Hudson Pacific Properties has sold the remaining six buildings of Peninsula Office Park in San Mateo for $210 million before credits, prorations and closing costs. The all-cash transaction represents a 5.1 percent premium to the company’s GAAP basis and a 15.4 percent premium to the allocated purchase price.
The buyer was not disclosed.
“The sale of Peninsula Office Park’s remaining six buildings exemplifies our approach to recycling capital to further focus on strategic holdings in our core markets,” said Victor Coleman, Hudson Pacific’s chairman and CEO.
Buildings 1 through 5 and 7 of Peninsula Office Park total 447,739 square feet, and, as of the end of the first quarter of this year, they were 83 percent occupied. Hudson Pacific sold the fully vacant 63,050-square-foot Building 6 in January of this year for a total of $22.5 million before prorations, credits and closing costs.
Investment and leasing activity among Silicon Valley tech giants was very robust in the first quarter, according to Transwestern. First quarter net absorption was 675,000 square feet, the highest it has been in two years.
The San Mateo County office market measured an occupancy gain in the first quarter of the year, putting to bed a three-quarter streak in which the market recorded negative net absorption, according to Avison Young. Totaling 222,287 square feet, the occupancy gain measured in the first quarter of the year is greater than the occupancy loss measured during the last three quarters of 2017, bringing the 12-month total to 34,590 square feet of positive net absorption.
Total vacant space in the San Mateo County office market measured 3.2 million square feet at the end of the first quarter 2018. This amount of space translates to a vacancy rate of 8.5 percent. Since the first quarter of 2016, the amount of vacant space on the market has increased 16.3 percent in the San Mateo County office market.
With limited availability, asking rates in San Mateo County have climbed more than 4.0 percent year-over-year, ending the first quarter at $4.74 per square foot, full service. Menlo Park and Redwood City continue to command higher asking rates than the overall market due to high demand and lack of available supply, with average asking rates at the end of the first quarter 25.9 percent higher than the average asking rates throughout the San Mateo County, at $5.97 per square foot full service. Rents are expected to continue to increase through the end of 2018, as the market remains very tight.
