Silergy will relocate from Sunnyvale, Calif. to Santa Clara, Calif., and will occupy the entire top floor of the six-story 2600 Great America Parkway, located within the three-building campus. The company’s new headquarters will include both office and lab space.

Standing on a on a 14-acre lot, the 164,594-square-foot building came online in 2014 , according to CommercialEdge. Designed by Pei Cobb Freed, the LEED Gold- and Energy Star-certified property features a market café, a fitness center, open-air collaboration spaces, two game rooms, as well as surface parking, bike lockers and EV charging stations.

READ ALSO: California, a Leader in LEED-Certified Office Buildings

The property offers connectivity to Highway 237, as well as freeways 880, 680 and 101, being within walking distance of local transportation stations. The retail, dining and recreation destinations at Santa Clara Square Marketplace are also accessible by foot. Levi’s Stadium, Hyatt Regency Santa Clara and the Santa Clara Convention Center are less than 2 miles of the property.

The Silicon Valley office market witnessed growth in Q1

The Silicon Valley office market closed the first quarter with a positive net absorption of 152,767 square feet, due to large office lease signings, according to a Colliers report. The average vacancy rate reached 10.7 percent, marking a 30-basis-point decrease since the previous quarter and down 10 basis points year-over-year.

According to the same report, while widespread tech layoffs have affected numerous Silicon Valley companies, the impact on actual office workers has been minimal. In fact, many companies are utilizing this market instability as an opportunity to restructure their businesses.

The post Irvine Co. Inks HQ Lease in Silicon Valley appeared first on Commercial Property Executive.

AvantSpace, a California-based workspace provider, has unveiled plans for AvantSpace, Marin, a 10,000-square-foot coworking space in San Rafael, Calif. The location is part of a 12,976-square-foot historic office building owned by Moana San Rafael LLC, according to Commercial Edge data. Opening is scheduled for June.

The Marin County flex office space will include open and dedicated desks, fully furnished private offices for teams of up to six members, as well as an event venue for private and member events, available for outside bookings. Amenities and services at the space include high-speed internet, mail services, HD video conferencing and access to cultural events.

Located at 835 5th Ave., the space is within walking distance of numerous dining and retail options available on Lincoln Avenue., while U.S. Route 101 and downtown San Rafael are less than half a mile away. The company operates another coworking space in San Francisco’s Marina district, located at 2181 Greenwich St., that opened in 2018.

Other flexible workspace providers are also expanding their footprint in the Bay Area. In January, Pacific Workplaces opened a 10,798-square-foot coworking space in the Pacific Heights neighborhood. Last year, Convene entered the market with a 65,000-square-foot space at 100 Stockton St.

The post AvantSpace Expands in North Bay appeared first on Commercial Property Executive.

Building 4, the largest at Morton Commerce Center in Newark, Calif., is occupied by tech giant Meta. Image courtesy of CommercialEdge

Terreno Realty Corp. has acquired the Morton Commerce Center in Newark, Calif., for $186 million.

Torrance, Calif.-based Overton Moore Properties was the previous owner of the industrial facility, with Cushman & Wakefield serving as leasing manager and broker, according to CommercialEdge data.

The complex comprises four industrial distribution buildings totaling approximately 603,000 square feet. Situated on 30.5 acres at 7355-7395 Morton Ave., the project sits adjacent to Interstate 880, California State Route 84 and the Dumbarton Bridge, the southernmost highway bridge crossing San Francisco Bay.

Four tenants—Facebook parent Meta, Lucid Motors, Pegasus Logistics Group and RK Logistics Group—hold leases at the property expiring between 2026 and 2032, according to CommercialEdge and a statement from Terreno. Lucid Motors, which occupies Building 1, is marketing a sublease for the entirety of its 161,680-square-foot space. Buildings 2 and 3, which are leased by Pegasus Logistics and RK Logistics, total 217,437 square feet, while Meta-occupied Building 4 is the largest, totaling 225,679 square feet. The asset’s estimated stabilized cap rate is 4.6 percent.

The site features 86 dock-high and eight grade-level loading positions, as well as parking spaces for 730 vehicles. All four buildings were completed in 2020.

In addition to the San Francisco Bay Area, Bellevue, Wash.-based Terreno acquires, owns and operates industrial real estate assets in five U.S. coastal markets: Los Angeles, Seattle, Miami, Washington, D.C., and the New York City metropolitan region, including northern New Jersey.

The acquisition price accounts for marking assumed debt to market, as well as the buyer’s due diligence and closing costs, estimated near-term capital expenditures and leasing costs necessary to achieve stabilization, according to Terreno’s statement.

The post Terreno Realty Pays $186M for Bay Area Industrial Asset appeared first on Commercial Property Executive.

25 Orinda Way. Image courtesy of JLL Capital Markets

Volwood Management has purchased 25 Orinda Way, a Class A office building in Orinda, Calif, a San Francisco suburb. Long Market Property Partners sold the asset for $12.8 million, with the assistance of JLL.

Completed in 1974, the three-story, 28,931-square-foot boutique office property was renovated in 2018, now featuring an upgraded HVAC system and lighting. 25 Orinda Way was 91 percent leased at the time of sale.

The asset is in the Layafette Orinda submarket, 9 miles outside Oakland and approximately 17 miles from downtown San Francisco. The property is close to Route 24 and Orinda Metro Station, which provide easy access across the Bay Area.

Senior Director Erik Hanson, Senior Managing Director Rob Hielscher, Senior Director David Dokko, Managing Director Adam Lasoff, Associate Mike Matera and Analyst Caroline Reynolds led the JLL Capital Markets team working on behalf of the seller. Knute Bucklew, head of agency leasing at JLL, provided leasing advisory services.

According to a recent CommercialEdge report, San Francisco’s office sales amounted to $308 million in the first two months of 2023. The metro continued to struggle in terms of leasing activity; the vacancy rate was at 19.2 percent as of February, up 230 basis points over the year.

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Tracy 205. Image courtesy of CBRE

Trammell Crow Co. and CBRE Investment Management have wrapped construction at Tracy 205 Logistics Center in Joaquin County, Calif.

The Class A industrial facility is located 1269 E. Grant Line Road in the city of Tracy’s Northeast industrial submarket, offering connectivity for tenants in the Bay Area and Northern California.

A single building, the cross-dock facility totals 606,343 square feet and features 40-foot clear heights, 4,054 square feet of office space and a secured, fully fenced yard, as well as 40,000-pound mechanical dock levelers, a 185-foot full-depth truck court and a dedicated full-movement intersection. The warehouse is outfitted with LED lights, 4,000 amp electrical service, sky lights and an ESFR system.

READ ALSO: US Port Activity Reaches Peak

The property is designed to appeal to distribution occupiers aiming to service the region, according to a statement from Trammell Crow.

Located 18 miles from the Stockton Metropolitan Airport, the facility is within 60 miles of the San Jose and Oakland airports and 76 miles from Sacramento International Airport. The facility is 21 miles from the Port of Stockton, on the Stockton Ship Channel of the Pacific Ocean, and 53 miles from the Port of Oakland in the San Francisco Bay.

Kier & Wright was civil engineer on the project, while Big D Pacific Builders was the general contractor and HPA Architecture designed the building.

Tracy 205 is available to lease, with Daniel Davis, Ryan Davis, Thomas Davis and Robert Taylor of CBRE‘s Central Valley Team marketing the facility.

The post Trammell Crow, CBRE IM Complete 600 KSF Industrial Project appeared first on Commercial Property Executive.

Image by Sven Mieke via Unsplash

Prologis intends to develop a two-building, 550,000-square-foot office and laboratory campus on three adjacent properties it owns in South San Francisco, Calif., San Francisco Business Times first reported. To that end, the firm has submitted an application with the city, seeking to merge the sites, which total 4.7 acres, and replace the existing warehouses with two eight- and 10-story buildings, alongside a nine-story, 827-space parking garage.

Following the project’s approval, Prologis will demolish all existing construction at 101-150 and 170 Associated Road as well as 175 Sylvester Road. The parcels on Associated Road will become the development site of the complex’s 340,600-square-foot West Building. On Sylvester Road, the developer plans to build the 210,430-square-foot East Building, as well as the above-ground parking garage. The properties will be connected through a landscaped plaza. DGA is leading the project’s architectural design.

Slated for redevelopment

Prologis acquired the three sites in 2014, 2021 and 2022, respectively, according to CommercialEdge information. On-site construction currently includes:

• A 175,187-square-foot industrial building at 175 Sylvester Road that was constructed in 1953. At present, the space is leased to Cruise and Sunbelt Rentals. The owner purchased the building and its surrounding lot in 2014.
• A 27,331-square-foot distribution center at 101-150 Associated Road that is occupied by BF Imports and Simex International. Prologis acquired the property in 2021 for $11.5 million.
• An additional 20,040 square feet of warehouse space at 170 Associated Road. The firm picked up the asset in 2022 for $15 million.

