PG&E Completes $906M HQ Purchase
The sale closed in three tranches.
Pacific Gas and Electric Co. has completed the acquisition of its headquarters building at 300 Lakeside Drive, a 910,000-square-foot office tower in downtown Oakland, Calif. The deal closed at $906 million, the San Francisco Business Times reported.
The company purchased the asset from TMG Partners, which has been retained to continue to manage the property for the next six years.
PG&E has moved its headquarters from San Francisco to the Class A high-rise in 2020, where it occupies 600,000 square feet of space.
In August last year, the company stated its plans to buy the asset for an initial price of up to $900 million. Starting with July 2023, the sale agreement happened in three tranches, with the first one of $150 million, the second one of $250 million in July last year, and the remaining $506 million paid to TMG Partners this Thursday, according to the San Francisco Business Times. The deal also included the adjacent 130,000-square-foot building at 344 Thomas L. Berkeley Way and a parking structure with 1,400 spots, from the same seller.
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PG&E’s purchase is part of the company’s real estate consolidation plan, designed to save customers the equivalent of $757 million and to cut its Bay Area office space in half by consolidating for office locations into a single one. The company sold its former San Francisco headquarters to Hines Interests, in an $800 million deal that closed in 2021. That transaction is expected to return some $400 million in savings for the company’s customers over a five-year period through 2026.
Formerly known as the Kaiser Center Tower, 300 Lakeside Drive is adjacent to Lake Merritt, close to Interstate 980 and to multiple bus stops, as well as to retail and dining options in the city’s downtown area. Oakland International Airport is 10 miles away and downtown San Francisco is 12 miles southwest.
Built in 1962 and upgraded in 2005 and 2019, the 28-story building includes 46,541-square-foot floorplates, 17 passenger elevators, 17,000 square feet of ground-floor retail space, an on-site conference center, an auditorium with 382 seats and 1,163 parking spots.
Western markets leading in sale prices
The property previously changed ownership in 2020 as part of a $449.8 million portfolio deal, when TMG Partners picked up two buildings from Rockpoint Group, according to CommercialEdge. During its ownership, TMG Partners secured $172 million in C-PACE financing for the building in 2023. At the time, the transaction was the largest C-PACE loan on a U.S. office property.
Western markets continued to command some of the highest office sale prices in the U.S., according to the latest CommercialEdge report. After San Diego’s $364 per square foot average, San Francisco followed, with an average sale price of $325, surpassing Los Angeles, where properties sold at $298 per square foot.
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