CIM Group has plans to sale $1 billion of office assets, all located in Oakland, according to the San Francisco Business Times.
The firm is reported to be the largest landlord in the city.
The portfolio consists of 1.73 million square feet of class A assets, located at 1 Kaiser Plaza, 1333 Broadway, 1901 Harrison St., Center 21 and 353 Webster St. All of the properties were purchased from Brandywine Realty Trust in 2008 for $412.5 million.
The “tech” sector is the primary driver of job growth in the Bay Area, says Colliers International. The East Bay’s proximity to Silicon Valley has pushed migration from the west to the east and has accounted for 57 percent of the growth in the local population since 2011.
Investment activity in recent years has driven rent growth, especially in the class B market, according to JLL’s first quarter Oakland office report. New owners are raising rents to justify investments on renovations to historical buildings, where select landlords are commanding between $5.00 per square foot to $6.00 per square foot fully serviced. Striking rents for secondary office space ranges between $4.50 to $4.85 industrial gross. As a result, class B average asking rents have increased 69.3 percent since 2015.
CBRE describes downtown Oakland’s office vacancy as the tightest downtown market in the country, with San Francisco following as a close second. CBRE ranked the top 10 tightest downtown office markets in major metropolitan areas for the first quarter of 2018. Oakland had 5.3 percent vacancy and San Francisco had 5.7 percent.
JLL expects Oakland CBD vacancy will increase during the next 24 months with as much as 1.2 million square feet of new or redeveloped office space set to deliver, not all of which is pre-leased. Buildings currently under redevelopment include 2150 Webster, Uptown Station and Tribune Tower. New construction includes 601 City Center and 1100 Broadway, both of which are partially pre-leased. As long as other Bay Area markets stay tight, tenants searching for more affordable options will be attracted to the East Bay.