A lively life science market

The plots are just south of 100 E. Grand Ave., another Prologis parcel where the firm plans to build a recently entitled 600,000-square-foot life science campus. Located in South San Francisco’s East Side district, the complex will be within 2 miles of a dense cluster of life science and industrial properties, including BioMed Realty’s 2.2 million-square-foot biotech campus that is also home to an Amgen facility.

Owing to its wealth of research universities, hospitals and biotech headquarters, the Bay Area remains one of the nation’s largest life science markets across nearly all of its major fundamentals. Data from a fourth quarter 2022 Newmark report shows that the region’s pipeline has more than doubled year-over-year to 7.7 million square feet at the end of December, while investments totaled roughly $8.7 billion in Q4.

And the Bay Area’s life science pipeline has just become larger, as Longfellow Real Estate Partners recently broke ground on a 315,000-square-foot lab and office project in Milbrae. Completion is expected in the third quarter of 2024.

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Avia Labs at Millbrae Station. Rendering courtesy of Longfellow Real Estate Partners

Longfellow Real Estate Partners has broken ground on Avia Labs at Millbrae Station, a Class A, life science campus in Millbrae, Calif. JLL Capital Markets arranged a $310 million construction loan on behalf of the developer, through Otera Capital. The development is set to encompass 315,000 square feet of lab and office space.

Designed to achieve LEED Gold and Fitwel certifications, the all-electric Avia Labs is set to incorporate sustainability and well-being components. The development will comply to ESG standards and meet the requirements of academic research institutions, as well as biotech companies, said Longfellow Managing Director Lauren McDermott in a prepared statement.

READ ALSO: Emerging Trends in Bay Area Life Science Design

A fitness center, conference spaces, bike storage, a terrace and a publicly accessible cafe are among the planned amenities at the property. The upcoming campus will rise at 210 Adrian Road and will be within walking distance of the Millbrae Transit Center and less than 3 miles from San Francisco International Airport.

Earlier this month, Spear Street Capital topped out 300 Kansas, a sustainable research and development manufacturing building in San Francisco. The design of the development features an all-electric, zero-carbon design.

Longfellow Real Estate expands in California

The groundbreaking of the Avia Labs campus is a significant milestone for Longfellow, marking the company’s continued growth in the Bay Area since its debut in 2018. At the end of last year, Longfellow received $202.6 million in construction financing for Bioterra, a 316,000-square-foot life science project in San Diego. The project is slated for completion in the third quarter of 2024.

Longfellow currently has more than 2.5 million square feet of existing space and has plans for an additional 2.5 million square feet of development, with key projects underway in California including some in Palo Alto, Redwood City, San Francisco and Emeryville.

Newmark research indicates that the Bay Area continues to hold its place as the second most significant life science cluster in the U.S., thanks to its abundance of laboratory space exceeding 33 million square feet, strong demand from tenants and robust venture capital networks.

A recent CommercialEdge report reveals that, as of January 2023, the office pipeline in the Bay Area was poised to expand inventory by 2.9 percent, with the addition of 5.8 million square feet of new space.

The post Longfellow Lands $310M for Bay Area Life Science Campus appeared first on Commercial Property Executive.

San Francisco skyline. Image by Raphael Stäger via pixabay.com

The top three tech cities in the world are all in the U.S., according to Savills Tech Cities 2023 report. San Francisco leads the way, followed by New York and third-place Silicon Valley. And with the California towns holding two of the three top spots, the San Francisco Bay Area carries the distinction of being the preeminent global tech hub.

“As the fourth industrial revolution transforms business and industry, new tech sectors are driving growth, supporting demand for property in the cities that lead in them,” according to the report.

Savills examined a diverse range of factors in determining the leading tech cities. The London- based commercial real estate services firm assessed each market’s business environment, tech environment, city buzz and wellness, as well as strength and depth in 11 tech sub-sectors ranging from AgTech & FoodTech to SpaceTech. New York, may have ranked second in the world overall, but the city takes top billing globally in AgTech & FoodTech, FinTech, DeepTech and MediaTech.

READ ALSO: Top 10 Markets for Office Deliveries in 2022

Talent, however, is the leading measurement of success in the Savills ranking, as skilled labor is the backbone of the tech world. San Francisco, New York and Silicon Valley all have extensive talent pools and premier universities to keep the educated labor force flowing.

Taking all factors into consideration, Savills’ findings indicate that the U.S. far outranks Europe and Asia in tech leadership, with 15 U.S. cities holding a place on the list of the 30 principal tech markets of the world.

Upward bound

While the world’s established tech cities—the global markets that record the highest marks in depth of tech base, quality of life and supportive business environment, and attract the most venture capital—will continue to lead the tech industry, rising cities are making waves. “Big cities are back in vogue as the effect of the pandemic has eased, though smaller cities that offer more affordable living, easy access to green space and outdoor pursuits are also in high demand,” according to the report.

Rising cities, secondary global markets that often specialize in one tech sector, include the likes of Houston, Raleigh-Durham, N.C., and Denver. “These cities offer a quality business and education environment, combined with city living on a smaller footprint, benefitting as people sought a better quality of life in the wake of the pandemic. That allows easier access to amenities and a better work/life balance for residents, but with all the ‘buzz’ of larger urban centers.” Before the pandemic, neither Houston, Raleigh-Durham, N.C., nor Denver ranked in the top 30, having made no appearance at all in Savills’ 2019 report.

Other rising cities of note include Austin, Texas, which is the seventh-leading city in the world for MediaTech, and St. Louis, ranking eighth in the world in AgTech & FoodTech.

As rising cities grow in appeal to specialist tech companies, these metros are seeing a positive effect on their respective office markets. As noted in the report, specialist tech firms face evolving real estate needs as they grow in size, making the flight to quality at most levels and thereby bolstering the Class A office sector. And Class A accommodations in rising cities have a far more palatable price per square foot than those in established tech cities.

Although rising cities are attracting more attention, the leading tech hubs will continue to have a firm hold on their position at the forefront. The factors that make the big tech cities perform well, such as the depth of their talent pools and the weight of money flowing into them, are enough to keep them at the top of Savills’ index, Paul Tostevin, director with Savills Research, said in prepared remarks.

The post US Cities Lead the World in Tech appeared first on Commercial Property Executive.

Image by falco via Pixabay.com

Construction has gone vertical at Ridgeline Property Group’s Class A Midway Commerce Center in Vacaville, Calif. Ridgeline is developing the project with capital partner and real estate investment manager USAA Real Estate.

Vacaville is in Solano County, roughly halfway between San Francisco and Sacramento. The 89.7-acre logistics park is on Eubanks Drive, a mile from the Midway Road and I-505 interchange, and has quick access to I-80.

Walls are in place and the roof deck is being installed on the 1.5 million-square-foot park’s largest structure. Building C is an approximately 1.2 million-square-foot, cross-dock facility with a 42-foot clear height and hydraulic dock levels at all 209 positions.

Wall panels are going up at Building A, a 198,490-square-foot rear-loading facility with a 36-foot clear height and mechanical dock levers at every other position.

READ ALSO: US Port Activity Reaches Peak: Savills

Both buildings will feature LED lighting, ample power, and high-finish offices, according to Ridgeline, and will be ready for occupancy by early fall.

In a prepared statement, Steve Arthur, a partner at Ridgeline, said plans for the 105,908-square-foot Building B will be announced very soon.

Ridgeline, which is based in Atlanta, did not reply to Commercial Property Executive’s request for additional information.

HPA Architecture is the project’s designer.

In the prepared statement, Vacaville City Manager Aaron Busch called the campus well positioned to attract logistics, distribution and e-commerce tenants, as well as advanced manufacturing industries.

Brooks Pedder, John McManus and Tony Binswanger of Cushman & Wakefield are the park’s exclusive leasing brokers.

Tight and getting tighter

The industrial space market in the Solano and Napa counties saw its razor-thin vacancy of 1.0 percent creep down to 0.9 percent in the fourth quarter, setting another record low, according to a report from Colliers. The average asking rent has risen a bit, to $0.79 per square foot, triple net.

About 3.3 million square feet is under construction, versus a current industrial inventory of 56.3 million square feet.

In December, local planning officials approved Transwestern’s plans to develop Axiom Point, a 375,000-square-foot biomanufacturing campus in Vacaville’s Vaca Valley Business Park. The park, at I-80 and I-105, is already home to Genentech and Johnson & Johnson, among other life science companies.

