By Ariela Moraru
KBS Capital Advisors expanded its KBS Strategic Opportunity REIT II portfolio with the acquisition of 505 14th St. and 1300 Clay St., two Class A office buildings in Oakland’s City Center totaling 367,357 square feet. NKF represented the sellers, Rubicon Point Partners and Canyon Partners Real Estate LLC.
505 14th St. is a 172,273-square-foot, 12-story office tower built in 1985. 1300 Clay St. is a 195,084-square-foot, 11-story office tower built in 1990. Rubicon purchased the properties in 2015 from Strada Investment Group for $59.5 million and $55 million, respectively, according to Yardi Matrix. JLL manages the LEED Gold-certified properties, while Colliers handles leasing efforts. The buildings are currently 92 percent occupied to around 40 tenants operating mostly in the legal, finance and government sectors.
Oakland’s value proposition
“As Oakland’s urban renaissance continues, the new owner is in an ideal position to bring existing tenants to market rents,” said NKF’s Steven Golubchik, in prepared remarks. “Historically, Oakland has been a long-time benefactor of spill-over from tenants priced out of San Francisco, however, Oakland has now stepped out of San Francisco’s shadow. The Class A vacancy rate in Oakland CBD is less than 4 percent, the lowest CBD office vacancy in the U.S.”
Golubchik worked with NKF’s Grant Lammersen, Tim Walling and David Hosler in the transaction. The team also recently closed the sale of a 358,589-square-foot Bay Area office tower and nine-story parking structure in Concord, Calif.
Located above Oakland’s 12th Street BART station and with easy access to Interstate 80, the properties are just minutes from downtown San Francisco. Since 2011, Oakland has benefited from 1.6 million square feet of inbound migration mostly from San Francisco. The average spread between San Francisco rents and Oakland CBD Class A rents over the last 18 years has been approximately 20 percent, while today’s spread stands at more than 30 percent. Overall office vacancy in San Francisco stands at 8.5 percent, with the Mission Bay submarket registering the lowest rate at 5.6 percent, according to a Yardi Matrix report.
Images via Yardi Matrix