The post Ridgeline, USAA Hit Development Milestone on 1.5 MSF California Logistics Campus appeared first on Commercial Property Executive.

1350 South Loop. Image courtesy of Newmark

Biopharmaceutical company Vivani has signed a full-building lease to occupy 43,645 square feet at 1350 South Loop, a Class A life science building within the Radius @ Harbor Bay campus in Alameda, Calif.

Newmark Managing Directors Ari Rokeach and Conor Ranahan brokered the deal on behalf of the ownership, a partnership between Paceline Investors and True North Management Group.

Recently converted into a life science facility on a speculative basis, 1350 South Loop consists of 60 percent lab and 40 percent office space. The single-story property features 14-foot clear heights, new HVAC for lab areas, a backup power generator, as well as room for outdoor equipment.

The spec labs encompass equipment rooms, single pass air, floor drains, fume hoods and lab benches. A large flex lab area can also be customized to support a chemistry lab, biology lab, pilot plant or lab support.

READ ALSO: Life Science Assets Maintain Lasting Appeal

The nearly 700,000-square-foot Radius @ Harbor Bay campus is part of the growing Harbor Bay life science hub, anchored by Abbott Laboratories, Exelixis and Penumbra. Located near the Harbor Bay Parkway, the campus is accessible by ferry, offering connectivity to downtown San Francisco and the San Francisco International Airport.

Steady expansion of the life science sector

A recent Newmark report reveals that the Bay Area’s life science hub maintains its position as the second most important cluster in the U.S., due to more than 33 million square feet of lab space, high tenant demand and robust venture capital networks. In the first half of 2022, healthcare and life science venture capital funding in the Bay Area rose by 19.3 percent compared to the same period in 2021.

Vivani’s lease is proof of the submarket’s attractiveness and the heightened demand for built-out lab spaces, which enables companies to save on capital expenditures and speed up occupancy, said Rokeach in a prepared statement. The rising popularity of Alameda as a life sciences submarket is in line with the flight-to-quality trend present in the current market, he added.

The post JV Inks Full-Building Life Science Lease in Bay Area appeared first on Commercial Property Executive.

345 Fourth St. Image courtesy of CommercialEdge

The brand-new office building at 345 Fourth St. in San Francisco has come under new ownership, courtesy of an off-market transaction valued at $52.8 million. Taipei Economic and Cultural Office acquired the 56,000-square-foot property from 4th & Harrison SF LLC, an entity of real estate company T2 Hospitality, and will occupy the Class A property in its entirety.

Located in the city’s SOMA neighborhood, 345 Fourth is just one block from the new Central Subway Extension and within blocks of a BART station. Stanton Architecture designed the seven-story tower which features office-level balconies, a rooftop terrace, ground-level retail and a grade-level passageway with various outdoor spaces providing coworking and amenity options. The building also incorporates a bevy of sustainable features ranging from exterior sunshades to a vegetated roof.

READ ALSO: What’s Ahead for the Office Sector in 2023

TECO will relocate to 345 Fourth from its current home just 1 mile away at 555 Montgomery St., intending to remodel the interior of its new home. The move will mark an upgrade in accommodations, taking the company from space in a multi-tenant office building built in 1984, to a state-of-the-art corporate tower that delivered in 2022.

TECO relied on Tenny Tsai, Tom Christian and Andrew Hsu of Cushman & Wakefield, along with SV Commercial Property Brokerage Inc.’s Danny Yu for representation in the transaction. Barry Bram of Brookwood Starboard stood in for the seller.

Big deal

San Francisco’s office market has yet to make a post-pandemic comeback, but lackluster fundamentals have hardly translated into fire sales. The trade of 345 Fourth at more than $940 per square foot is in line with the average sale price per square foot for San Francisco office assets in 2022, which was roughly $900 per square foot, according to Kidder Mathews‘ research.

The metro’s office market didn’t precisely see a flurry of sales activity in 2022. Amid rising interest rates and a frosty financing environment, transactions totaled less than $1 billion in 2022, marking a low not seen since 2009, as per fourth quarter 2022 research from Colliers. However, change is on the horizon.

“Office investment sale activity is forecasted to be muted during the first half of the year with more activity projected through the second half of the year coinciding with increased demand and activity in the leasing market and unfreezing of the debt and capital markets for office assets,” according to the Colliers report.

The post New San Francisco Office Building Trades for $53M appeared first on Commercial Property Executive.

Steve Mohebi, CEO & Co-Founder, CANOPY. Image courtesy of CANOPY

With hybrid work culture slowly becoming the norm, an increasing number of commercial real estate landlords and investors are expanding their flex office portfolios, lured in by the subsector’s projected growth. Boutique coworking spaces with modern finishes and high-end design are among the most in demand today.

In the Bay Area, one network of shared workspaces is expanding fast. CANOPY currently operates three locations in San Francisco and another one in Silicon Valley, all offering personal desks, shared workspaces, conference rooms and private offices. Most recently, CANOPY opened in Springline, the 6.4-acre live-work-play destination developed by Presidio Bay Ventures in downtown Menlo Park, Calif. 

To find out what his vision and plans are, we asked CEO & Co-Founder Steve Mohebi to share his thoughts on today’s office market landscape, and illustrate why boutique coworking spaces make sense for office landlords across the Bay Area. 

READ ALSO: What’s Ahead for the Coworking Sector in 2023

How has office vacancy fluctuated in the San Francisco Bay Area in the past couple of years?

Mohebi: Vacancy continues to climb throughout the San Francisco Bay Area, but a large percentage of the space that’s considered vacant is technically occupied and paid for, it is actively being marketed for sublease due to lack of utilization. This highlights the overall mega trend: reduced utilization and acute need for flexible workspace solutions in the prevailing hybrid work model.

What are the main challenges that office landlords in the area face today?

Mohebi: Office landlords continue to face a flurry of challenges due to the lingering effects of the pandemic and the current consequences of the economy. For companies who are leasing space, shifts in staffing and hybrid schedules continue to fluctuate, preventing them from committing to long-term, large-scale offices. For the spaces that remain vacant, plans for converting to residential or other uses can be incredibly difficult and costly, leaving landlords with empty towers for months and years on end.

Most of these challenges are not going away anytime soon, so it is crucial that landlords continue to be creative and work with the right partners to find long-term solutions for filling vacant space. The acute need in the prevailing hybrid work model is flexible workspace solutions that enable executives to right-size their footprint to optimize facilities expenses—often the second-largest line item of any Bay Area business, behind payroll.

Pacific Heights, CANOPY’s coworking space at 2193 Fillmore St. in San Francisco. Image courtesy of CANOPY

What is CANOPY’s business model and what sets it apart from other flex workspace solutions?

Mohebi: We firmly believe that flexible, shared workspaces are the answer to the challenges facing both landlords and tenants today and in the future. The demand side is acutely tilting toward flexibility as a need to have, not a nice to have. The supply side, namely landlords, are holding outdated products—large blocks of office space—that are rapidly becoming obsolete. Our turnkey solution provides landlords with an immediate solution to this dilemma with a flex product that meets the prevailing needs of the market.

The most notable is our commitment to thoughtful, elevated design throughout each space… We design each space with highly curated colors and textures, while enhancing productivity with elegantly ergonomic furniture and abundant natural light.

Our commitment to sustainability and design, paired with more intimate workspaces in key locations across the Bay Area, and offered via flexible membership options, has ultimately created an ecosystem of accomplished and aspirational leaders from all industries. From downtown San Francisco to the heart of Silicon Valley, we’ve designed CANOPY to be a place for top talent to flourish, to which landlords and members have been receptive before, throughout and since the pandemic.

How is your model meeting the needs of both landlords and tenants in the Bay Area?

Mohebi: For landlords, we create a seamless experience, handling all responsibilities related to leasing, outfitting and managing the space, all under a long-term contract. For our members, CANOPY is a flexible, convenient solution for their fluctuating needs. As companies grow or downsize, transition from remote to hybrid, our workspaces are able to accommodate without compromising on the quality of the space or experience.

Overall, it’s crucial in today’s hybrid work environment that our workspaces provide an elevated experience that cannot be replicated by a home office. From on-site amenities like a private garden and integrated chef-driven restaurant to being in the proximity of great retailers and public spaces, each CANOPY location is designed to be an intentional, productive place to be at any time of the day.

Financial District, CANOPY’s coworking space at 353 Kearny St. in San Francisco. Image courtesy of CANOPY

Who are CANOPY’s tenants? What type of tenants are looking for boutique coworking spaces?

Mohebi: Across all four of our locations, we house members from a wide range of industries, mostly from financial services, but also design firms, law firms, professional services, tech start-ups, nonprofits and foundations and more. We are very proud of the diversity in our membership base, accentuated by a near gender-balanced community—a rarity in the Bay Area.

These types of companies are typically looking for trophy, Class A space, but in today’s modern work environment, they’d like the flexibility and access to amenities that most spaces can’t provide. The competitive options are formulaic offices in cavernous spaces built for scale. With our boutique offerings and beautiful spaces, we’re able to attract top talent from each of these industries, creating an unmatched networking experience for our members.

READ ALSO: A Glimpse Into NYC’s Booming Boutique Coworking Scene

Financial District. Image courtesy of CANOPY

How have your San Francisco locations performed last year?

Mohebi: 2022 was a fantastic year for CANOPY, bringing in the highest revenue in our history and setting us up for a record year in 2023. Our most recent location opened in November 2022 in the heart of Silicon Valley and was more than 50 percent presold prior to opening day. We’re proud of the occupancy levels we’ve maintained compared to the rest of the market and look forward to our continued growth in 2023.

Why did you choose Springline? What made that project a good fit for a CANOPY location? 

Mohebi: We chose this location because Springline is conveniently located just steps from the Caltrain Station and adjacent to downtown Menlo Park, bringing new energy to the heart of Silicon Valley through hospitality-driven modern residences, a dynamic culinary roster, and creative offices for growing businesses and entrepreneurs. Lastly and most importantly, Springline is an on-brand community committed to excellence in design, sustainability and the overall visitor experience. This is reflected in its commercial success with office rents setting national records.

Please tell us more about member benefits at your Menlo Park boutique coworking space. 

Mohebi: At our Menlo Park location, CANOPY members benefit from the wider Springline development with amenities including nine chef-driven restaurant concepts, a fully equipped fitness center, a golf simulator, an entertainment lounge, a community dog park and nearly 2 acres of public outdoor space. The walkable neighborhood is home to hundreds of modern apartment residences, bringing the mixed-use community to life with constant energy and activity. Members also have complimentary access to amenities including a full-time, full-service concierge, a programmed events schedule and a heated and misted private garden workspace.

Why do you believe that this model is the answer to the future of office space?

Mohebi: The country’s office market continues to face an uncertain future as challenges around filling vacant space and fulfilling tenants’ demands persist. We’ve struck a balance through our tailored, trophy office spaces that provide development partners with stability and members with flexibility. The way we handle leasing for the landlord and office management for the members allows us to de-escalate the decision on both sides, creating a long-lasting solution that has proven successful.

Can you share anything about your plans for this year? Do you intend to open boutique coworking spaces in other areas of the country?

Mohebi: We’re currently exploring new opportunities to expand CANOPY across the country as we assess the right spaces and partners to grow our business while maintaining the same level of quality and attention to detail that we’re known for. We look forward to announcing more details as these plans come to fruition this year and beyond.

What are your predictions for the Bay Area coworking sector in the upcoming 12 months?

Mohebi: We expect continued proliferation as more and more of the office sector reaches for a flexible workspace solution amid the prevailing hybrid work model. CANOPY stands alone as the only premium option to meet the needs of the upper quartile of the market—both for flex office as well as other would be direct lessees who seek short-term flexibility in the uncertain market ahead.

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300 Kansas. Image courtesy of Spear Street Capital

Spear Street Capital has topped out 300 Kansas, an approximately 70-foot research and development advanced manufacturing building in San Francisco.

The 150,000-square-foot property was designed by Kansas City, Mo.-based El Dorado Architects and features an all-electric, zero-carbon design, according to a statement from Spear Street. Webcor is the general contractor for the six-story building.

Construction at the property is due to wrap by this summer, with the first tenants expected to arrive in September. Newmark is the exclusive leasing agent for the building. Groundworks Office has been brought on as landscape designer for the property’s front roof deck and garden, which will total 4,500 square feet and offer views of the city, the San Francisco Bay and Mount Diablo.

Located on the corner of Kansas and 16th Streets in San Francisco’s Design District, the building is expected to run exclusively on renewable energy and will include electric vehicle charging stations, as well as bicycle storage, in its underground parking facility.

Spear Street has enlisted environmental consultant Atelier Ten and the International Living Futures Institute to achieve zero-carbon performance at the site. Carbon neutrality will be achieved during construction with the use of materials with lower embodied carbon than the industry standard, with carbon offsets to be purchased to account for the balance, according to a statement from Spear Street.

The post Spear Street Tops Off Sustainable Bay Area Office Project appeared first on Commercial Property Executive.

Southline. Rendering courtesy of Square Mile Capital Management

Lane Partners has received a $373 million financing package for the construction of the first phase of Southline, a mixed-use, life science project totaling roughly 3 million square feet in South San Francisco, Calif.

Square Mile Capital Management originated the financing for the 370,000-square-foot development, while Bank OZK provided the senior portion of the loan. Managing Director Matt Haden of Eastdil Secured’s San Francisco office arranged the transaction.

The developer’s investment partners for $1 billion project include Goldman Sachs Asset Management’s Real Estate Group and an affiliate of Beacon Capital Partners. Site work began in the third quarter of 2022 and the transit-oriented campus is expected to welcome its first tenants by the end of 2024.

According to CommercialEdge data, Lane Partners has a current pipeline of eight office properties in various stages of development in the San Francisco market, adding to a roughly 3.1 million-square-foot existing inventory.

A state-of-the-art life science campus

Designed by DES Architects + Engineers to achieve LEED Gold and Fitwel 2 Star certification standards, Southline is set to encompass seven six- to seven-story buildings with floorplates ranging from 45,000 to 100,000 square feet. Common-area amenities will feature a full-service restaurant, conference room, fitness and wellness center, coffee bar and gaming room, among others. The campus will also feature 7 acres of open space with a beer garden.

The project’s first phase will feature six stories of lab and office space, as well as a six-story parking garage. Amenities will include a fitness center, restaurant, conference facilities and bike storage.

READ ALSO: MBH Architects on Trends in Bay Area Life Science Design

Phase One is taking shape on a 28.5-acre site at 30 Tanforan Ave., 11 miles from downtown San Francisco and only 4 miles from the San Francisco International Airport. The development is adjacent to the San Bruno BART station, as well as San Bruno Caltrain and South San Francisco Caltrain Station, offering tenants multiple commute options.

The Bay Area, still a hot spot for life science development

In the last two quarters of 2022, several office and life science projects got green light from the local authorities  across the Bay Area.

In July, Transwestern Ventures and the City of Vacaville, Calif., announced plans to develop a 390,000-square-foot biomanufacturing campus. and received the Planning Commission’s approval after less than 90 days. Set within the Vaca Valley Business Park, its location is in proximity to Sacramento, Calif. and San Francisco.

In late 2022, Lincoln Property, in partnership with Dune Real Estate Partners, received approval to develop 777 Airport Boulevard, a 13-story, 400,000-square-foot office building in Burlingame, Calif. The project is expected to generate more than $1 billion in economic activity.

The post Lane Partners Lands $373M for Bay Area Life Science Project appeared first on Commercial Property Executive.

Eddie Hall, Project Architect & Senior Associate, MBH Architects. Image courtesy of MBH Architects

The San Francisco Bay Area is one of the largest life science markets in the U.S., as researchers have immediate access to a deep talent pool from nearby universities, and developers here can find capital a lot easier than in other parts of the country. At the end of last year’s third quarter, some 6.5 million square feet of specialized space was under construction in the area, according to a CBRE report.

MBH Architects has designed several life science laboratories throughout the Bay Area and has some major projects underway. 

“We are currently working on the design of a new ground-up lab within the City of San Francisco, and have a ground-up laboratory under construction in San Carlos, on the Peninsula,” Eddie Hall, project architect & senior associate at the company, told Commercial Property Executive.

Here’s what else Hall revealed about these projects and the Bay Area life science market—which continues to benefit from its proximity to academia.

The Bakar BioEnginuity Hub near University of California Berkeley. Photo by Cris Gebhardt Photography, courtesy of MBH Architects

What are today’s users looking for in life science projects?

Hall: To attract top talent and companies, new labs must be amenity-rich, inspiring environments where people want to work. We design from the perspective of the operator, the researcher, and the potential investor that may visit the space.

At Bakar BioEnginuity Hub, there are multiple tiers of outdoor terraces as well as private outdoor patios. Along with fresh air, bringing in as much natural light as possible into space also promotes a healthy work environment. We uncovered skylights in each lab space that had been covered to protect artwork from UV damage under the museum use. We infused the spaces with color and art to make them vibrant and inspiring.

When we were designing Bakar BioEnginuity Hub, we thought about what it would be like to be working at a lab bench and look up to see the central atrium of the building. It’s awe-inspiring with dramatic forms of concrete cantilevered out over the open space and a ceiling that is faceted with concrete and skylights—it feels gravity defying.

Coworking/incubator and flexible spaces are also gaining popularity. Shared equipment allows more companies to operate without cost-prohibitive start-up costs. At both MBC BioLabs and Bakar BioEnginuity Hub, researchers can rent a single bench and desk all the way up to private labs and offices. The shared space model allows companies to grow, and affords the opportunity to interact with new people and ideas. Labs must be able to flex with changing needs of the users and technology.

How common are adaptive-reuse projects in the life science sector? 

Hall: Adaptive-reuse projects are on the rise, which allows labs to insert into desirable locations that lack available space. In many cases, renovating an existing building is more cost effective and better for the environment. For one lab project, we converted three warehouses into a visually stimulating lab environment with an addition. The project took a tired, rundown block and made it lively, useful, and economically beneficial for the surrounding community.

From an architectural perspective, the lab use is a great way to save older buildings from being demolished. These older buildings, some of which are historically significant, in turn provide an inspiring place for scientists to work. Bakar BioEnginuity Hub is exemplary of how an important community building can be saved and converted into a thriving new hub for innovation. 

Please tell us how the renovation process at Bakar BioEnginuity Hub went. What were the main challenges of repurposing a museum into a lab space?

Hall: The original brutalist structure was designed by Mario Ciampi, opening as University Art Museum, later called Berkeley Art Museum & Pacific Film Archive. In 1997, the University deemed the building structurally unsafe, and it was determined that the necessary retrofitting could not be completed in a way that would not compromise the exhibition spaces.

In 2001, while a new site was being determined, temporary steel braces were added to the building’s exterior to support the cantilevered concrete as a partial solution until the museum could vacate. After the museum relocated, attempts were made to save the campus icon, but without any success, the building faced demolition.

MBH was hired in 2016 with a feasibility study to determine the renovations required to convert the building into a seismically safe life science laboratory, while preserving its historical significance. MBH identified the four largest potential challenges to be studied to determine the feasibility of rehabilitating and reprogramming the building for the new use. 

First, the structural performance—the team needed to bring the building up to code and make it seismically safe for inhabitants. Then, the historical character—the building is listed on both the City of Berkeley Designated Landmarks and the National Register of Historic Places. All modifications proposed needed to be respectful of and sensitive to the defining features of the building and preserve the character of the building where possible. This is particularly challenging in a building composed almost entirely out of concrete. We performed a very substantial amount of x-raying to understand the structure.

The program, the access, and life safety were also challenging. The highly irregular shape of the building posed challenges from spatial, accessibility and life safety perspectives. For the proposed use to be feasible, all these factors had to be solved in concert. Eighty percent of the existing building was considered inaccessible by modern standards.

The last challenge was the building’s mechanical system—the existing mechanical system was very complex and elegantly concealed within the structure of the building, but due to age and demand by the proposed new use, the system needed substantial upgrades.

READ ALSO: Is a Life Science Real Estate Bubble Forming?

Sustainability and net zero buildings are key features for today’s life science users. What role do these energy requirements play in the decision-making process, when designing a new life science building?

Hall: Laboratories require a great deal of energy-use and finding sustainable solutions to support it are critical for both the planet and for operational costs. Bakar BioEnginuity Hub is LEED Gold certified. Representative elements of mechanical, electrical and plumbing systems include: conversion to all-electric building; it performs 20 percent better than the California Energy code; the energy usage intensity is 33 percent lower than the LEED baseline and 63 percent lower when compared to similar labs; the HVAC system makes use of a fully manifolded supply and ventilation air system that provides healthy and safe ventilation. In addition, the chilled and heated hot water is generated by a modular air-source heat pump that can operate simultaneously in high-efficiency and heat-recovery mode. 

The MBC Biolabs lab campus we are currently building in San Carlos utilizes fuel cells for energy production. A Bloom Energy system is being installed as part of the phase two project to support the new lab campus from its microgrid by converting fuel into electricity through an electrochemical process.

Rehabilitation projects can avoid the emissions/energy costs of full new building construction. The best way to reduce carbon input is to fully utilize existing building elements when possible. At Bakar BioEnginuity Hub, the entire existing concrete and steel structure was kept in place and augmented by new elements for the adaptive reuse, minimizing the carbon impact. Structural steel used in the retrofit is highly recycled. Concrete mixes used cement replacement to the highest extent possible. Also, most of the concrete and steel structure was left exposed to view, greatly reducing the amount of non-structural finish materials in the renovation. Sustainable materials were chosen with chemicals of concern in mind.

Our landscape design team employs many solutions for creating healthy, water-conscious eco systems including, but not limited to, the use of native and low/very-low water plants, biodiversity, soil and habitat conservation, use of potable water for irrigation, rainwater collection, storm water management, and water management systems and controls that minimize use.

Life science users benefit greatly from the proximity to academia in the Bay Area, through incubators and grant programs that attract new talent from STEM universities. What are some less-known benefits of this proximity, in your opinion?

Hall: Connection to faculty members and students provides opportunities for new insight, ideas, internships and mentorship. A relationship with the well-established university also helps build connections with the local community. Universities foster learning that is not focused on profit, while companies must produce profit. Across all markets, from retail to life sciences, our society values purpose-driven companies. The connection to the university’s learning model may influence companies to further consider societal impact, which may be of increasing importance to investors and new talent.

What areas of research are the most demanding in terms of finding the right design?

Hall: For pharmaceutical or life science spaces, wet labs are always more involved than dry since they involve ventilation, chemical storage, and access control according to their Biosafety level classification. These facilities also have increased equipment to serve such facilities and pressurization requirements for clean spaces. Both wet and dry facilities often have sensitive equipment that requires review of structures for vibration criteria, often at or near 4000 micro inches per second, which can come into play for multistory buildings and make adjacencies such as freeways to the building site problematic.

Regardless of the area of research, careful user-centric based planning needs to be made to ensure the building functions such as deliveries, storage, circulation of users, proximity to safety features, common-area meeting and socializing spaces are all met. Additional research requirements such as a vivarium or significant chemical storage areas come with additional space and logistics considerations, and often require significant mechanical and electrical loads that all take up space.

Pharmaceutical and biotech startups have received record-levels of funding last year. How does this growth in capital translate at the design and development levels?

Hall: Available capital allows for better design and more amenities, particularly in the case of incubator labs where the need for collaboration space and common space outside the lab is as important to the users as the space inside the labs. At the development level, we are constantly pushing to make the most of the spaces and properties, whether new construction or adaptive reuse.

What challenges do you foresee on the horizon for Bay Area life science design and development?

Hall: The opportunities for new ground up buildings are quickly diminishing in dense urban markets, so conversion projects and adaptive reuse will be on the rise, and that carries challenges for infrastructure, vibration, and floor-to-floor height. We often do pre-evaluations on properties to determine the suitability of a site for an adaptive-reuse lab.

The post MBH Architects on Trends in Bay Area Life Science Design appeared first on Commercial Property Executive.

321 Middlefield. Image courtesy of Newmark

Morgan Stanley has paid $68 million for a 44,719-square-foot medical office building in Menlo Park, Calif. Pollock Financial Group sold the fully leased asset in a transaction arranged by Newmark.

With a $4.42 billion sales volume year-to-date as of November, the Bay Area dominated the West Coast in terms of office transactions, as shown by a recent CommercialEdge report. The market also registered the lowest growth in vacancies over the past 12 months at just 0.07 percent, according to the research.

A Bay Area medical office asset attracting investor interest

The two-story facility came online in 1962 on a 3-acre site, and underwent cosmetic renovations in 2009, according to CommercialEdge. Menlo Medical Clinic, a partner of Stanford Health Care, DeMarta Dental and Lucile Packard Children’s Hospital Stanford are among the tenants at the property.

Located at 321 Middlefield Road, with connectivity to Interstate 101, the medical office building is some 3 miles from Stanford Hospital, the only Level 1 trauma center on the San Francisco Peninsula. Downtown Menlo Park is less than 2 miles away.

The Newmark team that facilitated the transaction included Executive Vice Chairman & President Steven Golubchik, Vice Chairman Edmund Najera and Director Darren Hollak, together with Senior Managing Directors Jonathan Schaefler and Jesse Millman.

In a prepared statement, Golubchik said that the asset attracted strong investor interest, despite market volatility. According to Newmark research, Menlo Park accounts for 6.5 million square feet of the approximately 39 million square feet of office space in the South Peninsula market, with a vacancy rate of 12 percent in the fourth quarter of 2022.

The post Morgan Stanley Buys $68M Bay Area MOB appeared first on Commercial Property Executive.

San Francisco Pacific Heights. Image courtesy of Pacific Workplaces

Pacific Workplaces is set to open San Francisco Pacific Heights, its new 10,798-square-foot coworking space in San Francisco. The flex office location is part of a 27,281-square-foot building and marks the company’s second coworking space in the city. Official opening is set for January 26th.

Part of the Pacific Heights neighborhood, the hybrid workspace encompasses two meeting rooms, suitable for teams varying from three to 10 members, 36 private offices, for both individuals and larger teams, 30 coworking seats and dedicated desks, as well as virtual address services. Amenities also include lounge areas, work booths, a wellness room, bike racks, lockers and happy hour events, offering workspace solutions that people can walk or bike to.

Located at 2001 Van Ness Ave., the coworking space is within walking distance of several dining and retail options, such as Whole Foods Market or Trader Joe’s. Interstate 80, as well as numerous bus stops, are within 2 miles from the property, while Lafayette Park is also within walking distance.

Pacific Workplaces’ portfolio currently includes flex office spaces throughout California, Las Vegas, Reno, Nev., and Phoenix. The other San Francisco coworking space is located at 201 Spear St., offering a mix of dedicated desks, meeting rooms, private offices and shared spaces. A few months ago, the company opened another 11,590-square-foot coworking space in Sacramento, Calif.

The post Pacific Workplaces to Open San Francisco Coworking Location appeared first on Commercial Property Executive.

Peninsula Life Science Center. Image courtesy of Gemini Rosemont

Gemini Rosemont Commercial Real Estate has acquired Peninsula Life Science Center, an eight-story life science building in Burlingame, Calif. The company partnered with Gemini Investments for the $59.4 million, all-cash purchase. Cushman & Wakefield represented the seller, a joint venture between Sansome Street Advisors and Gordon Brothers.

According to CommercialEdge, the 65,804-square-foot, multi-tenant property previously changed hands in 2016, for $21 million.

READ ALSO: Life Science Assets Maintain Lasting Appeal

Completed in 1974, the building underwent cosmetic renovations in 2016 and 2022, the latter comprising $11 million worth of capital and tenant improvements. At the time of the sale, the property was 98 percent leased and anchored by three life science tenants. Gemini Rosemont’s David Wilson will oversee property management.

Located at 1828 El Camino Real, the building offers exposure to California Drive, Highway 101 and State Route 82, while the San Francisco International Airport is less than 3 miles away. The facility is also situated in the vicinity of the Millbrae BART/Caltrain metro station.

The life science sector stays strong

As revealed by Cushman & Wakefield’s October 2022 life sciences outlook, the industry is set to witness further robust development and constant demand in the years to come, despite economic headwinds, such as inflation, increased interest rates and potential labor shortage of skilled personnel. The sector’s development pipeline as of October will add 26.6 million square feet of space to the country’s inventory, with 19.9 million square feet slated for delivery by the end of 2023.

Cushman & Wakefield’s team involved in the deal included Executive Managing Directors Seth Siegel and Steve Hermann, together with Managing Director Ryan Venezia. The buyer represented itself in the acquisition, led by Acquisitions Manager Kevin Flemming.

The post Gemini Rosemont Pays $59M for Bay Area Life Science Asset appeared first on Commercial Property Executive.

The Mills Building. Image courtesy of The Swig Co.

Gensler has signed a new long-term lease with The Swig Co. for 45,500 square feet at The Mills Building in San Francisco.

The building is both WELL Health-Safety and LEED Platinum certified, managing to achieve high performance in energy efficiency, indoor environmental quality and sustainable site development.

Gensler is planning to renovate the 45,000-square-foot, second-floor space to run on all-electric utilities and support the company’s carbon zero goal by 2030.

Historic landmark

Darius Ogden Mills constructed the Mills Building in the 1890s. The last addition was the 22-story Mills Tower, which was completed in 1932. The property is a San Francisco landmark with historical and architectural interest and the city’s only remaining example of the Chicago School of Architecture style. After the 1906 earthquake, architect Willis Polk oversaw the restoration of the building, maintaining the original design.

The Swig Co. acquired the Class A office asset in 1954 and completely renovated it in 2003. The building totals 439,000 square feet and features a wellness room, 10-foot operable windows, on-site parking, a conference center, security and storage.

In 2014, the property became subject to a $70 million, 42-year loan originated by Voya Financial, according to CommercialEdge data.

Located at 220 Montgomery St., the property sits on a 1.1-acre site in the Financial District. There’s an abundance of dining options, retail spaces and entertainment venues in the area. Interstate 80 is within 1.5 miles of the site.

In another recent move, the Swig Co. acquired a 96,058-square-foot office property in Santa Monica, Calif. The LEED Silver certified building was the company’s first acquisition in Santa Monica, and is slated for upgrades.

The post Gensler Leases 45 KSF at San Francisco Landmark appeared first on Commercial Property Executive.

Axiom Point. Rendering courtesy of Transwestern

The City of Vacaville’s Planning Commission has approved plans for Transwestern’s Axiom Point, a 375,000-square-foot biomanufacturing campus in Vacaville, Calif.

The project team includes DGA Architects, overseeing the overall design process, and DPR Construction, serving as general contractor.

Set to take shape in Vaca Valley Business Park, on a 22.4-acre site, the two-phase development is expected to attract life science jobs to the area. Through August this year, an estimated 137,707 unique life science jobs have been posted on a national level, a 28 percent increase from the same period last year, according to Cushman & Wakefield.

Vaca Valley Business Park is home to a variety of life science companies, including Genentech, Johnson & Johnson, RxDNova, Agenus and Polaris. The development is situated at the junction of Interstates 80 and 105, in proximity to San Francisco, Sacramento, Calif., and the University of California’s Berkeley and Davis campuses, which provide easy access to top talent across the life science and advanced manufacturing sectors.

Adjacent to Solano Community College’s Vacaville campus and home to nonprofit California Biomanufacturing Center Inc., Vaca Valley Business Park includes more than 240 acres for development and has been operating since Alza’s arrival at the site back in 1987.

READ ALSO: The Best Metros in the U.S. for Life Science Companies

Bay Area’s life science sector poised for growth

Axiom Point. Rendering courtesy of Transwestern

Approved in less than 90 days, Axiom Point is the first life science campus to take advantage of the city’s Biotechnology and Advanced Manufacturing Initiative that aims to process planning entitlements in 100 days or less.

In a prepared statement, Transwestern Managing Partner Fred Knapp said that the quick turnaround supports the city’s initiative to make biomanufacturing the foundation of its economic development plan. City of Vacaville Mayor Ron Rowlett added that the city has the land, infrastructure and workforce that the biotechnology industry requires for further growth.

According to a recent Transwestern report, the Bay Area’ life science sector has been rapidly expanding despite economic volatility, with 4.2 million square feet of medical office space under construction year-to-date as of third quarter, marking a 68.7 percent increase from one year ago, and the highest level on record.

With a tightening vacancy and strong development pipeline, the Bay Area continues to experience a historically high level of demand for life science space.

Axiom Point has been designed to accommodate a variety of users, including biomanufacturing, laboratory research and development, medical device manufacturing, food science, agricultural technology and health-care companies.

The post Transwestern Gets Approval for Bay Area Life Science Project appeared first on Commercial Property Executive.

Bay Area skyline. Image courtesy of Adam Derewecki via pixabay

Burlingame, Calif., city officials have unanimously approved a Bay Area research and development center. 777 Airport Boulevard, brought forth by a partnership between LPC West, an affiliate of Lincoln Property Co., and Dune Real Estate Partners, is anticipated to be more than 400,000 square feet of office space for employers in the science and technology space.

Situated on the Burlingame waterfront, 777 Airport Boulevard is set to be a 13-story building on the corner of Airport and Anza Boulevards. The project is designed by Gensler with offices, laboratories and other science and technology spaces.

The total lot size for the new project is 308 acres, according to CommercialEdge data. With the appeal period closed, pre-development activities on the Class A center can commence.

Environmentally sustainable features incorporated into the building’s design include shoreline infrastructure to prevent against sea level rise, water conservation installments, terraces for more access to fresh air and natural light and rooftop solar for an all-electric building. EV charging stations, bike parking, a bike repair station and ride-share parking are also being implemented into the development.

More than $1 billion in economic activity is anticipated to result from the project, including $19 million in fees to the city and 2,500 permanent jobs. Another 1,000 construction jobs are set to come out of the build with some $189 million in construction-related activity.

Community related outcomes to 777 Airport Boulevard are expected to be more than $5.6 million in benefits. These will include improvements to the pedestrian walkways and experiences along Airport Boulevard, educational signs along the Bay Trail, a public plaza with a café and more than 1 acre of public greenspace featuring landscaping, seating and bike racks.

Bay Area office space hot spot

Burlingame, located in the San Mateo County on the San Francisco Peninsula, is situated south of San Francisco. As of September, South San Francisco had 2,982,010 square feet of office space under construction, the highest across the Peninsula and Bay Area submarkets. With life science companies moving to the area, it has become one of the nation’s largest hubs for construction.

Also in September, the greater Bay Area had 10.3 million square feet of office space under construction. This marks the third largest pipeline in the U.S.

LPC West has been investing heavily throughout the Bay Area, as well as California in general. The company recently acquired a 228,000-square-foot Bay Area life science portfolio in Fremont. Further south, LPC West expanded its San Diego footprint with the purchase of a 135,000-square-foot industrial property for $35.1 million.

The post Lincoln Property, Dune Gain Approval for Major Bay Area Project appeared first on Commercial Property Executive.

1410 Harbor Bay Parkway. Image courtesy of Invesco Real Estate

Invesco Real Estate has signed Exelixis as a tenant at 1410 Harbor Bay Parkway, one of the six buildings of its Loop campus in Alameda, Calif. The biotech firm leased the entire, 100,000-square-foot life science facility to use as laboratory, bringing its local footprint to roughly 575,000 square feet.

CBRE’s Mark Kol, Austin Hinder and Mike Raffetto represented the landlord, while Kidder Mathews’ Gregg Domanico negotiated on behalf of the new tenant.

Exelixis’ new home is part of The Loop at Harbor Bay, a business park totaling approximately 332,000 square feet that Invesco acquired for $101.3 million in 2021, according to CommercialEdge data. Approved for advanced manufacturing, life sciences and STEM-related uses, the Class A life science building features dock and grade-level loading and was constructed to the latest seismic codes with 100 percent clean power.

Exelixis joined Azzur Cleanrooms on Demand and SentiBio, among others, on The Loop’s tenant roster, bringing its occupancy to 80 percent. Invesco Director of Investment Management Shannon Aquino said in prepared remarks that the campus provides a community for lab/R&D and Current Good Manufacturing Practices firms in search for space to grow in the Inner Bay Area.

Fueled by research talent growth and strong investments, demand for Class A life science facilities in the San Francisco Bay Area remained among the highest in the nation. According to a CBRE report, lab/R&D space in the Oakland submarket had the second lowest vacancy rate in the region, at 5.7 percent, in the third quarter of 2022.

The post Invesco Signs Tenant at Bay Area Life Science Campus appeared first on Commercial Property Executive.

100 Stockton St. Image courtesy of Convene

Convene, a New York-based hospitality, event and flex space provider, has unveiled plans for its first San Francisco location. Spanning 65,000 square feet, the new premises will occupy the fourth and fifth floors of a 265,000-square-foot building, owned by Blatteis & Schnur Inc.

The eight-story property is part of the Union Square neighborhood and formerly served as a Macy’s Men’s department store. Currently under redevelopment, the mixed-use overhaul is scheduled for opening in the second part of 2023.

The Convene at 100 Stockton will comprise six meeting rooms and event spaces, suitable for corporate social events or classroom-style learning, equipped with AV technology and kitchens. Tenants will also have access to a dedicated lobby on the ground floor, as well as to the building’s amenities, including retail and dining options, a roof deck and a terrace. Chotto Matte, an internationally acclaimed Japanese-Peruvian restaurant, will also operate at the location.

Situated at 100 Stockton St., the property is within walking distance of retail and entertainment hubs and less than a mile from Interstate 80, while San Francisco city center is 1 mile away.

Cushman & Wakefield brokered the lease signing for both parties, with the company’s Vice Chairman Kazuko Morgan and Senior Vice President Ashley Brown of Blatteis & Schnur representing the owner in the transaction. A team led by Executive Managing Director J.D. Lumpkin is assisting Convene with identifying other locations within the San Francisco metro.

The new space will add to California’s rapidly growing coworking market. Just last month, SOMO Group opened SOMO Cowork, a 24,000-square-foot flex office space in Rohnert Park.

The post Convene to Open 1st San Francisco Location appeared first on Commercial Property Executive.

In September, the Bay Area (East and South Bay), driven by the market’s thriving tech and life science hubs, had 10.3 million square feet of office space under construction—the third largest pipeline in the country after Manhattan and Boston—while 7.9 million square feet of office space taking shape within the San Francisco Peninsula market.

Between January and September, six properties amounting to 1.9 million square feet of office space were delivered in the Bay Area, while 3.2 million square feet of office supply came online in San Francisco. Almost 100 percent of these properties are Class A product, reflecting the area’s strong demand for high-quality workspace. Here are the top Bay Area submarkets for office construction, based on CommercialEdge data.

5. Emeryville

Situated on the East Bay between Berkeley and Oakland, Emeryville is the home of Pixar Animation Studios, along with several well-known tech companies. As of September, the Emeryville submarket had 867,572 rentable square feet of office space under construction across five office properties. Out of the five, four are life science facilities—echoing ongoing trends within the submarket.

Emeryville Center of Innovation. Image courtesy of BioMed Realty

BioMed Realty is behind the largest life science project in the making within the Emeryville submarket. In April 2021, the company received approval for the expansion of its Emeryville Center of Innovation campus. At that point, the campus consisted of a 303.000-square-foot research building, fully leased to Zymergen Inc. Four new lab/office buildings totaling 950,000 square feet are planned for the extension, with the first phase, comprising 281,000 square feet, already under construction.

4. Mountain View – Shoreline

An integral part of Silicon Valley’s early history, the city of Mountain View houses the headquarters of numerous large tech companies, including Google, Microsoft, LinkedIn and Samsung. As of September, the Mountain View – Shoreline submarket in Santa Clara County had 994,810 rentable square feet of office space in the making.

Google is wrapping up construction on its Google Charleston East building within the company’s first ground-up campus dubbed Bay View. Designed by two of the most revolutionary architecture studios, Bjarke Ingels Group and Heatherwick Studios, the 595,000-square-foot project will house roughly 3,000 employees. The canopy-covered, 111-foot tent-like structure will aim for LEED Platinum certification.

3. Sunnyvale – North

Google Caribbean. Image courtesy of the City of Sunnyvale

Part of the Santa Clara Valley, Sunnyvale represents the birthplace of the video industry. Some of the biggest tech players have offices in the city, with the area’s largest employers including Google, Apple, Amazon, Microsoft and LinkedIn. In September, 1.3 million square feet of rentable office space was under construction within the Sunnyvale – North submarket.

Google is currently developing a two-building, 40.5-acre office campus in the Sunnyvale – North area, to total more than 1 million square feet. The City Council approved the project known as Google Caribbean in 2020 and construction broke ground the following year. Bjarke Ingels Group is also behind the ziggarut-like architecture of the buildings.

2. San Jose – CBD

With a significant jump from the previous entries in terms of under-construction pipeline, the San Jose – CBD submarket saw 2,972,330 square feet of office space in the making, as of September. As the cultural and financial center of Silicon Valley, San Jose is the most populous city in the Bay Area and the third most populous city in the state. One of the wealthiest cities in the world, San Jose has the third highest GDP per capita—as well as the fifth-most expensive housing market—on the planet.

Park Habitat. Rendering courtesy of Westbank

The two largest office developments currently taking shape in San Jose’s CBD are both rising along Park Avenue. Located at 180 Park Ave., Westbank’s Park Habitat project will create 1.3 million square feet of office, museum and retail space. Designed by world-renowned Japanese architect Kengo Kuma, the mixed-use building is set to become one of the first net zero carbon workspaces in the country. Construction officially broke ground in April, with planned completion in 2025.

1. South San Francisco

As of September, South San Francisco had the largest under-construction stock across the Peninsula and Bay Area submarkets, reaching 2,982,010 square feet, according to CommercialEdge data. The city has one of the nation’s largest life science hubs. Last year, a total of three office properties amounting to nearly 1.2 million square feet came online in the area.

Kilroy Oyster Point. Rendering courtesy of Kilroy Realty

In June 2021, Kilroy Realty Corp. broke ground on the second phase of Kilroy Oyster Point, a 50-acre, 3 million-square-foot life science and office megadevelopment. The first stage of the waterfront project, totaling 656,000 square feet, was completed last year. The second phase dubbed Gravitate will create 860,000 square feet of lab and office space, across three separate buildings. The seven- and eight-story ensemble will target LEED Gold certification.

The post Top 5 Bay Area Submarkets for Office Construction appeared first on Commercial Property Executive.

513 Eccles Ave. Image via Google Street View

BioMed Realty, a subsidiary of Blackstone that specializes in the acquisition and management of life science properties, has completed its $80 million purchase of an 87,991-square-foot industrial building in South San Francisco, Calif., according to The Bay Area Registry. BioMed acquired the property from a private seller affiliated with the Varnhagen family trust.

BioMed’s new facility was built in 1960 on a 6-acre plot of land at 513 Eccles Ave. The address is home to Avis Rent A Car.

BioMed’s plans for the facility are unknown, but the property is within 1 mile of the firm’s master-planned, multi-phase Gateway of the Pacific, a 2.2 million-square-foot life science research and office campus where Nobell Foods recently leased 66,234 square feet.

Keen on life science developments

BioMed continues to expand its life science investment and development portfolio nationwide. The firm recently broke ground on its 600,000-square-foot 585 Kendall life science project in the Kendall Square neighborhood of Cambridge, Mass. The building has been preleased in its entirety by Takeda Pharmaceutical Co. Ltd.

In August, BioMed received $514 million in construction financing for its Assembly Innovation Park, a 485,000-square-foot life science tower in Somerville, Mass. The project broke ground in January and is scheduled to deliver in the second quarter of 2024.

The firm is also in the process of expanding its Emeryville Center of Innovation campus by 265,000 square feet. Completion is expected in 2024.

The Bay Area’s life science success

With a total inventory of 35 million square feet at the end of the year’s third quarter, The San Francisco Bay Area remains one of the largest markets in the nation for life science real estate investment and development, due to its condensed number of research universities, tech companies and hospitals. Despite a lull in overall occupancy, the region continued to see an expansion of its development pipeline, some 7 million being under construction as of September, according to data from a Newmark report.

One of the ongoing developments is IQHQ’s Elco Yards project in downtown Redwood City, Calif. Upon completion, the mixed-use property will add 600,000 square feet of life science space to the city’s inventory.

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The upcoming data center at 2175 Martin Ave. Rendering courtesy of Prime Data Centers

Prime Data Centers has started construction on an additional data center, its fourth in Silicon Valley. The turnkey, build-to-suit facility is designed to serve either a single client, or multiple colocation tenants. Phase 1 is set for completion in the second half of 2023.

The new data center will take shape at 2175 Martin Ave. in Santa Clara, Calif., on a 1.7-acre site that Prime acquired for $13.9 million in 2021, according to CommercialEdge data. This represents a second campus location, as Prime also has a similar facility underway on Comstock Street, next to its existing, 9-megawatt data center that was preleased by Cyxtera last year. An additional, 32-megawatt hyperscale facility was also announced at 2225 Martin Ave.

Upon completion, the 2175 Martin Ave. building will feature 80,000 square feet of purpose-built data center space and 9 megawatts of critical capacity, at N+1 redundancy. The three-story facility is also set to include access to multiple carriers and dark fiber. Cabinet densities will support up to and above 30 kW per rack.

READ ALSO: Decarbonizing Data With Vantage

In a prepared statement, Executive Vice President of Acquisitions Chris Sumter mentioned that the new data center is strategically positioned near the headquarters of several large tech companies, which are likely to need more data center deployments going forward.

Prime Data Centers is on track for another year of high activity, with expansions planned in other markets as well. In September, Prime announced it will construct a massive, $1 billion data center in Chicago—its first outside California. The three planned buildings will comprise 750,000 square feet and offer a total of 150 megawatts upon completion.

High barriers to entry Silicon Valley

As noted by former Director of Marketing Jon Falker, in an interview with Commercial Property Executive last year, an essential aspect of developing data centers in Silicon Valley is obtaining power entitlements. According to Falker, these are conceived as specific agreements between the developer/operator and the utility company—with the data center company agreeing to not exceed a specific amount of power, even in periods of high consumption. For its newest development, Prime has secured up to 9 megawatts from Silicon Valley Power.

The Northern California market also poses challenges in terms of available land to build new data centers, according to a report from JLL. In the first half of this year, vacancy fell below 5 percent and JLL research estimates that low vacancy is likely to persist as newly constructed product delivers largely preleased.

At the same time, the market is on track for record levels of absorption. Land and power scarcity have led to secondary markets, like Sacramento, to see increased activity, the same report shows.

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3303 Scott Blvd.

Blue River Technology has purchased an 83,590-square-foot office building in Santa Clara, Calif., for $85 million, according to CommercialEdge data. The seller, Toeniskoetter Development, constructed the 2015-completed property.

Owned by Deere & Co., the buyer is a farm robotics technology company, which subleased the property in July of this year. Back in March, Deere opened its new tech hub in Austin, Texas, occupying the upper two floors of a Clarion Partners office building.

Located at 3303 Scott Blvd., the Class A office asset is equipped with two passenger elevators, 27,146-square-foot floor plates, controlled access and 288 parking spots. The four-story building is situated on a 2.5-acre lot close to Interstate 280, providing access to San Francisco. The property is 6.9 miles from downtown San Jose, Calif., and within 7 miles of Mountain View, Calif.

According to recent CommercialEdge data, the San Francisco Bay Area was one of the top markets for office transactions during the first half of 2022, ranking second on the list, after Los Angeles. The metro’s sales volume in the first six month of the year amounted to $2.4 billion, at an average price of $497 per square foot.

The post Tech Company Pays $85M for Silicon Valley Office Building appeared first on Commercial Property Executive.

750 Gateway Blvd. Image courtesy of Amgen

Amgen recently opened a new research and development facility at the 2.2 million-square-foot Gateway of Pacific life science campus in South San Francisco.

The biopharmaceutical giant signed a long-term lease with BioMed Realty, owner and developer of Gateway of Pacific, in 2019 to be the sole occupant of a brand-new, 245,000-square-foot laboratory and office building.

BioMed delivered Amgen’s new home, 750 Gateway Blvd., in early 2022 as part of Phase II of the 23-acre Gateway of Pacific development. According to information posted on the website of construction consultancy Nova Partners, which managed Amgen’s tenant improvements, the nine-story tower was developed at a price of approximately of $158 million. The Flad Architects-designed building, linked via a common-space atrium to another new office/lab structure, is a state-of-the-art facility with modular labs and open workspaces conceived to promote collaboration. The new building is also Amgen’s second-largest R&D facility in the world.

LISTEN TO: High-IQ Investment: IQHQ’s Tracy Murphy on Life Science Real Estate

The central feature of Amgen’s new glass-clad home, however, is its sustainability. 750 Gateway incorporates such elements as green living walls and sustainable materials in its flooring. The tower boasts LEED and Fitwel certifications and is in the process of applying for TRUE and WELL certifications. Another feather in 750 Gateway’s environmental cap is its designation as a pilot site for MyGreenLabs certification.

The new Amgen San Francisco location, Saptarsi Haldar, vice president, said in a prepared statement, is the “perfect combination of technology and biotech innovation, making Amgen an attractive place for local scientific professionals.” In addition to the modern workspace accommodations, Amgen’s roughly 600 employees will also have access to an array of amenities available at Gateway of Pacific’s campus, including the 47,000-square-foot Traverse center, which encompasses restaurants, a health facility and meeting and event space.

Premier space remains a priority

Headquartered in Thousand Oaks, Calif., Amgen has had R&D operations in the San Francisco Bay Area for roughly two decades. At the time of Amgen’s lease agreement with BioMed for 750 Gateway three years ago, the company was leasing a total of approximately 684,000 square feet at Healthpeak Properties’ Britannia Oyster Point campus. However, in 2022, Amgen exercised its option to terminate its lease at Britannia Oyster Point’s 1100 and 1120 Veterans Blvd., which total approximately 190,000 square feet. The company’s lease of the 68,000-square-foot 1140 Veterans Blvd. at Britannia Oyster Point is due to expire in December 2022.

With Amgen’s departure and other tenant vacancies, Healthpeak is taking the opportunity to upgrade the 10-building campus. “We’re redeveloping six buildings in order to capture optimal rents, resulting in near-term drag but will be significantly accretive upon stabilization in 2025,” Healthpeak noted in its June 2022 investor presentation.

While the pursuit of higher rents may be the priority for life science property owners, the bid to attract and retain talent remains a key focus for life science tenants, who dangle cutting-edge workspace as a carrot.

“Competition for talent in an overall very tight labor market has heated up in the life sciences sector with postings for life sciences jobs at currently double the pre-pandemic levels,” according to an October life science report by Cushman & Wakefield. “In the U.S., year-to-date through August 2022, there have been a total of 413,120 life sciences occupation postings, a 28 percent increase from the same period last year.”

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